Tough times ahead: Experts

ECONOMIC experts have warned of tough times ahead which may require belt tightening across all sectors of the economy as 2014 threatens to be even harsher than last year.
The country is going through an economic squeeze which is making life unbearable for citizens, with debilitating effects on industry and commerce.
Several hundreds of companies shut down in 2013, while scores are teetering on the verge of collapse.Indications are that 300 workers are being offloaded onto the streets on a weekly basis, dampening prospects for the New Year.
While ZANU-PF, which was given a fresh mandate to rule following the landmark July 31 polls, has put together a blueprint to guide the country’s recovery efforts, the document is silent on how Treasury would fund several recovery programmes on the table in the wake of a continuously deteriorating economic climate.
In 2009, it was estimated that at least US$8,3 million was required to re-ignite economic growth. This figure could have increased by now, given the dire state of the country’s economic and social fabric.

With more than 100 days in office, the ruling party has failed to make discernible positive movements in the economy.
This week, economist John Robertson, said government must change tact in the way it conducts its affairs, if the right formula to solve the intricate economic crisis is to be found.
“If the government does not change (the way it conducts itself), I think 2014 would be worse because the whole economy has run out of reserves and there is nothing to support us,” said Robertson.

“There is no enough investment, no enough jobs, and no enough tax revenues and there might be no enough food this year,” he added.
Robertson said the 2014 National Budget announced last month may have no impact on the economy as it is just a statement of assumptions, with no guarantee that projected tax revenues will roll in.

He said policies that have repelled investors, such as the highly contentious empowerment laws, must be reviewed if global investors were to regain the much-needed confidence in Zimbabwe.While the Zimbabwe Investment Authority has improved its ‘doing business’ indicators significantly since 2009, Robertson said procedures for getting projects approved in Zimbabwe were still cumbersome, and had remained a limiting factor to Foreign Direct Investment Inflows.

He singled out the lengthy discussions surrounding Indian steel giant, ESSAR, which has failed to resume operations since taking over a controlling stake in the Zimbabwe Iron and Steel Company (renamed NewZim Steel) in 2011, as one example of a project where State bungling and red tape had discouraged potential investors.
Economic commentator, Eric Bloch, said there could be a slight economic improvement if government could walk the talk in terms of some of its budget proposals such as the new tax regime.

He said the manufacturing sector is at the most risk and that if downsizing or company closures persist it would be catastrophic.
“Indigenisation must not be reversed, it should be modified,” said Bloch.
Last month, former Finance Minister Tendai Biti also painted a bleak future for the economy. He pointed out at the government’s inability to increase civil servants salaries as promised during election campaigns.

“The post July 31 crisis is manifested by …rising domestic debt and sovereign debt; de-industrialisation and plummeting capacity utilisation; collapsing social services such as health and education; lack of foreign direct investment; capital flight; lack of domestic savings and systemic banking sector vulnerabilities,” Biti said.
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