Economist gets a crack at sorting out Zim chaos
But new finance minister will still be at the mercy of politics
● New Zimbabwean finance minister Mthuli Ncube is a man on a mission. Just days after being sworn in as the country’s fourth finance minister within a decade, Ncube embarked on “listening roadshows” across the country.
His first stop on Wednesday was to listen to the challenges faced by 50 executives of some of the largest corporate firms in Zimbabwe, including Delta Beverages, a unit of global brewer Anheuser-Busch InBev; retail giant Pick n Pay; mobile operator Econet Wireless; and financial services firm Old Mutual.
The challenges faced by these corporates belie President Emmerson Mnangagwa’s “Zimbabwe is open for business” mantra, aimed at courting foreign investors into the country with the promise of the ease of doing business.
The World Bank ranks Zimbabwe at 159 out of 190 economies on its Ease of Doing Business Index.
The executives told Ncube that they were constrained by “the prohibitive cost of finance, severe foreign currency shortages, high import duties, an uncompetitive business environment and bureaucracy”, the finance ministry said in a statement.
These are just a few of the challenges that Ncube must deal with in his new post, if he is to realise his boss’s ambition of turning Zimbabwe into a middle-income country by 2030.
Zimbabwe’s economic ruin runs deep. It has had no currency of its own for nine years and government debt is excessively high, estimated last year at over 77% of GDP by Trading Economics.
The external debt owed to Western lenders such as the IMF and World Bank is $10.2bn (R151bn).
Without clearance of these arrears, it is unlikely that any new lines of credit will flow into the country.
However, in contrast to previous appointments made at the finance ministry, Ncube’s appointment has sparked a modicum of market confidence.
Mnangagwa said he thought Ncube was “capable” when he explained to journalists the curious choice for his cabinet this month.
Finance ministers in the past decade have included Patrick Chinamasa, a lawyer; Ignatius Chombo, a teacher; and Tendai Biti, a lawyer.
Ncube was the chief economist and vice-president of the African Development Bank.
His regional and international contacts, economic observers said, would come in handy when he goes out to make his case for Zimbabwe’s funding from international financial institutions that have long shunned the country.
But Tony Hawkins, an economics professor at the University of Zimbabwe, said there was a limit to what Ncube would be able to do and much of the progress on the economy depended on Ncube getting buy-in from politicians.
“All that he can try and do is to influence and persuade the politicians to go the way that makes sense for the economy.
“Without that it will be difficult and could be reminiscent of what happened with the late former finance minister, Bernard Chidzero,” Hawkins said.
Chidzero, an economist, was post-independent Zimbabwe’s second finance minister, who introduced in the 1990s austerity measures that proved unpopular with ZanuPF elites.
Robert Besseling, director of Exx Africa, a business intelligence firm, said Ncube’s addition to the cabinet was aimed at facilitating an improved relationship with the IMF and other creditors whose loan repayments are in arrears.
However, Ncube has no political clout and will struggle to work with Zanu-PF’s party hierarchy and military command, Besseling said.
When he was sworn in on Monday, Ncube made known his position on the key economic direction that he wants to pursue.
The bond notes adopted in November 2015 must go, he said.
Government expenditure on salaries for public servants, currently at 97%, must be cut, and a three-year payment plan must be tabled to Zimbabwe’s debtors.
His position on bond notes, which he wants gone in the “short to medium term” is likely to be a source of contestation over the next few weeks with John Mangudya, governor of the Reserve Bank of Zimbabwe, who has been the chief supporter of the pseudocurrency.
Hawkins said that while Ncube had indicated willingness for Zimbabwe to join the rand monetary union, it would be necessary to also gauge whether SA was keen to have Zimbabwe join the four-nation union of SA, Namibia, Lesotho and Swaziland.
All that he can try and do is to influence and persuade the politicians to go the way that makes sense for the economy. Without that it will be difficult
Tony Hawkins
Economics professor at the University of Zimbabwe