26 July 2009: Why The Inclusive Government Is Bad For Zimbabwe's Economy

Nearly six months after the formation of the much-touted Inclusive Government in Zimbabwe, the country still faces massive power cuts, no running water almost permanently in most suburbs and cities.

Industrial capacity is still well below 50%, despite the dreamt-up figures quoted by the Minister of Finance. Investment is still giving Zimbabwe a wide berth. Schools that are now largely functional remain at the mercy of demotivated teachers, lack of basic services and educational tools in those schools.

The list of woes is endless indeed.

But why?

The problem lies in a crucial ingredient to the success of any modern economy: business and consumer confidence. In Zimbabwe, the existence of the Inclusive Government itself is the cause. It is impossible to instill confidence in the future when Deputy Minister designates are being arrested and denied the freedom of movement.

Foreign investors, like their governments, like the IMF and the World Bank, look at the scenes unfolding in Harare everyday and see an insincere partnership, one part of which is arresting Members of parliament from the other party, jailing them and triggering by-elections.

It is clear ZANU PF refuses to accept the reality that it is no longer wanted by the people of Zimbabwe. Mugabe plots still.

On several occasions, he has declared that he is willing to let the Inclusive Government die for one reason or the other.

We are not certain what this country may wake up to the next day. Business does not like this at all. Especially when ZANU PF has a very recent history of violating property rights, invading companies and mines.

As I have pointed out before, they say private capital is a coward. It will not put up with that sort of nonsense and looks elsewhere for opportunities. Zimbabwe is left high and dry as a result.

It would help, of course, if Prime Minister Tsvangirai had managed to show the world that he was gaining the upper hand over Mugabe and ZANU PF.

If this had happened, business and investors would feel that there was at least an element of inevitability about the process. Right now, they see an utterly subjugated Morgan Tsvangirai and can not be certain that Mugabe is going to make U-turn within months.

It is these two factors, then , that ensure that Zimbabwe never gets the investment it needs.

Investment is the only solution that has a chance of transforming Zimbabwe into a first-class country. Aid and other handouts tend to fund only consumption, be it by the public or the government. After all, even now, what Zimbabwe gets is only the barest minimum needed to keep body and soul together.

But investment and especially Foreign Direct Investment, shies away from Zimbabwe because there is no reason for them to believe that the Highway Robbers of yesteryear are still not lurking in the bushes, ready to pounce the moment they see any valuable bounty.

It is for this reason that I say Morgan Tsvangirai has failed the biggest test of his Premiership. Instead of sending the right signals about the triumph of democratic ideals, he is instead seen to be endorsing tyranny.

Because of that, the world has lost interest. And it is the fault of these two men: Robert "The Solution" Mugabe and Morgan Tsvangirai.