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Political Stalemate Hits Economy

No one wants to buy or sell as long as it remains unclear which way the country is heading politically.
By Jabu Soko
The frozen political process in Zimbabwe has done further damage to the country’s troubled economy, causing a virtual shutdown of activity in many sectors as buyers, sellers and lenders hold off on making business decisions until the picture becomes clearer.



“The economy is suffering; business and individuals are failing to make binding decisions,” John Robertson, a Harare-based economist and businessman, told IWPR.



“It is proving difficult for people to decide their future. Investors can’t make decisions right now.”



Analysts say businesses need to be agile when deciding their next move in a hyperinflationary environment like Zimbabwe’s, but the political impasse is blocking this kind of decision-making.



“In fact, the country has not been at work for the past two or so weeks as people await the release of the presidential polls. The longer the delay, the greater the harm to people’s health and the economy,” said Robertson.



Useni Sibanda, coordinator of the Christian Alliance, which has put out a statement imploring the government to release the presidential results, said, “It has become difficult for everyone – from chief executives to street hawkers – to plan. Everyone is in suspense.”



The result of the March 29 presidential election has still not been released, and there are fears a partial recount that began this week will skew the result in favour of the incumbent Robert Mugabe.



The opposition Movement for Democratic Change, MDC, insists its candidate Morgan Tsvangirai won a clear majority, but last week it lost a court action to force the Zimbabwe Electoral Commission, ZEC, to release the figures.



The recount is taking place in 23 of the 210 constituencies, and covers parliamentary and local election as well as the presidential ballot.



Tsvangira’s faction of the MDC won the parliamentary election outright with 99 seats in the lower house against the ruling ZANU-PF’s 97, and the smaller MDC group taking another ten seats. If the recount reverses the result in only nine constituencies, ZANU-PF will regain control of the National Assembly.



The ZEC recount now looks like it might take longer than the three days originally envisaged.



Business, analysts and ordinary Zimbabweans say the delay in wrapping up the election results is bad for the economy.



Mara Hativagone, president of the National Chamber of Commerce, said key decisions in industry had stalled, as companies waited to see which way things would go after the election results were announced.



“Most businesses have shut down until the announcement of election results,” Hativagone said.



“Those who are still operating are doing so at a very low scale. The outcome of the elections will determine the decisions that companies will make. However, it does not mean that there is nothing going on in companies; some are manufacturing.”



A number of firms have cut their working week to just two days – Mondays and Fridays – because of lack of raw materials as executives delay placing orders.



In the past few weeks, commodity shortages have worsened in supermarkets, again due to reduced deliveries, and prices have surged even higher in response. Even the once-flourishing parallel market, where a month ago it was easy to obtain basic commodities that are scarce in the shops, has hit hard times.



The uncertainty has also caught up with the real estate sector. Industry insiders say the market has gone to sleep as potential sellers hold onto their properties.



Matthias Kufandirimbwa, a property analyst, said people were awaiting the outcome of the elections before making firm decisions on property investments.



“It is difficult for people to make decisions now. Nobody is willing to sell his or her property and no one is willing to buy. A political settlement is needed now more than ever, because as a country we need to move forward,” he said.



The mood of indecision is even affecting people who exist on the margins of the economy.



Patricia Mpofu, 33, a subsistence farmer on the outskirts of Harare, has had to defer expanding her poultry business, as the banks are reluctant to lend money because of the uncertainty.



“My bank had promised me money, but now they are saying wait until the results,” said Mpofu. “Everything seems to hinge on the presidential outcome.”



Percy Zvauya, 40, a self-employed trader who buys basic goods in South Africa and brings them back to sell to major supermarkets in Harare, has had to halt his weekly shopping trips to the border town of Musina.



Zvauya said the supermarket owners he had been supplying with tinned fish, beans, cooking oil, salt and flour had advised him they would only start buying from him again after the ZEC released the results.



“The supermarkets are not taking any orders right now,” he said.



A tour of major supermarkets and general traders in Harare’s central business district showed that the majority had not re-stocked their shelves since election day.



Analysts say that if Tsvangirai were to be awarded victory, it would restore confidence in the economy.



Multilateral lending organisations are reportedly promising to pump in massive back-up funds for Zimbabwe in the event of an MDC victory.



Tsvangirai says the MDC has secured pledges of ten billion US dollars from the international community to kick-start the failing economy that has been ravaged by chronic shortages of fuel, electricity and basic goods, a lack of foreign currency to fund imports, and inflation that is now said to have topped 165,000 per cent year on year.



The opposition leader has also promised that if he wins, he will hold a reconstruction and development conference later in the year to bring back foreign investment.



Jabu Soko is the pseudonym of a reporter in Zimbabwe.

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