NEW YORK, August 3, 2013 — Robert Mugabe’s reelection as president of Zimbabwe will slow the country’s recent economic gains after years of hyperinflation, high employment and negative growth. The 89-year-old incumbent, who has ruled the country for over three decades, has now won another five years in office.
Zimbabwe’s presidential election was an opportunity to move economic growth forward by first showing the world it could remove Mugabe from office through a fair democratic process. Zimbabwe’s Election Commission claims that Mugabe won over 61 percent of the votes to defeat the challenger, Prime Minister Morgan Tsvangirai, who captured barely 34 percent.
“The credibility has been marred by administrative and legal violations which affect the legitimacy of its outcome” said Tsvangirai. He called the election “null and void.”
Mugabe, a self-proclaimed Marxist, last year announced a wealth redistribution policy. He plans to force foreign-owned firms to surrender 51 percent of their shares so they can be transferred to black Zimbabweans.
In response, 80 firms closed in Bulawayo, Zimbabwe’s second largest city, according to Tsvangirai. Consequently, 20,000 jobs were lost in a city known for its steel, engineering and railroad plants.
The re-elected president is targeting 1,100 foreign business in the next five years. If they decide to flee Zimbabwe, thousands of more jobs will be lost and foreign direct investment will decline. Ultimately, Mugabe’s redistribution policy would lead to a rapid contraction in the economy.
Mining firms are the first on Mugabe’s list for expropriation. In 2011, mining was the main driver of industrial growth. Nickel, platinum and diamonds, all extractable resources, are the government’s main sources of revenue.
The economy has slightly improved after the 2008 presidential election when Mugabe formally agreed to share authority with Tsvangirai and Deputy Prime Minister Arthur Mutambara. The agreement took effect in February 2009, but it took a while for the new government to change the course of the economy.
Inflation hit a high of 90 sextillion percent in November, 2008, according to IMF estimates, just months before the shared government structure came into power. To absorb the increase, $Z100 trillion notes were printed, which had a value of five U.S. dollars. The Zimbabwean dollar was abandoned in 2009. Unemployment rose to 94 percent. Salaries of civil servants could barely cover bus fare. Nevertheless, the new government got GDP growth to climb from -6 percent in 2008 to a 7 percent average between 2009 and 2012.
The inflation rate dropped due to the dollarization policy. The government stopped printing its own currency and adopted the U.S. dollar, the British pound, the euro, the South African rand, and the Botswana pula as its legal currencies.
This year inflation is down to 5.9 percent. Unemployment is below 95 percent, but the U.N. World Food Program claims that it is above 60 percent. It is a promising start, but the economy is still fragile.
GDP growth this year is forecast to be 3.4 percent, down from 10 percent in 2010 and 9 percent in 2011. Only $217 was left in Zimbabwe’s public account in January after the government paid its civil servants.
Mugabe put even more stain on finances by barring foreign aid from financing the elections. As a result, the government had to raise over $100 million for the polls. The money could have been used to feed the 1.7 million Zimbabweans facing hunger this year according to U.N. World Food Program.
“In fact, we have basically raped government in order to finance this election” said Tendai Biti, Zimbabwe’s Ministry of Finance in a recent Aljazeera interview. Biti is a senior member of the Movement of Democratic Change (MDC), the same party of Prime Minister Tsvangirai. Before the results were announced, he said that the election was “illegal, illegitimate, immoral, unfree and unfair.”
The African Union labeled the election as free while noting some irregularities. The European Union said it was concerned about alleged irregularities, incomplete participation and other obstructions in the electoral process.
“In light of substantial electoral irregularities reported by domestic and regional observers, the United States does not believe that the results announced today represent a credible expression of the will of the Zimbabwean people,” said Secretary of State John Kerry.
To reduce the likely economic damage by Mugabe, perhaps Tsvangirai with the support of the international community can find a compromise similar to the power sharing agreement in 2008.
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