Zimbabwe's finance minister Mthuli Ncube. Picture: BLOOMBERG/CYNTHIA R MATONHODZE
Zimbabwe's finance minister Mthuli Ncube. Picture: BLOOMBERG/CYNTHIA R MATONHODZE

Mthuli Ncube may not have realised quite what he was letting himself in for when he took the job of Zimbabwe’s finance minister in September last year. With his impeccable CV — he is a former chief economist and vice-president of the African Development Bank, and lecturer at the London School of Economics and Wits Business School in Joburg — he was hailed as the right man to fix the economy. But a year on, things are far from rosy.

"[Ncube] didn’t realise how much damage Robert Mugabe had done," says economist John Robertson. "He thought he could fix in a year the damage done in 37 years by Zanu-PF. That is not possible. The destruction of agricultural output and the collapse of many manufacturing companies are going to take years to fix."

Sitting in his Harare office, Ncube admits to the rigours of the task. "It’s a very challenging job. You have to understand complexities and be able to take things apart and understand how everything works," he says.

"For me, I am able to deal with complexities. I will put [the job] at seven out of 10 on a challenging scale."

Under the circumstances, it’s an honest appraisal. Things are far from stable: the economy is in recession and likely to contract by at least 5.2% in the current fiscal year — the first contraction since 2009, when Zimbabwe was forced to abandon its currency due to hyperinflation.

The outlook for 2020 is even bleaker.

To Ncube’s credit, he had achieved a budget surplus of Z$800m as at June, thanks to strong tax revenue mobilisation; a tax on all mobile and electronic payments now raises Z$112m a month for the government.

The country’s revenue collection agency is also achieving its targets, due largely to price increases.

When Ncube took office, the Treasury was running a huge budget deficit due to a lack of fiscal discipline. The central bank had, since 2009, been funding budget deficits through the creation of money, issuing Treasury bills to the value of as much as US$9bn, as well as electronic money. This he has brought to an end.

By instituting an auction system for Treasury bills, Ncube has "brought sanity to planning, and [brought] transparency and free-market dynamics to the Treasury bills market", says economic analyst Victor Bhoroma.

Bhoroma takes a balanced view of Ncube’s performance so far. He believes he has scored some positives when it comes to debt management, for example, having reduced local debt to Z$8.8bn from Z$9.5bn in August last year.

However, he says, "a lot has been promised but not much has been delivered. The economy is contracting and confidence is at a record low."

Ncube’s failure to act boldly to rein in government expenditure — remodelling command agriculture (a state-funded agriculture finance scheme), trimming the civil service, cutting noncore expenditure and privatising loss-making state enterprises — is also likely to lead to further inflation and economic decline, says Bhoroma.

At the same time, the austerity measures Ncube has implemented since taking office have not endeared him to many. Ordinary Zimbabweans don’t seem to have any kind words on the occasion of his first anniversary as finance minister.

Washington William, a street vendor in Harare, says Ncube has fared dismally. "If we were to rate him on a scale of one to 10, he would not go beyond two," he says. "He has piled misery upon misery for the common man. We were much better in the same period last year.

"Even in the name of austerity, the suffering is intolerable."

For Knowledge Mudzamire, a book vendor in the capital, "things are getting worse by the day. I just have to compare then and now. Now, I can’t buy basics (mealie meal and cooking oil). I have to save for a few days to buy basics when we run out."

Ncube says Zimbabweans must be patient. "It took a while to get [to the current economic situation] — 37 years of mismanagement in some areas — and it’s going to take some time to get everything right. It’s a painful period but it’s a transitory and temporary one."

He has, he believes, stabilised the economy through fiscal reform.

"When you are implementing a fiscal consolidation and you have a savings surplus and your current account is beginning to behave, you have achieved the target in terms of the macro adjustments," he says.

"The austerity as it pertains to fiscal consolidation is coming to an end. All the big macro adjustments really have been made and whatever is left will be completed in the next few months, and certainly before the end of the year."

From there, his focus will turn to the micro economy, improving competitiveness and productivity, and creating employment. He believes there is some low-hanging fruit in sectors such as tourism and mining. But, he says, "we are going to be systematic about it".

More broadly, though, things are falling apart. The annual inflation reading to June — Ncube has stopped the publication of official data until February 2020 due to the introduction of a new currency — measured at about 175% (see graph). That’s from an inflation rate of 42% at the end of 2018.

Bhoroma believes the problem, in part, lies in Ncube’s failure to assert control over the central bank.

"The central bank needs checks and balances, and independence from political interference to deliver its mandate on managing inflation," he says.

But the problem isn’t just inflation; the unemployment rate is above 90%.

"Unemployment is obviously an issue," Ncube says. "Now our focus is on driving investment to create jobs. I will start with mining, for instance. [The government wants] to grow the sector from [an estimated] US$23bn in 2023 to US$30bn by 2030. That is how we create jobs."

Not all that has gone wrong in the economy is by Ncube’s hand.

"Some of the things that mitigated against the economy [recovering] are black swan events, such as the drought that affected power generation in Kariba, and Cyclone Idai," he says, referring to the cyclone that left a swathe of destruction in the east of the country.

But some actions have his fingerprints all over them, such as his June decision to outlaw the use of foreign currencies in local transactions. His defence is that every country needs its own currency — but it was always going to be a hard sell, given inflation that has eroded the purchasing power of real-time gross settlement dollars, bond notes and electronic balances, the quasi-currencies making up the "new" Zimbabwe dollar. The move inspired a crisis of confidence, given memories of hyperinflation in 2009.

The currency has also weakened alarmingly since Ncube announced the separation of foreign and local currency-denominated bank accounts in October. The move was a tacit acknowledgment that the bond notes were no longer on par with the US dollar — though they officially remained so until the local currency was allowed to float in February.

At the time of going to press, it was trading at Z$10.8/US$.

As attempts to offset the effects of inflation get trickier by the day, the Treasury has announced a salary increase is on the cards for civil servants — though Ncube insists this will be done in a sustainable manner. "It can’t be an exorbitant amount, and industry is doing the same by increasing wages," he says.

But whether it will offer any real relief is unclear. Robertson, for one, believes it’s time Zimbabweans temper their expectations about Ncube. "No more miracles should be expected," he says.

It was announced on Friday that Mugabe had died at a hospital in Singapore.