Zimbabwe Ex-Finance Boss Sees Potential $100 Billion Economy

(Bloomberg) -- Zimbabwe’s opposition could expand the size of the economy more than fivefold to $100 billion within eight years if it wins this year’s elections, a former finance minister said.

The first elected government since Robert Mugabe stepped down in late 2017 under pressure from the military will inherit an economy shattered by almost two decades of upheaval including a failed land reform program, hyper-inflation, Western sanctions and mass emigration. Zimbabwe owes at least $11 billion to lenders such as the African Development Bank. The World Bank estimates current gross domestic product at about $16 billion.

“Part of our agenda is to rebuild the economy,” Tendai Biti, a member of the southern African nation’s main opposition alliance who served as finance minister from 2009 to 2013 in a coalition government, said in an interview Wednesday at Bloomberg’s office in Johannesburg. “We want to build a $100 billion economy within the next eight years -- and it’s possible.”

Mugabe’s 37-year rule was brought to an end by the military and his own Zimbabwe African National Union-Patriotic Front in November, with former intelligence chief Emmerson Mnangagwa sworn in as interim president until elections that must be held by Aug. 22. Since taking over, Mnangagwa has embarked on a global campaign to attract back business and investment. Biti says he hasn’t achieved much.

Unity Government

Biti, 51, was a minister in a unity government in which Zanu-PF shared power with the opposition Movement for Democratic Change, from which he later split after the MDC was defeated in disputed elections in 2013. Annual economic growth averaged 10.5 percent between 2009 and 2012, according to the IMF, after Zimbabwe abandoned its own currency and reforms in the mining and services industries bore some fruit. Growth slowed in 2013.

“Since Emmerson took over, the economy has actually turned down, the statistics don’t lie,” Biti said. “You can’t get a single dollar out of a bank, there’s a big increase in queues, there’s an increase in inflation. Chickens have come home to roost, in a big way.”

Annual inflation in the country with the world’s biggest platinum reserves after South Africa accelerated to 3.5 percent in December and January, from 3 percent in November. It slowed to 3 percent in February and 2.7 percent in March.

Biti, whose People’s Democratic Party is in talks to rejoin the MDC, said Zimbabwe’s economy has the potential to expand as much as 8 percent per year and has described the vote as the country’s most important in a generation. Nelson Chamisa, a 39-year-old lawyer, will run as the coalition candidate. If elected, Biti said the opposition could enact reforms including:

  • Stabilizing the public wage bill, which accounts for 90 percent of the budget, by eliminating so-called “ghost workers’’ from the more than 500,000-strong workforce
  • Tackling a fiscal crisis by reducing the country’s debt exposure
  • Exploring the privatization of some state-owned enterprises such as Air Zimbabwe
  • Ensuring Zimbabwe properly benefits from its diamond resources through a new mines and minerals act
  • Eliminating corruption, reducing bureaucracy and the cost of doing business
  • Guaranteeing security of tenure for landowners without undoing the land reform program, which saw the seizure of white-owned farms
  • Compensating farmers whose land was taken for both their real estate and improvements such as dams
  • Investing in agro-processing and finding as much as $3 billion for irrigation projects

In its 2018 fiscal plan, the National Treasury forecasts growth of 4.5 percent growth, up from an estimated 3.7 percent in 2017. It expects the economy to expand 5.6 percent next year and 6 percent in 2020.

“Whatever government that takes over in 2018 is going to have a lot on its shoulders,” Biti said. “It’s a failed state.”

©2018 Bloomberg L.P.