With major world economic powers – the US and the EU – bogged down in a desperate effort to save their economies from slipping into a recession or, even worse, a depression, the Zimbabwean economic quandary is the last thing on their minds.
And what makes the situation even more gloomy for Zimbabwe, experts say, is that SA – which brokered that country’s fragile power-sharing deal – is too tiny to conjure up the multibillion-dollar aid assistance needed by Zimbabweans.
Pan African Advisory Services chief executive Iraj Abedian says the ongoing wrangle over the cabinet posts by Robert Mugabe’s ruling Zanu-PF and Morgan Tsvangirai’s opposition Movement for Democratic Change is not helping the Zimbabwean cause at a time when global financial markets are in a tailspin.
"These guys are busy arguing over cabinet positions while Rome is burning. I don’t think they realise how big their problem is. Unless the big financiers come to the party, SA is not in a position to afford the financial aid needed by Zimbabwe. At this stage there are very few countries that can help," said Abedian.
Abedian believes that Zimbabwe requires at least a seven-year multi-billion-dollar balance of payments support package underwritten by the world’s richest economies. The money could help it bolster its depleted foreign currency reserves that have contributed to the meltdown of the Zimbabwean economy.
Without the foreign exchange the country cannot import fuel, food supplies, seed crop, fertilisers, capital equipment and spare parts for its industrial sector.
While the Zimbabweans are haggling over who should control influential government ministries, US President George Bush is having difficulties convincing politicians in Washington to vote for a $700bn (R5.9-trillion) bailout package to save the US banking sector from a collapse that could lead to a scenario similar to the Great Depression of the 1930s.
In Europe there was a rumour this week that the EU was planning a $420bn plan to bail out its banks from the subprime losses -related to the US mortgage crisis.
Already the British government has nationalised mortgage lenders Northern Rock and Bradford & Bingley in a bid to rescue them from sinking. Across Europe, banks in Denmark, Belgium, Switzerland and Germany are being saved by governments to prevent them from falling victim to the mortgage crisis.
While huge piles of dollars are being brandished about in Washington and capitals in Western Europe, Zimbabwe will have to wait longer before its plight is back on the Western agenda, provided it concludes its peace settlement peacefully and implements economic reforms.
It is estimated that the Zimbabwean economy has lost more than 40% of its value over the past decade as the worth of its gross domestic product plummeted to $6.2bn at the end of last year. Chronic hyper-inflation accompanied by a shortage of basic foods and unemployment of above 80% have forced many citizens to flee to neighbouring countries, mainly SA.
"Unfortunately there is not much that can be done for Zimbabwe. The country will have to suffer longer because its politicians took longer to come to their senses," says Abedian.
Industrial Development Corporation chief economist Lumkile Mondi says SA has a duty to help its northern neighbour as the countries’ futures are intertwined.
"Where is Zimbabwe going to get the money in the middle of a global financial crisis. It is very difficult for triple A-rated companies to get credit in this current economic climate.
"No one is going to give Zimbabwe money. SA will have to help Zimbabwe until it is ready to go to the International Monetary Fund and the World Bank to ask for credit," he said.
He said the national treasury could afford to lend Zimbabwe at least $2bn to help the country stabilise its economy.
"It is important that we support Zimbabwe with a financial package because it was once the breadbasket of southern Africa and SA’s main trading partner in Africa. I am confident that Zimbabwe can be turned around quickly if necessary reforms are carried out.
"Zimbabwe is rich in mineral resources like chrome, platinum, coal, gold and uranium and it has fertile agricultural land to feed the whole of southern Africa. The private sector will put money in Zimbabwe as soon as the economy is stabilised."
Elias Masilela, a former deputy director-general at the national treasury, says financial aid and investment will flow into Zimbabwe once it has reformed.
"Zimbabwe knows exactly what to do. We do not need to tell Zimbabwe what to do. In my mind, money is not an issue in Zimbabwe. The issue there is structural. Once there is structural change and certainty the private sector is going to invest in Zimbabwe," said Masilela, who is now a senior executive at savings group Sanlam.
As for a loan bailout by SA to Zimbabwe, Masilela says SA first has to ensure that its neighbour is capable of repaying the loan before it can be granted.
He says SA will also have to establish what the money is going to be used for before granting it.
"Otherwise the money will end up being abused if there are no proper structures. It will just disappear," warned Masilela.
– City Press