Zimbabwe's economic crisis has reached breaking point

Zimbabwe's economic crisis has reached breaking point
Published: 18 August 2019 (133 Views)
When Zimbabweans are expressing nostalgia for Robert Mugabe you know things must be bad. Yet it is now common to hear that things are worse under Emmerson Mnangagwa, president since a 2017 coup, than during the darkest days of the man he deposed. Zimbabwe is in humanitarian meltdown.

Food is in such short supply that some people have stopped taking their HIV medicine because they cannot afford to pay for the meals that must accompany tablets. In what was once the breadbasket of southern Africa, many people are down to one meal a day — or less.

The World Food Programme says one-third of the country's 14m people are "marching towards starvation".
Zimbabwe is in the midst of its worst drought in 40 years.

Low dam levels have deprived the country of electricity, adding to misery by plunging hungry people into the dark.
But make no mistake. The main cause of Zimbabwe's suffering is economic mismanagement.

Mnangagwa's government has brought in tough measures, backed by the IMF, to stabilise a wrecked economy.

They have made things worse. After years of massive deficit spending, the government is now living within its means in an effort to get finances back on track and, eventually, re-engage with an international community that treats it as a pariah state.

The problem is Zimbabwe has no means by which to live.
Zimbabwe's currency was scrapped in 2009 after a dose of hyperinflation that saw wallets replaced with wheelbarrows.

A few years ago, the government introduced bond notes and electronic money, which goes by the catchy name of real-time gross settlement dollars.

These were pegged at a fictional one to one to the US dollar, though there were almost no reserves to back them up.
The fiction is now over.

In June, in an effort to normalise the whole crazy system, the government abolished the use of US dollars, restoring the fantastical RTGS currency as the sole store of value. Printing stopped.

The imaginary peg was abandoned.
An RTGS dollar is now worth 10 US cents. Savings have been laid to waste.

The price of almost everything has ballooned. A loaf of bread can gobble up a few weeks' pension.

Even civil servants, the nominal middle class in what was once a relatively prosperous country, are paid the equivalent of $1,80 a day, below the international poverty line. Inflation doubled to 175 per cent in July.

The government has suspended the publication of inflation figures. Once again, hyperinflation looms.
People have reached breaking point. The opposition is calling for a nationwide strike on Friday.

The last time it took similar action in January, security forces reacted with jackbooted ferocity.

At least 13 people were killed, dozens of women raped and hundreds beaten up as armed men went house to house.
In the aftermath, the opposition went quiet.

This week, Nelson Chamisa, the opposition Movement for Democratic Change leader, is talking the language of revolution.
"We now need to do the work, roll up our sleeves and we, as a people, be our own liberators," he said.

The government, mindful of popular uprisings in Algeria and Sudan, is treating the challenge as an existential threat. It will shoot to kill if necessary.

Zimbabwe, paradoxically, is still one of Africa's brightest prospects. Its people are among the best educated in the continent, testimony to one of the few things Mugabe got right.
Millions of qualified exiles are waiting to return should the Zanu-PF party vacate power after decades of misrule.

When Mnangagwa replaced Mugabe in 2017, the idea had been to re-engage with the international community, settle longstanding debt arrears and get investment flowing back into the country.
That now looks a more distant prospect than ever.

This is the fault of Mnanagagwa, who has been unable or unwilling to change Zanu-PF's authoritarian spots. Nor has his government stopped stealing.
Even so, there is a case for the US to drop its objection to financial re-engagement with the country.

Without a new injection of money, even the most competent government could not solve Zimbabwe's economic woes. Cutting it off from finance amounts to backing it into submission.

That policy is counterproductive. Driving ordinary people to desperation is no way to promote democratic change.

There's little evidence that allowing the country to, say, borrow from the IMF would prolong Zanu-PF's rule. International engagement might just as soon hasten its demise.
Still, it would be quite wrong to blame Washington for Zimbabwe's woes.

Zanu-PF is past master at doing exactly that. In fact, the fault lies entirely with the party, which long ago lost its legitimacy. Zimbabwe scrapped its currency a decade ago.

The country could breathe again if it scrapped its ruling party too.



- Financial Times

Tags: Zimbabwe,
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