ZIMBABWE-ECONOMY: Death of Finance Minister a Major Setback

By IPS Correspondents Reprint | | Print |

Lewis Machipisa

HARARE, Oct 9 1995 (IPS) - Zimbabwe’s efforts to attract foreign investment and donor support could suffer a setback with the death of Finance Minister Ariston Chambati, economists here warn.

Chambati died from meningitis on Saturday, just five months after his appointment, raising fears of a lack of continuity in economic and financial policies which could land the country’s economic structural adjustment programme (ESAP) in troubled waters.

“At this stage of Zimbabwe’s economic level we need to assure both the Zimbabwean business community and the international community of an effective continuity in our finance administration,” says economist and businessman Eric Bloch.

“I believe (Chambati’s) untimely death is one of the major tragedies of this country in its 15 years of independence,” he added. “Our government needs a man who has a stringent financial discipline.”

When then finance minister Bernard Chidzero fell ill in October 1993 after heading the ministry for more than 10 years, it took President Robert Mugabe 18 months to appoint a successor. The post was occupied by about three acting ministers until Chambati was finally appointed in April.

“We cannot afford to do that again if we are to be taken seriously,” Bloch told IPS. “It is vital that a successor is appointed without delay. Even at this early stage, it is clear that the world is watching with great concern whether the new appointment will be based on financial and administrative skills or on ruling party interests.”

Similarly, University of Zimbabwe economist Clever Mbengegwi feels that “the president must move in quickly to appoint a substantive minister to guide the process of economic reforms.”

“It would be sad if he delays as it would have a negative impact in the eyes of investors both locally and internationally,” he told IPS.

One reason given for the scant success of Zimbabwe’s efforts to attract foreign investment up to Chambati’s appointment was that the finance and trade ministry had been leaderless.

The late minister had been widely believed to enjoy the confidence of the local business sector, but his early death prevented any change in the hesitancy shown by foreign investors, who have largely stayed away from this formerly socialist nation.

Figures from the Zimbabwe Investment Centre (ZIC) show that foreign investment stands at about 10 percent of the country’s gross domestic product (GDP). For its economy to grow at the five percent per annum needed for the four-year old ESAP to succeed, Zimbabwe requires annual rates of investment in excess of 26 percent of its GDP.

“Somebody is needed urgently who can devote 100 percent of his time,” says Mbengegwi. “An acting minister can be appointed in the meantime but what is needed is a full-time minister.”

Zimbabwe began its ESAP in 1991, but it was only in early 1993 that it instituted far-reaching reforms such as a major devaluation of the local currency, opening up the stock market to foreign traders, and relaxing import laws.

However, the programme has remained off target: the government has failed to check extravagant public spending and reduce its huge budget deficit (12 percent of GDP in 1995) or curb the growth of the domestic money supply.

ESAP has also resulted in runaway inflation coupled with plunging incomes — now lower than 20 years ago — and exorbitant interest rates of up to 35 percent on loans.