Time is running out

THERE are two important factors that pushed Zimbabwe to the swamps during the 2000 to 2008 economic crisis. These include the use of unbridled force, threats and arrests to cow industrialists into accepting bad policies, and failure by Tripartite Negotiating Forum (TNF) partners to address concerns that were being raised by government, business and labour. Instead, the joint operations command (Joc), a grouping of securocrats, assumed a shockingly important role in crucial economic decisions, making Zimbabwe one of the few countries where critical economic issues would not pass without this clique’s blessings.

Raids on chief executive officers (CEOs) became history after the late strongman Robert Mugabe agreed to dollarise the economy in February 2009, while the TNF’s relevance was defused by the radical monetary policy changes.

But in the past few weeks, the Zimbabwean dollar has been devaluing rapidly on the parallel market since its return in 2013.

The domestic unit has been depreciating at breakneck speed against the US dollar, piling fresh inflationary pressures and driving prices beyond the reach of millions. Zimbabwe has walked through the same road that it trudged through between 2000 and 2008.

Tempers flared last week, when Finance minister Mthuli Ncube stunned the nation after issuing threats to cage CEOs dabbling in backstage forex deals. It is generally agreed that businesses found on the wrong side of the law must be punished.

But the government must be careful because the complexity of the crisis at hand may see innocent managers being punished for trying to save their businesses, and thousands of jobs.

When raids were mounted against CEOs before, the government created a far more deadly crisis — animosity spiralled and delinquency took centre stage due to the uncertainties created by the violence.

Basic commodities disappeared from formal marketplaces and resurfaced on the expensive black market. Critical commodities such as fuel were being imported and offloaded straight to the black market, at extremely expensive prices which ended up stalking inflation rates to 500 billion percent in 2008, and precipitating the collapse of the Zimbabwean dollar. It did not end well.

Foreign investors were scared away by the arrests and the turbulence that followed, turning Zimbabwe into one of the worst destinations for capital.

Today, investors are still scared, foreign direct investment inflows into Zimbabwe, at about US$500 million per annum, is only one tenth of what some southern African peers have been receiving.

Recovery hopes have been thrown into uncertainty due to the reemerging threats and troubles confronting the foreign currency auction system, a vital cog in efforts to rebuild the economy.

Introduced only a year ago, the foreign auction has been thrown off balance by shortages of foreign currency.

And if it is to collapse, it will be another case of history repeating itself — another foreign currency auction system collapsed only a few months after introduction in 2004, sending markets into jitters.

Perhaps instead of pursuing destructive confrontations, it is time parties to the TNF reconvene to try to map the way forward in a civilised manner.

Time is running out.