Chegutu - Across Zimbabwe, dozens of factories lie idle with
peeling paint, rusting machines and broken roofs in once bustling industrial
districts, symbols of the huge economic challenge facing President Robert
Mugabe and his Zanu-PF party.
On the surface, things look rosy after Mugabe's landslide
election victory in July: growth forecasts are looking more positive as
agriculture recovers, inflation has been tamed and the stock market is starting
to buzz again after some listless post-election trading.
But look behind the headlines and the landlocked southern
African nation's manufacturing heartlands, which accounted for a quarter of the
economy a generation ago, are now wastelands - and some fear the decay is
From Harare in the north to the second city of Bulawayo in
the south, companies are working at a third of capacity, down from 55% a year
ago, according to the Confederation of Zimbabwe Industries (CZI).
"Businesses are collapsing, and the economy will need a
real big push-start to get going again," said an accountant winding down
tube-making firm BMA Fasteners and Tube and Pipe in Harare. He declined to be
named for professional reasons.
"At this rate, it's frightening to think what the
future holds," the 42-year-old said, scratching his head. "I don't
think it is an exaggeration to say it might just be hell."
Although they are careful not to blame politics, industry
bosses say business confidence has fallen since the 89-year-old Mugabe was
declared the overwhelming victor in the 31 July election, which the opposition
MDC rejected as rigged.
New finance minister Patrick Chinamasa expects the economy
to grow 6.1% in 2014 from 3.4% this year but that will make no dent in
unemployment estimated at over 80%.
Zimbabwe's economy shrank by 45% during a decade-long crisis
blamed on Zanu-PF, but bounced back in 2009 after Mugabe was forced to share
power with arch rival Morgan Tsvangirai after violent and disputed elections
the previous year.
The July election put paid to that coalition, and with it
what some critics saw as the MDC's moderating influence on Mugabe and Zanu-PF
In its most blatant form, that nationalism was manifest in
Mugabe's "indigenisation" push, under which foreign-owned firms have
been forced to sell majority stakes to local blacks.
However, with the economy so desperate for capital - some
estimates put domestic credit demand at $12bn, more than double total bank
deposits - Mugabe may be forced to soften his anti-foreigner stance.
"We are likely to see a more pragmatic approach by the
politicians," said Grant Flanagan of Amigo Partners, which manages a
Zimbabwe-focused investment fund, noting some faint signs of a softening of
Most notably, in his new cabinet, Mugabe swapped combative
indigenisation minister Saviour Kasukuwere for a mild-mannered technocrat who
has already suggested the government is open to discussion about the extent and
timing of black ownership.
However, there are no details and when asked by Reuters
about indigenisation, another member of the government, Industry and Commerce
minister Mike Bimha, declined to discuss something he said was outside his
Without a decent period of clarity and consistency,
investors are unlikely to be writing any cheques.
"Zanu-PF must realise they are in trouble over the
economy," independent economic commentator John Robertson said.
"Investors, particularly in mining, where they have an opportunity, will
want to see whether there really is any softening. If there is, then definitely
the economy stands some chance."
Even then, turning the ship round will be difficult.
The African Development Bank estimates that fixing the
infrastructure needs $14 bn, a sum that in reality can only be met by the
World Bank and IMF, which stopped lending to Harare in 1999 because of unpaid
Private investors will then have to address a manufacturing
vacuum filled by cheap imports, mostly from China.
Nowhere is the evidence more glaring than at David
Whitehead, a large textile firm that used to employ 2 500 people in Chegutu,
100km southwest of Harare, but which collapsed two years ago and stands empty
A handful of people are contracted to maintain machinery.
Most of the time, only a couple of guards are on patrol.
Elsewhere, the factory sector built during the years of
isolation imposed on white-minority Rhodesia has lost makers of everything from
shoes to medicines, carpets to building materials and chemicals to food.
In 1986 manufacturing contributed 26 percent of GDP. Today
it is just over 2 percent.
The industrial graveyard includes Ziscosteel, once the
largest integrated steel works in the region, which shut in 2008 due to what
analysts said was gross mismanagement and a failure by the state-owned firm to
upgrade its equipment.
The government has been struggling to revive it with a
number of foreign firms, including lately Essar from India.
"There is a long way to go and the starting point for
our companies is retooling. There is no other way. There is idealism, and then
there is reality," says economist Prosper Chitambara, a leading private
Wait and see
The Harare tube firm, which used to employ 300 people, says
it was a victim of a range of factors - price controls, foreign currency
problems, power cuts, and then cheaper imports from India and China.
"Everything that could go wrong went wrong," said
the accountant in charge of its burial rites.
For Zanu-PF, the absence of the MDC as a coalition partner
means it has no-one to blame and nowhere to hide.
After the July election, it launched a Zimbabwe Agenda for
Sustainable Social Economic Transformation, although the document was culled
from the black empowerment parts of its manifesto, leading many to see it as
more of the same from a party well-known for its empty economic blueprints.
However, aides say Mugabe himself is taking greater interest
in the economy in a bid to rebuild a legacy tarnished by the hardships and
hyperinflation of the last 13 years.
A glimmer of hope lies in tobacco farming, where state and
private support for small-scale farmers is expected to push production to 200
000 tons from 45 000 in 2008, the pit of a slump blamed on Mugabe's seizures of
white commercial farms.
Many also see huge potential in mining and diamonds if the
government can assuage concerns over forced sales of stakes to locals.
"We have to wait and see," said the security guard
manning the entrance to the David Whitehead factory in Chegutu, echoing a
refrain heard in boardrooms from Harare to Johannesburg, London and New York.