Zimbabwe think tank Econometer Global Capital predicts a bumper tobacco crop for the country in 2015

In 2015 Zimbabweans will be looking to their government to enact and implement prudent policies to revive the moribund economy which has taken a severe battering for close to two decades. In that period political strife within and among the major political parties took center stage, overshadowing social and economic development.

For the greater part of the years from 2000 to the present day, the economy suffered as the ruling Zimbabwe African National Union-Patriotic Front (ZANU-PF) led by President Robert Mugabe expended its energy on fighting off the challenge posed by the opposition Movement for Democratic Change (MDC) and its offshoots. After securing a resounding yet disputed victory with more than a two-third majority in the 2013 elections, ZANU-PF surprised many by turning the sword on itself in vicious infighting. It saw former Vice President Joice Mujuru fired along with 15 ministers and several senior party officials. They were accused of plotting the ouster of Mugabe.

Now the party and the government should turn their attention to the economy. 

Growth challenges

Economic experts say that difficult as it may be, substantial growth, which will translate to improved living standards, is achievable if the ZANU-PF ends infighting and attends to critical economic fundamentals.

The past year ended with all indicators showing the economy was heading south. Sifelani Jabangwe, a senior official at the Confederation of Zimbabwe Industries, the nation's largest body of manufacturing companies, said Zimbabwe's manufacturing capacity utilization fell to around 30 percent. In 2013 it was 39.6 percent. Capacity utilization is a measure of the extent to which factories use their installed productive potential.

There was some respite following the adoption of a multicurrency regime in 2009. There was a marked increase in industrial performance, with capacity utilization recorded at 32.3 percent in the first half of 2009, 43.7 percent in 2010 and 57 percent in 2011. But from 2013 the picture has been bleak and industry has been grappling with increasing retrenchments. Workers are being fired as companies continue to close and service delivery deteriorates. According to sources at the Retrenchment Board, more than 6,020 workers were laid off from January to November 2014.

Eonomic blueprint

Through all this, the ZANU-PF and the government have been aware of the problems and came up with an ambitious economic blueprint, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation, dubbed ZimAsset. According to the government, ZimAsset requires about $27 billion to be fully implemented by 2018, but so far, the funds have not been forthcoming.

But according to Eddie Cross, an opposition legislator, the international apathy toward Zimbabwe's efforts to revive its economy may change. However, he said the change will come only if the government moves beyond its rhetoric of good intentions and fully adheres to the rule of law, amends indigenization laws and respects property rights.

Following the ZANU-PF's victory in the July 2013 general elections, Finance Minister Patrick Chinamasa spent the greater part of that year and 2014 pleading with diplomats to persuade their countries to invest in Zimbabwe. The envoys cited the frustration and uncertainty bred by the country's controversial indigenization policy. According to it, companies that set up shop in Zimbabwe have to cede 51 percent ownership to indigenous Zimbabweans. Chinamasa promised amendments to the law but they have not materialized.

"It is clear that with the regulations as they stand, there is very little chance of foreign investment taking place," Cross told ChinAfrica. He pointed out that the international community was skeptic about the government's respect for property rights as long as the indigenization law remained in its current format. That skepticism was responsible for the country's poor foreign direct investment (FDI) showing. FDI fell by a whopping 53 percent in the first 10 months in 2014 to $147 million from the $311 million received in the same period in 2013.

Cross also said the government urgently needs to address property rights issues, which have resulted in farmers losing assets worth over $30 billion without compensation.

From 2000, the government embarked on a land reform program which saw over 6,000 mainly white commercial farmers losing their land as the state sought to distribute it among the indigenous black population and redress colonial imbalances.

However, it failed to compensate the former farmers as well as foreigners who had acquired properties under the Bilateral Investment Promotion and Protection Agreement (BIPPA). This, coupled with the indigenization law, has seen the international community shun Zimbabwe and classify it as an unsafe destination for FDI.

Cautiously optimistic

But changes could be in the offing. The ruling party has admitted the error of its ways in its recently released Central Committee report and promised to halt further land expropriations until it finds money for compensations.

"A decision has been taken by the ZANU-PF and the government that we avoid acquiring, for now, BIPPA-protected farms to limit the country's obligations," the report said.

The party has also acknowledged the need to compensate white farmers, saying "the funds provided have been inadequate to the extent that up to 2014, only 210 out of 6,214 former farm owners have been paid either fully or partially. To date, only 1,250 out of 6,214 farms have been valued." It went on to further state that the "Ministry of Lands and Rural Resettlement has been requesting Treasury to provide funds to meet this obligation."

Pedzisayi Ruhanya, social analyst and Director of Zimbabwe Democracy Institute, a local think tank, has welcomed the pronouncements, especially on BIPPA, saying they suggest that the ZANU-PF wants to do business with the international community now, hence the talk about doing things the proper way and refraining from violating bilateral agreements.

"As land reform is no longer irreversible, [being] a constitutional issue agreed to even by the opposition, what now needs to be done is rationalization to make the land commercially viable. BIPPAs [should also be respected] so the country can do business with the international community," said Ruhanya.

Econometer Global Capital, a local economic think tank, forecasts industrial capacity utilization will increase to 38 percent in 2015 while real gross domestic product growth will average 1.2 percent in the fiscal year. "A bumper harvest is expected with maize, tobacco, horticulture and dairy to contribute much more significantly compared to last year," its socio-economic outlook report, 2015 Through the Windscreen, said.

While this is a far cry from the 6.4-percent growth hoped for by Chinamasa, these are promising signs of an economic take-off. Much will depend on the government and ruling party's resolve to follow through on rhetoric and implement prudent socio-economic policies.

(Reporting from Zimbabwe)