Above all four hard facts must be acknowledged.
- First, there are no quick fixes for the Zimbabwe economic crisis. Decades of under-investment and inappropriate policies are responsible for the current situation. On average, says the IMF in its most recent report on Zimbabwe (July 2017) it takes a decade for a fragile economy (like Zimbabwe) to overcome its fragility. Those in the investment commentariat need to take such comments into account.
- Second, the economic pain that Zimbabwe is likely to experience in 2018 is already programmed into the system. According to US academic, Professor Steve Hanke, Zimbabwe can expect inflation of over 200% over the next two years. Hanke, who hails from the eccentric end of the profession may be unduly pessimistic and more sanguine local economists hope that it can be kept to 50%, but it is hardly a positive omen for an administration going into elections in the second half of 2018.
- Thirdly, will the new administration be prepared – or able – to implement the tough austerity measures necessary to stabilise the economy in the run-up to elections? The smart money says no. A wage freeze, cancellation of bonuses, job layoffs in the public service including the military, higher utility tariffs to restore viability to the parastatals, and spending cuts across the public sector are not measures any government would wish to implement ahead of elections.
- Finally, there is the employment problem. President Mnangagwa says the key is agriculture. Look elsewhere in emerging markets and you see that agriculture sheds jobs which are created, mostly these days, in services and some in industry. If agriculture is to competitive internationally, especially in a country like Zimbabwe vulnerable to climate change, it must raise productivity, which usually, means fewer not more farm jobs. – The Source
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