Fool's Gold and ZimAsset

Gold or diamonds its all there as promised in Zimbabwe's super economy

If it sounds too good to be true-it is too good to be . The Zimbabwean government is promising economic salvation on the back of Zim Asset. Zim Asset reminds old Zimbabweans of the early 1900s, history surely does repeat itself.

In those olden days, The Chartered Company, or  British South Africa And Company (BSAC), promised everyone Zimbabwe had very large deposits of easily accessible, high quality gold. By 1920, it became obvious Zimbabwe did not have this promised gold. The Chartered Company had over-promised and to preserve its investments BSAC had to move heaven and earth to create a 'bread basket' of Southern Africa.

The so called mineral holdings backing Zim Asset, like the mythical King Solomon's mines also supposedly located in Zimbabwe, do not exist in the promised quantity and quality. Zim Asset is a dream built on the myth of 'mineral wealth'. Such fool's gold economics will not deliver development. As demonstrated in the 1920's, no amount of mineral marketing can save a poorly designed economic strategy.

Promising Zimbabwe Economic Budget

Zimbabwe's budget looks promising. It remains the only credible economic planning tool: as it changes tariffs and indicates sectors of the economy favoured for growth by the state. This budget is linked to Zim Asset and takes some stakeholder views into consideration.

Zim government will have a budget of US$4 Billion, out of a GDP of US$15 Billion. In terms of resourcing, this budget shows how the Zim economy is heavilly reliant on the centralised role of the government. Of all the risks indentified in the budget, a risk of  government again failing to deliver is not identified. Markets have no faith in Zimbabwe, as the result of the state itself and its past repeated economic fumbles.

The budget is a sincerely written document, full of commendable aspiration. If the government again fails to deliver, its side of the bargain, Zimbabwe will return to full on economic crisis. Zim Asset seems to be the only tool in this budget; Zim Asset on the other hand will not solve the crisis if bureaucracy, corruption and a lack of transparency re-haunt Zim plc in 2014. The articulate Minister has a battle on his hands, as even he fights to demonstrate his credibility.