June 6, 2002

ZIMBABWE loses third of jobs - Makoni

Zimbabwe’s economy has lost a third of its jobs since the country was plunged into crisis in 2000 and was set to contract by 10 percent this year, Finance Minister Simba Makoni said on June 5. Zimbabwe’s economy is in its fourth straight year of recession with record high inflation and unemployment, and is facing a severe food crisis.

"Broadly the job sector has shrunk by one third in the last 18 months to two years. It is an unacceptable level of unemployment which the economy cannot afford," Makoni told reporters at an economic forum in Durban. He said that prolonged bad weather was the main culprit for worsening food shortages in the country, but acknowledged the government’s controversial land reform programme had played a role. "There is no famine in Zimbabwe yet and we are striving to avert it — but we have a serious food deficit," he said. He noted that about 7.8 million people — the bulk of the country’s population — would be short of food after three consecutive years of bad weather for crops. "That is the major cause of food shortages in the country but I would be one to admit to you that when you are undertaking land reform of the magnitude we are ... it does have an impact on the levels of production."

Analysts say millions of Zimbabweans are facing starvation due to drought and reduced food production in the wake of President Robert Mugabe’s seizure of mainly white-owned commercial farms for redistribution to landless blacks, which began early in 2000. Zimbabwe is mired in its worst economic crisis since independence from Britain in 1980. Inflation has risen by an annual rate of more than 100 percent since last November, unemployment is estimated at 60 percent and acute foreign currency and fuel shortages have crippled business activity since 1999.

Makoni said that forecasts for the economy which shrank by 7.3 percent in 2001, had been revised lower. "The preliminary estimate which I presented to parliament was at minus 5.3 percent — it is now moving towards minus 10," he said in reply to a question. He added that he had not yet prepared estimates for 2003, although he was planning for an improved outcome. He also said that he was still working to achieve a consensus in government for devaluing the Zimbabwe dollar, which is officially set at 55/dollar, versus a parallel market rate of about 350/dollar. "I am looking for a rational, predictable, credible, exchange rate," he said.

Makoni said that he had not yet come up with a way of financing an 80 percent subsidy for tobacco growers. The subsidy for the crop, a key foreign exchange earner, is estimated to cost the fiscus an extra 16-17 billion Zimbabwe dollars. "Our plan is to finance it outside of the market, but the mechanism is not yet decided," he said. Makoni dismissed suggestions that Zimbabwe may be excluded from an ambitious African recovery plan which aims to boost investment, trade, aid and debt relief in exchange for commitments to democracy and good governance. "Zimbabwe is an African country — we will be in it just like any other African country," he said. The recovery plan is the focus of the three-day annual African economic summit in Durban, which began yesterday. It has drawn 700 delegates including several African presidents and more than 50 ministers and central bank governors. (THE FINANCIAL GAZETTE)

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