Mugabe back from leave as Zim woes deepen

Harare - President Robert Mugabe returned home on Thursday from his lengthy annual holiday abroad to face the hard reality of a further slowdown in the already struggling economy he had left behind. Experts are now saying that lack of reform and the government's unwillingness to address the economic environment will muzzle growth prospects for 2015 to a lowly 1%.

Projections by the International Monetary Fund (IMF) and Finance Minister Patrick Chinamasa show Zimbabwe’s economy will grow by an ambitious 3.2% this year. However, analysts and economists insist that this is highly unlikely owing to subdued mineral prices and continued curtailment of domestic productivity.

Bankers Association of Zimbabwe president Sam Malaba said on Thursday that the country could be looking at a growth rate of 2% or just 1% in 2015. He noted that merely being endowed with minerals does not automatically translate to a bumper harvest of investments for Zimbabwe.

"Do not assume that because you have minerals, investors will come to you. We need to modify our indigenisation laws to attract investors," he said at an economic symposium hosted by the Confederation of Zimbabwe Industries (CZI) in Harare on Thursday.

He said the government needs to do much more to attract foreign direct investment, and highlighted that neighbours such as Zambia and Mozambique are also vying for the same investors.

Zimbabwe needs reforms and policy measures aimed at drawing foreign investors with the much-needed capital required to breathe capacity and liquidity into the economy to boost its attractiveness as a preferred investment destination, he said.

“The issues are known. We need to create political will and accountability on non-implementation. It is about the bureaucracy in the system (and) it is about the respect of property rights and bilateral agreements,” Malaba told government officials and business executives attending the symposium.

Economy has tipped into deflation

Renowned Zimbabwean economist Professor Tony Hawkins said the country's competitiveness deficit would deepen on the back of a lack of policies aimed at stabilising the currency overvaluation and the business competitiveness environment.

Zimbabwe’s economy has now tipped into deflation amid continued fears from the populace that the country may speedily reintroduce the Zimbabwe dollar.

Mugabe returned home on Thursday from the Far East, where he spent more than a month. His wife Grace had undergone an operation and therefore remained behind, he said on arrival at Harare international airport.

Reports however say the ageing ruler, who turns 91 next month, also sought attention from health experts in the Far East. Mugabe will celebrate his 91st birthday in the resort town of Victoria Falls in the next few weeks, with state parastatals and other private companies expected to bankroll the lavish birthday bash.

Zimbabwe’s economic woes have been compounded by its precarious debt situation, which has seen the country accumulate an external debt overhang that has shot above US$7bn. This has deterred financial institutions such as the IMF and World Bank from advancing finance packages to the country.

IMF country representative in Zimbabwe Christian Beddes said the institution is working on restoring relations with Zimbabwe. The country's debt to the IMF has now surged to about $120m, said Beddes.

“We have no financial involvement with Zimbabwe at the moment but we are in the process of trying to fix that,” he said.