“South Africa has of course always been aware of the state of Zimbabwe’s economic problems but had underestimated the extent to which the situation has deteriorated,” a SA official who attended the briefing to The Zimbabwe Independent.
“Mugabe’s briefing to Zuma and ministers on the dismal state of the economy left no doubt that Zimbabwe’s economy was in a crisis and the country badly needs assistance to turn things around. We were quite surprised that Mugabe himself admitted this.”
“Mugabe talked about company closures and the collapse of his once vibrant industrial sector, as well as the liquidity crunch the country is currently facing.”
According to Finance minister Patrick Chinamasa in his budget statement last year in November, more than 4 600 companies had closed shop since 2011, resulting in more than 55 400 people losing jobs.
The real big surprise is that Mugabe is still holding on to the notion that he can, somehow, still “rig” economic recovery without addressing the root problems of gross mismanagement and rampant corruption fuelling the economic meltdown.
Mugabe was hoping to “rig” economic recovery with his ZimAsset plan in which he was choke out the adverse effects of the criminal waste due to the gross mismanagement and rampant corruption by swamping them with lots and lots of money hence the $27 billion in plan.
To put this sum into perspective, ZimAsset budget was nearly three times the current national debt of $10 billion!
Sadly for Mugabe, ZimAsset is dead in the water because no donor was prepared to bankroll such a hare-brain scheme. Just as well, Zimbabwe is already groaning under the $10 billion debt burden and in five years the debt would have swollen up to $40 billion with sweet nothing to show for it!
In August last year Mugabe was in China, on another begging mission. When he launched his ZimAsset plan before the 2013 elections Mugabe was confident his “all wealth friends”, as he flatteringly called the Chinese, would bankroll the plan. During the State visit the Chinese finally put him out of his misery by offering $4 billion for projects but nothing for the much needed budgetary support. And the told Mugabe to his face why; “he was a bad debtor” they told him.
The economic crisis has continued to get worse with more company closures and more workers thrown on the already mountain high unemployment heap, forcing the regime to once again take up the begging bowl and resume the begging duties.
Last week Minister Chinamasa was in Washington DC begging from the IMF and WB and came back with nothing in the bowl. He was only trying his luck because the Bentwood Institution have told the Zanu PF regime on countless occasions that they will only resume funding the regime if it carried out the economic reforms designed to address the underlying causes of the economic meltdown. None of the reforms have been implemented so Chinamasa returned without a dollar in the bowl.
On this trip, Mugabe and Chinamasa, reportedly, called on the SA government to urge development financial institutions to increase their investment in Zimbabwe, particularly the Development Bank of Southern Africa (DBSA) and Industrial Development Corporation South Africa.
“South Africa understands Zimbabwe’s situation unlike the international community; you are our brothers therefore we ask that when your companies advance funds to Zimbabwean companies you charge lower interest rates,” Chinamasa reportedly pleaded.
Without the economic reforms and an end to the criminal waste of resources due to mismanagement and corruption the soft loans from SA will only postpone the company closures but sooner or later those companies will in turn close under the burden of the waste.
Zimbabwe is subject to the same laws of thermodynamics, economics, etc. like everyone else. Mugabe thinks he can buck the system, borrow all he wants and never have to repay his debts, for example. Three and half decades of reckless spending and borrowing have finally caught up with him.
Mugabe has been able to cheat and bamboozle his way with advisories like Morgan Tsvangirai and former Vice President Joice Mujuru. He is yet to learn that he can neither cheat nor bamboozle the economy; he will have to implement the democratic reforms and then the economic reforms – there is no way the latter can be implemented without political reform – or the economic meltdown will only get worse.
Now that SA knows the seriousness of Zimbabwe’s economic meltdown one hopes that President Zuma will finally act and force Mugabe to accept the need for political reforms. It is not in SA or the region’s economic and political interest to let the Zimbabwe economy collapse completely and as Mugabe has himself admitted it is not far away from doing just that now!
By failing to put his foot down and insist that all the democratic reforms agreed in the GPA were implemented properly which would have created a democratic and stable Zimbabwe President Zuma and the other SADC leaders kicked the Zimbabwe crisis down the road. And now the consequences of a the political fudge and rigged July 2013 Zimbabwe elections has come back and is posing an even greater threat to the whole region’s prosperity and stability.