Q&A: Can Zimbabwe’s economy survive?

Harare, Zimbabwe – When Tendai Biti took over Zimbabwe’s Ministry of Finance in 2009, the country was in tatters.

With inflation sitting at 231 million percent following economic sanctions, mass economic mismanagement and the shock effects of Zanu-PF’s fast-track land reform programme, Zimbabwe was in the midst of an economic meltdown.

Biti – a senior member of the Movement of Democratic Change (MDC), a coalition partner of President Robert Mugabe’s Zanu-PF in a government of national unity, formed after the contested election results of the 2008 presidential poll – had the arduous task of rebuilding a country sitting on the brink.

The Ministry of Finance promptly scrapped the Zimbabwe dollar and adopted a multiple currency system, including the US dollar, which contained the country’s runaway inflation that had all but emptied the country of fuel and food supplies.

Five years later, inflation is under control at 5.9 percent.

With the government of national unity’s parliamentary term expiring in June 2013, and Mugabe adamant that foreign western donors would have no hand in funding or monitoring the election, Zimbabwe was forced to raise funds from its own resources.

Al Jazeera’s Azad Essa spoke with Tendai Biti about funding the elections, working with Zanu-PF, and being Zimbabwe’s finance minister – one of the toughest jobs in the world.

Here is an excerpt of the interview.

Azad Essa: Zimbabwe is paying for its own election. How is this going to happen?

Tendai Biti: It has already happened. We have managed to pay for our own elections. We have basically frozen government. We have squeezed government so that all our obligations in terms of the budget have been suspended, in order to create fiscal space to cover the budget. In fact, we have basically raped government in order to finance this election.

There was opportunity to get money from the UN, from the international community, but our colleagues at Zanu-PF frustrated that. What we have done then is to behave as if Zimbabwe starts and ends on July 31, 2013. This is regrettable, but this is what we have done.

AE: What were the challenges in securing these funds?

TB: Difficulties were there; this is a small economy. Also in the first quarter of the year, we lost three points in our GDP. I have also just revised the anticipated growth rate of the country. The election comes shortly on the heels of the referendum in March – which came on the heels of the census in September-December 2012.

Basically, we have had three elections in the past six months – by another name. Quite clearly, these kinds of things, for any country, puts [on] tremendous fiscal pressure. We have had a situation of high demand, huge expectations but total absence of fiscal legroom. The bottom line is that it has not been easy.

AE: This insistence to pay for the elections. Will this put Zimbabwe back?

TB: Of course it will. We have had to use expenditure that we would have otherwise gone to productive and utilitarian sectors, like social delivery. But if we have the correct outcome – if the MDC wins, because the MDC is the only party that can restore legitimacy and credibility with the international community.

The only party that are prepared to deal with that, that understands business, is the MDC. And if the MDC wins, as we expect, then the turn-around and the rebound, would be as rapid as it would be amazing.

AE: Moving to the elections. What is the likelihood that these elections will be free and fair?

TB: I have said it and I have said it again and I am beginning to sound like a broken record now, but these elections are illegal, illegitimate, immoral, unfree and unfair.

AE: Why? The African Union is saying that they will be legitimate…

TB: With all due respect to [AU chair] Nkosanaza Zuma and the African Union, this is the only election where its credibility is pronounced before the actual elections is being held. This does not happen anywhere in the world.

You don’t have to be a rocket scientist to observe the kid of atrocities that we are going through. There are a number of irregularities. We have not been given the space in the media… as I’m speaking to you, they have banned our rallies, they have banned bulk SMS service in the country. They have blocked us from accessing our Facebook accounts. And we still do not have, at this late stage, access to the voters’ roll. Where in the world does that happen? With three days to go before the elections, we don’t have a final list of the polling stations, so we don’t know where people are going to the polling stations. So it’s a dog’s breakfast, but one which [even] my dog, Jonathan, will also not consume.

AE: Some say you are claiming the elections are unfair because you are not prepared for elections…

TB: We were the first party to hold primaries in this country. We were the first party to document the agenda for real transformation. We were the first to hold a campaign rally. You have seen the huge numbers of people who have attended our rallies. So there is no question of us being afraid of this election. We are talking about facts. We are not a Mickey Mouse party. We are the biggest party in this country.

AE: Let’s talk about your role as Minister of Finance. You took on a very difficult job. How do you measure your success?

TB: Again, let’s talk facts. When I came in, there was absolutely no food in the supermarkets. Inflation was 500 million percent. GDP growth rate in 2008 was minus 14 percent. We also had more than 14 years of successive GDP declines. From minus 2.7 percent in 1997 to minus 14 percent in 2008.

The economy had shrunk by 60 percent of its value between 2000-2008. [But] our growth was 5.7 percent in 2009 and between 2010-2011, the averge growth rate in real terms was 9.7 percent. In fact, we were the fastest growing economy in the world for those two years. Inflation is on average around three percent.

There is food in the country. You are sleeping in a normal hotel. Hospitals and schools are functioning.

So what we have done is nothing short of a miracle.

AE: How were you able to do this?

TB: It was because of MDC credibility. My credibility. People trust me, people trust the MDC. It was a case of business and labour trusting me and my party. We had the plan and then had the discipline to implement our plan.

AE: Zanu-PF says this is western conspiracy, that sanctions disabled the country. As soon as the MDC had some type of power, western powers came back to the country.

Let’s take inflation – this is not caused by external intervention. You can have Chinese and British on your side, but unless you do some fundamentals right, you won’t get it right. So economic management and mismanagement has everything to do with the self-induced policy distortions and Zanu-PF are the grand masters of self-induced policy madness and macro-economic insanity.

AE: Some say that Harare has not been governed as well as it should have been [under the MDC’s watch].

The MDC is paying the price of things that were not done by the Zanu-PF government over the last 33 years.

AE: What is the policy of MDC with regards to indigenisation?

TB: We don’t believe in an elitist model that seeks to grab things and assets by elites, a predatory faction, of Zanu-PF. We believe in genuine empowerment, and we believe that, right now, the cake is so small, the Zimbabawean economy is in the red. And we’d rather own 10 percent of an elephant than 100 percent of a rat.

At this moment in time, this economy has to be expanded. And you expand it by creating jobs, creating new industries, by getting foreign direct investment, by mobilising domestic investment, by promoting small enterprises … you create genuine empowerment by looking at the whole gamut of governance and not predatory accumulation, which is another name for Zanu-PF indigenisation.

AE: How would the MDC plan on addressing the issue of redress which is what Zanu-PF argues all of this is about?

TB: Our plan is very clear. This country needs a plan of sustainable programmes of real reconstruction and development. We require huge resources to attend to the infrastructure needed but we are going to require a really consistent macro-economic policy.

We also require re-engagement with the international community and [to] improve our competitiveness. It is difficult to attain loans as a country because of the risks associated with the country. We have so many structural issues to attend to and it is a huge arena of problems and, trust me, my friend, Zanu-PF does not even know that it is lost.

Azad Essa is reporting from Zimbabwe throughout the country’s election. Follow him on Twitter: @azadessa