New Zimbabwe Leader Faces Herculean Task Of Economic Restoration

New Zimbabwe Leader Faces Herculean Task Of Economic Restoration

Whoever is elected Zimbabwe’s president faces the onerous task of getting the economy going after years of economic malaise, partly due to lack of investor confidence and wanton disregard of property rights, economic experts say, according to a report in ZimbabweIndependent.

Incumbent President Robert Mugabe claimed victory in Zimbabwe’s presidential election but opponents dispute the outcome, saying, “We do not accept it,” according to a report at PressTV.com.

Under Mugabe’s 33-year reign, Zimbabwe’s gross domestic product shrank through 2008 by as much as 60 percent, according to International Monetary Fund data. Inflation rendered the currency almost worthless.

Given the heightened threats by Mugabe at his election rallies to take over companies, whoever wins the presidential election will have the unenviable task of restoring a sense of investment security in the minds of potential investors and financiers, said Economist Eric Bloch in the ZimbabweIndependent report.

Economists say the No. 1 thing needed to get Zimbabwe’s economy going is to repeal or sanitize the Indigenization and Economic Empowerment Act. Some say it’s part of an agenda by the ruling elite to parcel out companies to themselves and the well-connected.

“Whoever comprises (the next) government and whoever is going to be president, will have to: restore a sense of investment security in the minds of potential investors and financiers by substantively modifying the indigenization and empowerment policies and laws so they are constructive and do not alienate investor security; observe compliance with bilateral investment promotion and protection agreements; re-align taxation legislation in accordance with what is prevailing elsewhere in the region; and reconcile with the presently alienated entities within the international community,” Bloch said.

The new government must also rein in runaway government spending, Bloch said. Civil servants’ salaries eat up $2.6 billion, or 70 percent of the government’s total revenue collections.

Also of concern are Mugabe’s intentions to re-introduce the Zimbabwe dollar once re-elected, the report said. The economy is not ready for the Zimbabwe dollar’s return, experts say.

The right pre-conditions would include sustainable macro-economic stability, accumulation of adequate foreign exchange reserve buffers and infrastructure rehabilitation, said Reserve Bank of Zimbabwe Governor Gideon Gono.