PRESIDENT Emmerson Mnangagwa’s administration faces a mammoth task to steady the ship and deliver the goods as pressure mounts from all angles amid massive economic, social and political turbulence which is shaking the country to the core.
Mnangagwa is swimming against the tide as he seeks to salvage the country’s fragile economy as well as assert his political legitimacy, five months after winning a disputed poll by a wafer-thin margin.
The government is agonising over currency reforms, at a time the administration’s insistence that the US dollar is equal to the bond note has aggravated economic instability and currency volatility, leading to price hikes, inflationary pressures and erosion of savings and balance sheets.
Foreign currency shortages have worsened, resulting in government failing to provide adequate funds for fuel, importation of raw materials, medical drugs and other critical needs.
As the economic crisis worsens, Zimbabweans are increasingly losing faith in the Mnangagwa administration.
About 70% of Zimbabweans have no confidence in Mnangagwa’s leadership, according to a survey by the Zimbabwe Council of Churches (ZCC) released this week.
“Many people have a low opinion of the willingness and capability of government and other leaders to resolve pressing challenges due to lack of clarity of communication on the nature of the problems and how they are being addressed,” the ZCC said.
The Confederation of Zimbabwe Industries (CZI) yesterday warned that if government does not urgently resolve the forex shortage as well as the currency volatility, many manufacturing companies risked shutting down within the next 30 days.
The manufacturing sector is struggling to access foreign currency required to import raw materials key towards sustaining operations.
Delta Corporation, the largest firm by market capitalisation, is in a precarious position and faces the gloom prospect of halting its business operations in the face of an unrelenting economic maelstrom.
Medical doctors at public hospitals yesterday ended a 40-day strike pressing to be paid in US dollars and better working conditions, bringing relief to government but, hours later, the civil service unions rejected a 10% salary increase offer by government, to be effected in April, saying the amount was inadequate given the rising cost of living.
After a crunch meeting which lasted over four hours yesterday at the Kaguvi Building in Harare, the government team led by Simon Masanga and the Apex Council led by the chairperson Cecilia Alexandra failed to reach an agreement.
“We are just coming out of the NJNC (National Joint Negotiating Council). The purpose of the meeting was to get a response from government on a position that we presented in November 2018, which was amounting to $1 733 for the least paid worker in government. We submitted this in November and it is quite disturbing that government brought a 10% offer which translates to only $41 for the least paid civil servant,” Alexandra said.
“And as Apex Council negotiators we have rejected this offer in totality and now we are going to give feedback to our constituency who will advise us on the way forward.”
Salaries for most low-income earning civil servants are pegged around $500, which is paid in the bond note currency through the Real-Time Gross Settlement (RTGS). The bond note, which government ironically insists is trading at par with the greenback, has lost value threefold over the past few months.
While an unrelenting economic crisis persists at home, Finance minister Professor Mthuli Ncube is attending the European Union (EU)-Africa conference where he is also pushing Zimbabwe’s reform agenda and advocating for economic support.
The bloc and other leading creditor nations — including the US — have insisted that Zimbabwe needs to implement political and economic reforms before accessing fresh funding. Creditor nations have also insisted Zimbabwe should first pay its debts to multilateral institutions before accessing fresh funding.
The reforms include significantly cutting the government wage bill, which is now a challenge given the demand for salary increases by civil servants.
Mnangagwa will also travel to Belarus, Russia, Azerbaijan and Kazakhstan as part of a spirited crusade to attract fresh investment capital required to turn around the southern African country’s weak economy. He is also due to fly to Switzerland to attend the World Economic Forum at Davos, but such trips have yielded little in the past. At the heart of Zimbabwe’s economic conundrum, Mnangagwa is also battling to settle a domestic debt that soared more than 34-fold within six years, from US$275,4 million in 2012 to the current levels of US$9,5 billion, largely fuelled by government’s excessive issuance of Treasury Bills. With no bailout package in sight, the weight of expectation is weighing down heavily on Mnangagwa’s administration as he battles to salvage confidence among Zimbabweans.
Among those who have spurned his advances for a major rescue package is Zimbabwe’s close ally China, often touted by Harare as an all-weather friend.
Political analyst Piers Pigou says Mnangagwa’s administration lacked the political will to institute reforms, crucial towards unlocking funding from international financiers.
“Financial relief from the international financial institutions is unlikely anytime soon. The government plans to repay debt arrears by late 2019 and serious budgetary support can only come after this is resolved, but also only on the basis of putting in place deeper reforms, which the government will struggle to implement based on current form,” he said.
— Zimbabwe Independent