Thursday, January 13, 2011

Zimbabwe — uneven recovery

Rudderless and gutless
Tony HawkinsThursday, 13 Jan 2011
Trade upswing, politics and policy will determine the potential for Zimbabwe’s recovery in 2011

Zimbabwe’s uneven recovery from 10 years in recession will continue — possibly even accelerate — through 2011, subject to three provisos.

The first is the global economic upswing. So long as that remains on course and Zimbabwe continues to benefit from strong demand and high prices for its key exports (platinum, gold, ferrochrome, tobacco and cotton — as well as the wild card, diamonds), GDP, which rebounded 8% in 2010, is expected to grow 9,3%, according to the finance ministry.

The second is the political climate.

This year political imponderables loom even larger than last as politicians squabble over a new constitution and the timing of fresh elections, assuming the constitutional draft is endorsed at a national referendum.

The third is economic policy, specifically the government’s controversial indigenisation legislation. President Robert Mugabe’s Zanu-PF is pushing hard for its immediate implementation.

That would require all businesses with assets in excess of US$500000 to dispose of 51% of their shares to indigenous (for which read black) Zimbabweans within five years. The other two members of the fragile, fractious coalition in Harare — prime minister Morgan Tsvangirai’s Movement for Democratic Change (MDC-T) and its breakaway wing, Arthur Mutambara’s MDC-M — say they support the principle of black empowerment but not as envisaged by Mugabe’s hardliners.
Uncertainty reigns and the longer it continues the greater will be its impact on investment decisions.
Indigenisation is not the only crucial economic issue that divides the coalition. There is no consensus on debt rescheduling, privatisation or public-service reform.

But so long as commodity prices remain strong and the economy is operating well short of its capacity levels, this policy paralysis need not disrupt the recovery. That is the view of the country’s business leaders, who want elections to be postponed so that the unpopular and dysfunctional administration hangs on to power.

Yet if opinion polls are to be believed, they are in the minority. The recent Afrobarometer survey found that 70% of Zimbabweans want elections this year.

The political parties are split on the election issue, too. Just last week, Welshman Ncube, who is expected to supplant Mutambara as leader of the tiny MDC- M, said he was against elections this year. His stance makes sense but, like the lawyer he is, he is talking his own book, since he knows that his party is almost certain to be wiped out whenever the elections are held.

Zanu-PF’s position is similarly confused. All the evidence and polls suggest it will be heavily defeated by Tsvangirai’s MDC. Despite this, the party is demanding that elections be held this year because the so-called Global Political Agreement to set up the national unity government expires in mid-February.

Though some in Mugabe’s party appear to believe Tsvangirai’s flip-flop style of governing has dented his political support , the rest hope that as long as the election rules remain unchanged, Zanu- PF will be able to fiddle the result, just as it did in 2008 and 2002.

With Mugabe himself not many weeks short of his 87th birthday in February, the party’s best hope is to hold elections as soon as possible so that a re-elected Mugabe can nominate his successor and retire before his health deteriorates further.

The MDC’s official position seems to be that elections cannot be held until a new constitution is in place, which almost certainly means 2012 at the earliest. However, in the space of just three months Tsvangirai has called for elections in 2011, threatened to boycott them and demanded a presidential election with parliamentary polls delayed until 2013. Small wonder that he has earned the reputation of a man who agrees with the last person who spoke to him.

Given these imponderables, the best bet is that Zimbabwe will have to endure another year of status quo uncertainty . There will be rumours surrounding the state of Mugabe’s health and the attitudes of President Jacob Zuma’s administration, other SADC governments and the African Union allegedly tiring of the ageing president’s intransigence.

The economy will continue to recover, though probably less robustly than government ministers predict, and investors will sit on their hands pending a resolution of the political crisis.

The political logjam could be broken by the president’s health, by internecine fighting over the succession within Zanu- PF or possibly by the SADC governments led by Zuma finally finding the courage to pull the rug out from under Zanu-PF’s feet. But, given the Zuma/SADC track record, few analysts are holding their breath.

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