Poor showing at ZITF reflects state of economy

The poor showing at the just-ended Zimbabwe International Trade Fair (ZITF), dubbed as the country’s trade showcase, is a reflection of the deteriorating state of the national economy, observers say.

Though over 600 exhibitors attended the fair, some said business had been very poor. One exhibitor said he did not see any point in participating at next year’s fair if things remained the way they were.

“At previous fairs we used to get up to 200 business inquiries a day. This year, we are hardly getting 10, even from children,” the exhibitor, whose company is celebrating its silver jubilee next year, said.

An observer said the poor showing did not surprise her. “The trade fair mirrors the state of the nation’s economy,” she said.

The economy, which had started improving following the introduction of a new monetary policy by central bank governor Gideon Gono in December 2003, seems to have come to a standstill following the March 31 parliamentary elections.

Inflation dropped from 623 percent in January last year to 123 percent in March this year. Foreign currency inflows improved from US$301 million in 2003 to US$1.7 billion last year. Basic commodities that had disappeared from supermarket shelves were back. The parallel market had dried up after the introduction of the foreign currency auction system.

But things are back to square one. The parallel market is back with a vengeance. The Zimbabwe dollar is trading at around $30 000 to the pound, $20 000 to the greenback, $4 500 to the pula and $3 200 to the rand.

Basic commodities have once again disappeared from the shelves. Other products such as matches, washing powder, toothpaste and razor blades have also disappeared.

“The situation is bad simply because political expedience has superceded economic rationale,” economist Godfrey Kanyenze said.

“As former University of Zimbabwe vice-chancellor Professor Walter Kamba once said, unprofessional thinkers are now meddling in the country’s monetary policy.”

Kanyenze said the country now had a bloated government, which had accommodated more than a third of the 150 Members of Parliament. It was on a spending spree for things that had not been budgeted for. It was planning to establish a senate and was buying fighter planes.

“We are in trouble because of the politics of appeasement. ZANU-PF is trying to solve its internal contradictions at the expense of the taxpayer. All the various factions within ZANU-PF have been brought together to the table. And this has serious implications on the economy.”

President Robert Mugabe’s new administration has 31 ministers, 19 deputy ministers, 10 provincial governors, two vice-presidents – taking 62 of the 150 members of the House.

“All this is happening when we have a serious food shortage. (The country is importing 1.2 million tonnes of maize to avert famine). What this simply shows is that the government has reverted to its old habit – an appetite for unbudgeted for expenditure.

“Even the so-called ‘Look East’ policy has a cost. One might even ask, where has all the foreign currency gone when inflows were on the increase?”

Gono, in his monetary review statement in January, said foreign currency inflows into the country had improved from US$301 million in 2003 to US$1.7 billion last year. He expected inflows to improve to US$3.05 billion this year and to US$3.9 billion next year.

“For the economy to operate smoothly,” Gono said, “the country needs monthly inflows of at least US$250 million or US$3 billion annually.”

Kanyenze said the government was resisting devaluation when it was one of the solutions to the foreign currency crisis and curbing the black market. It was also going back to price controls when it had clearly been demonstrated that they did not work.

“Price controls only worsen shortages of goods. It looks like ZANU-PF has adopted a reckless abandon and an I-don’t-care-attitude after the March 31 elections. The issue of succession now seems more important than solving the country’s economic problems,” he said.

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