Mnangagwa’s speech is far removed from the reality on the ground, where the exchange rate is galloping, exerting inflationary pressures on an already fragile economy.
During his Sona at State House yesterday, that coincided with the opening of the Fourth Session of the 9th Parliament, Mnangagwa painted a rosy picture, maintaining that the economy will grow by 7.8% notwithstanding the headwinds currently bedevilling the exchange rate and low productivity.
Buoyed by a largely successful 2020/21 agricultural season, the government maintains that the economy is poised for a rebound. Mnangagwa also insists that the foreign currency auction system, which has been blighted by abuse from top businesses linked to the administration, had stabilised the financial sector.
“The financial sector is stable with the foreign currency auction performing well and accessed by both large and small to medium size businesses.
“Going forward my government will ensure that the platform is adequately resourced and that the relevant authorities enhance efficiencies within the system,” Mnangagwa said.
The President’s assertions are far removed from what is obtaining on the market, where the parallel market exchange rate is galloping, exerting inflationary pressures on the economy.
Last week, the monetary authorities revised annual inflation targets upwards, before lining up a fresh set of policy proposals to the government.
They fear the parallel market rates are surging beyond control. Zimbabwe recently witnessed further depreciation of the parallel market exchange rate from about ZW$130 per US dollar to about ZW$160 per US dollar, implying a parallel market premium of above 70%.
Former Finance minister Tendai Biti said the Sona was devoid of truth.
“He speaks of a stable economy, but the premium exchange rate is galloping. Prices are running amok and there is no macro-economic stability,” Biti said.
Mnangagwa said the mining sector is set to grow by 11% this year on the backdrop of programmes that increase exploration and expansion projects, that includes the resuscitation of closed mines and opening of new ventures, as well as mineral beneficiation and value addition.
However, he did not address rampant leakages of the country’s minerals, where large quantities of gold have been smuggled out of the country through porous borders.
Leakages have been bleeding the economy of billions in revenue. Mnangagwa added that the manufacturing sector, which has been hit badly by the Covid-19 pandemic, is registering improved industrial capacity utilisation.
Import-substitution policies and ease of doing business had also aided in the recovery of the manufacturing sector, Mnangagwa said.
Economist Prosper Chitamba said: “Capacity utilisation in industry is also on an upward trajectory. Yes, there are some downside risks, but overall, the positive factors still outweigh the negative factors.”
Chitambara believes Zimbabwe has a realistic chance of turning around its fortunes.
“The economic projections are fairly realistic in my view, especially given the fact that we are emerging from a very low economic base caused by two successive years of economic decline in 2019 and 2020.
“The highly successful agricultural season, the firming of commodity prices, and the modicum of macro-economic stability, though volatile, will drive that recovery,” Chitambara said.
However, Biti said the Sona was a charade and far removed from reality.
“It is like he is living in another country. It is made for people living in another country and it is a shame,” Biti said.
He added that the Sona exposed Zanu PF’s detachment from the lived realities of citizens.
“It serves no purpose and exposes the emperor Zanu PF. This is a self-praising document. It is like going out naked and you start beating your chest, but the fact remains you are naked. He speaks of a stable economy, but the premium exchange rate is galloping,” Biti said.
In bid to improve infrastructural development, the government has spent 34% of total expenditure on key infrastructure.
“The ongoing Phase 2 of the Emergency Road Rehabilitation Programme is, indeed, transformational across all provinces, districts, cities and towns.
“Local resources are being put to good use, while local contractors are empowered and the commuting and trading public is experiencing the added convenience,” Mnangagwa said, adding that the government was planning to spend more on buses to curb unrelenting transport challenges.
Zimbabwe has been facing transport challenges since the government banned private transport operators.
Mnangagwa commended the frontline workers for their sterling work in fighting Covid-19, maintaining that the government was on course to achieving its herd immunity. Zimbabwe has inoculated 10% of its targeted 60% by December.
The government has an unrealistic chance of achieving this feat amid indications the vaccination rates are slowing down.
“I, however, call upon all of us to heighten our determination with regards to continued vaccinations in order to meet our desired national herd immunity target,” Mnangagwa pleaded.
Mnangagwa addressed the worrying drug abuse by the country’s youths, promising that security forces would be more involved in cleaning up the streets.
Drug and substance abuse has been described as a epidemic within a pandemic, with Zimbabwe risking losing a generation.
“Government also notes with grave concern that some sections of our youth are under siege from the scourge of drug and substance abuse. This situation threatens the very core of our future as a country and cannot go unchecked.
“As such, the recently set up inter-ministerial committee has been tasked with finding lasting solutions to reverse and end this disconcerting trend. Our security services are equally seized with the matter,” he said.
Mnangagwa also promised to expedite the alignment of the constitution with existing laws, a process which has been dragging since he was Justice minister. Conspicuously absent from his speech was how Zimbabwe will tackle corruption, create employment and deal with government inefficiencies. Newshawks