The Latest

THE LATEST

THE LATEST THINKING

THE LATEST THINKING

The opinions of THE LATEST’s guest contributors are their own.

Zimbabwe: Here We Go Again

Coen van Wyk

Posted on January 20, 2019 05:41

0 user

Five Billion dollars for your wall? Here you go, and keep the change! Zimbabwe is again in trouble. It looks similar to the financial crisis of a few years ago, but there are differences.

Runaway inflation in Zimbabwe in 2009 was estimated to have peaked at 80 billion percent. It gets ridiculous: One hundred trillion dollars were worth about 40 cents US. People lost all faith in Government’s ability to manage the economy. Mortgages, loans, the basics of a modern economy disappeared. Computer companies, importers operated on a barter basis.

Good for a loaf of bread. Wall Street Journal


The problems of Zimbabwe are manifold. Once a centralized Shona kingdom, a Zulu invasion upset the power balance. European adventurers moved in. Colonialization by Britain followed. A civil war between the white government of Rhodesia ended in withdrawal by the British, independence and a moderate rule which saw economic successes. For a while Zimbabwe hosted the most productive maize and sugar industries in the world, based mostly on innovative white farming skills, but also dedicated black farmers. The mining industry, enjoying favorable policies, was one of the best in the world.

Then came indigenization. Farmers were dispossessed. Mining investment dwindled, and state income vanished, often into the pockets of well-connected individuals. Over all this presided Robert Mugabe, who alienated the IMF, World Bank and a series of donors.

In November 2017 Mugabe was overthrown in favor of his strongman, Emerson Mnangagwa. For a while things looked good, but the economic realities remain: the economy does not produce enough. Barter trade cannot be taxed. Large parts of the economy have gone electronic, but most dealers in medicines, food, essentials insist on being paid in hard currency. Pensions and salaries paid in electronic form are increasingly discounted. Shelves are bare, prices unaffordable. A bottle of cooking oil sold for USD 25 when obtainable. Fuel costs meant that ox carts became cost effective.

Just when President Mnangagwa left on an expensive overseas visit to Moscow and Europe to invite investors, fuel prices were hiked by 150%, and the country erupted. Normally placid citizens took to the streets. Government’s reaction was harsh: police and military intervened to suppress demonstrations. Dozens were hospitalized with bullet wounds. Gangs of party militia were reported to roam the streets, beating up people, looking for demonstrators. Police roadblocks, a reminder of the bad old days, are back. 

Enough! REUTERS/Philimon Bulawayo

Speculation that Zimbabwe might join the South African monetary union were dismissed, and proposals for a new national currency raised scepticism. 

Problem is that there is insufficient US and South African currency in circulation to pay for the products needed Investment in mining is not happening. Farmers, white and black, refuse to abandon their farms in Texas, Australia, Ghana and Zambia to return to an uncertain future.
 
No Father Christmas is on the horizon. What will happen?

Coen van Wyk

Posted on January 20, 2019 05:41

Comments

comments powered by Disqus
Source: Al Jazeera

Zimbabwe's attempt to revive the economy makes matters worse for its struggling health system.

THE LATEST THINKING

Video Site Tour

The Latest
The Latest

Subscribe to THE LATEST Newsletter.

The Latest
The Latest

Share this TLT through...

The Latest