Challenge: Raising a moribund economy

HARARE, (IRIN) – Financial aid is vital to the recovery of Zimbabwe's once vibrant agricultural and industrial sectors, but will only come if the new inclusive government speedily adopts "comprehensive and workable frameworks" to address the dire economic straits prevailing, analysts told IRIN.

"Financial aid is basic to the agricultural recovery programme, just as it is to the whole economy. Those that are willing to assist will be cautious because they want to see what sort of policy frameworks are put in place before committing themselves," Sam Moyo, a land expert, told IRIN. The frameworks alone "could take months to put in place, and real work has to start after that".

Zimbabwe’s main political rivals – President Robert Mugabe’s ZANU-PF party and the two factions of the Movement for Democratic Change (MDC), led by Morgan Tsvangirai and Arthur Mutumbara – signed a power-sharing deal on 15 September that, it is hoped, will turn around the economic and political misfortunes that have plagued the country for nearly a decade.

Mugabe, seen by many as the architect of the political impasse and economic meltdown, will share executive powers with Tsvangirai, who will assume the newly created post of prime minister and oversee the daily activities of the new government.

Mugabe has called the deal a "humiliation" for ZANU-PF, which has ruled uninterrupted since the country won its independence from Britain in 1980, and has warned that he "will not tolerate any nonsense from our new partners [the MDC]."

However, his dismay at the dilution of his power is tempered by economic reality: inflation is officially estimated at more than 11 million percent, easily the world’s highest.

The collapse of the Zimbabwe dollar has seen government sanction the use of foreign currency as legal tender; shortages of basic foods, fuel and electricity are commonplace, unemployment is above 80 percent, and the UN estimates that 5.1 million people, nearly half the population, will require food assistance in the first quarter of 2009.

The European Union, the US and Australia have adopted a wait-and-see approach to the deal before agreeing to lift "smart sanctions" targeting Mugabe and more than 100 other associates, or releasing a rescue package said to be valued at more than US$1 billion.

Moyo said, "You can’t expect things to thaw a hundred percent immediately, but there will be somewhere to start, and it is safe to say there will be progress if we moved now. For agriculture, aid can, in the short term, be sourced from regional partners and businesses. The short-term policy paradigm should work to ensure that there is sufficient fuel, farming inputs, power; and this should not necessarily involve big money."

Transport infrastructure, particularly railroads, should be improved, as should agricultural extension services and affordable pricing systems for inputs; the government ought to resuscitate dormant or under-utilised fertiliser production plants, he said.

With the main farming season due to start in October, focus should be put on how best to finance the procurement of agricultural inputs, "and emphasis should be put on addressing the needs of the poor farmers and small-scale land holders, because they have been hardest hit by high prices of commodities, yet they have the capacity to produce enough to fend for themselves."

Moyo said humanitarian organisations had to address the population’s immediate needs, as well as provide agricultural inputs.

Fambai Ngirande, spokesman for the National Association of Non-Governmental Organisations (NANGO), an umbrella body, told IRIN: "Our members have started moving in to address the humanitarian crisis, and it is evident that they have been encouraged by the political deal.

"People have started receiving aid in certain areas and since the agricultural season is almost underway there is need for a rush to provide inputs to poor farmers. Even though some of our members will have to re-assess the food needs of affected communities, we are encouraged by the fact there are large food stocks that have been unused for a long time," he said.

The government recently lifted a ban imposed on the activities of humanitarian organisations, including food distributions, nearly three months ago, after accusing them of political interference during the lead-up to the presidential run-off ballot in June, which was widely condemned as flawed.

UNICEF Zimbabwe’s Rowland Monasch told IRIN his organisation was "doing a lot, and will continue to help those that need humanitarian assistance." He said they were working with the government to procure medicines and vaccines for public health facilities, providing support to up to 300 non-governmental organisations and 150 community-based organisations, and offering financial assistance to over 100,000 school children.

"Education has become an area of serious concern and we intend to ensure that children are kept in school. We are helping rural and urban areas with safe water, and have done substantial work in areas that were recently hit by a cholera outbreak. UNICEF Zimbabwe is also helping orphans and vulnerable children," Monasch said, and added that there was a need to "improve the human resources base so that we have enough manpower to roll out support."

Moyo warned that there could be delays in adopting the policy frameworks because of disagreements within the power-sharing government. "There are those that are arguing for a big bang approach, pushing for total liberalisation of the economy, yet there are others, particularly in ZANU-PF, who would want to retain control mechanisms."

He said the land issue remained vexed, and the issue of compensation for white commercial farmers, displaced in the 2000 fast-track land reform programme, which redistributed about 4,500 farms to landless blacks, should be speedily resolved.

Renson Gasela, the MDC’s former farming minister, said the land audit agreed to in the power-sharing agreement should be completed urgently. "The land audit will be a litmus test indicating the political will of the new government to kick-start agriculture, and this will be essential to restore investor and donor confidence," Gasela told IRIN.

Any policy framework adopted by the government should address the needs of communal farmers. "Communal farmers used to produce the bulk of cereals for domestic consumption and even exports," he said.

"They should be assured of inputs at convenient points across the country, as opposed to what is happening now, whereby the Grain Marketing Board [a state-owned monopoly] is the only one that is mandated with selling of inputs, and where the inputs can be found in other places … [they are] sold at exorbitant black market rates," he said.

Eric Bloch, a Bulawayo-based economic consultant, said full recovery would be "long and slow". "Political commitment is essential, and this should involve re-engaging the international community, which will in turn unlock aid, which should come in tranches over an extended period.

"There has been a lot of suspicion between the government and the international community but I think the MDC’s presence can do the trick, if there are no power fights in the future," Bloch told IRIN.

The new policy framework should ensure that industrial infrastructure was upgraded, and investors were confident that security of property ownership was re-established, he said.

The political settlement calls for the signatories to "work together to secure international support and finance for the land reform programme", and to "work together for the restoration of full productivity on all agricultural land".

After talks with the new unity government, the African Development Bank and the World Bank have indicated that that they are prepared to provide assistance.