HARARE – Analysts say poor economic policies, dilapidated infrastructure and political bickering in the Government of National Unity (GNU) have triggered Zimbabwe to remain one of the least competitive countries in the world.
The economy, which had been on a free-fall until the formation of the coalition government, has failed to significantly grow despite the country holding strategic minerals such as gold, diamonds and platinum.
According to the 2012-2013 Global Competitiveness Index published last week by the World Economic Forum (Wef), Zimbabwe remained on position 132 out of 144.
Economic analysts who spoke to businessdaily yesterday said unless political parties in government stop issuing conflicting policy statements and do not focus on inculcating investor confidence in the economy, Zimbabwe will remain an unfavourable investments destination.
Prominent economist John Robertson said a stable economic environment is key to global competitiveness.
“It is our choice of policies which makes us uncompetitive. If we look at the indigenisation policy, who would want to come and invest in an economy where you cede 51 percent of your shares.
“If government does not do something to scrap this policy we’ll continue to have investors making inquiries here but take their money elsewhere,” he said.
Robertson said electricity shortages, transport constraints, labour laws, liquidity squeeze and perceived country risks are some of the elements that contribute to make the economy less competitive.
“Addressing the above elements is essential but not enough.
“We have to show potential lenders that we are open for investments and we are willing to change some of our investor-unfriendly policies,” he said.
Amos Mushaninga, National Economic Consultative Forum executive secretary, said there are no surprises in the Wef list of problematic factors or indeed in Zimbabwe’s country rankings for specific aspects.
“Surprises arise not from the rankings but from the policy disconnect — the inability or unwillingness of politicians to tackle the problems identified in the Global Competitiveness Report and especially those arising from the executive surveys.
Small wonder that Zimbabwe is ranked 130 out of 144 countries for public mistrust of politicians,” he said.
Mushaninga said Zimbabwe’s rankings for wage determination policy, redundancy costs, hiring and firing practices and relating pay to productivity are amongst the worst in the world.
“Yet after three and half years in office the Government of National Unity has made no effort at all to tackle these constraints on the economy,” he said.
Economic analysts contend that a country ranked bottom for national savings and country credit rating and with a dismal record in the field of property rights observance (seventh from bottom) should be seeking to implement an indigenisation policy illustrates the disconnect between economic rationality and political posturing.
Zimbabwe is amongst the worst in the world for country credit rating, for investor-hostile rules and regulations, for national savings, for venture capital availability for the quality of electricity supply and for foreign direct investment and technology transfer.
Confederation of Zimbabwe Industries (CZI) president Kumbirai Katsande recently emphasised the need for government to create an enabling economic environment to attract foreign investments.
“But we must stress that money, however much it is, cannot make up for poor economic policies. So we urge the government to keep reviewing our policies so that we are a competitive investment destination,” he said.
While the Global Competitiveness Index is open to criticism on a number of counts, its findings and league tables are carefully appraised and analysed by corporate leaders, investors and policy makers.
The World Economic Forum contends that though there has been a semblance of economic stability on the local market, much still needs to be done to ensure macro-economic stability.
“Zimbabwe remains stable at 132 position. Public institutions continue to receive a weak assessment, particularly related to corruption, security, and government favouritism, although overall the assessment of this pillar is better than it was just a few years ago.
“And despite efforts to improve its macro-economic environment, including the dollarisation of its economy in early 2009, which brought down inflation and interest rates, the situation continues to be bad enough to place Zimbabwe among the lowest-ranked countries in this pillar (122nd), demonstrating the extent of efforts still needed to ensure its macro-economic stability,” read part of the study.
On the other hand, some major concerns linger with regard to the protection of property rights (137th), where Zimbabwe is among the lowest-ranked countries, reducing the incentive for businesses to invest.