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Critics Say RBZ Monetary Policy Won't Revive Crumbling Economy

FILE - Tobacco was once Zimbabwe's economic mainstay before the invasion of white commercial farms by Zanu PF-aligned activists 14 years ago.

A day after central bank chief John Mangudya delivered his maiden Monetary Policy Statement, there has been a lukewarm response from business, labour and economists, with many agreeing that his statements alone are not enough to stimulate economic growth in the country.

The country’s economy, long mired in recession, is under-performing in almost every sector since President Robert Mugabe won a disputed election last year.

The ruling Zanu-PF party blames the country’s economic problems on European and American sanctions, but Mr. Mugabe’s critics blame it on corruption and inconsistent economic policies.

Mangudya, in his policy statement under the theme; ‘Back to Basics: Setting the Tone for Zimbabwe’s Economic Recovery”, admitted that foreign investment in Zimbabwe more than halved in the first six months of the year with the country attracting a paltry $67 million compared to $165 million during the same period last year.

The central bank chief said the economic ills were caused by a number of factors which include, tight liquidity conditions, company closures, rising formal unemployment, low production levels, non-performing loans and a disproportionate trade balance.

Mangudya, who became central bank governor in May, taking over from Gideon Gono, urged the government to make its indigenisation policy clearer by issuing guidelines for investors.

According to the country’s indigenization law, black Zimbabweans must own 51 percent of shares of foreign companies.

The law is blamed by many economists for causing investor flight.

Mangudya told Studio 7 that despite all economic indicators pointing south, he is confident that the country can turn around its fortunes.

President of the Confederation of Zimbabwe Industries, Charles Msipa, said without a currency of its own, the country’s central bank chief has no room to manouvre.

Secretary general of Zimbabwe Congress of Trade Unions,, Japhet Moyo, concurred, saying Mangudya’s task is unenviable as government policies are inconsistent.