Source: ‘Escalating Zim crises point to disaster’ – DailyNews Live
Eric Chiriga 12 May 2017
HARARE – Zimbabwe’s escalating crises point to disaster, with a majority
of the long-suffering masses saying the country’s economy is now in a
“very bad” state, analysts have warned.
They said the lurching from one crisis to another proves that authorities
could “play tricks with politics, but no tricks work when it comes to the
economy”.
This comes as the troubled country’s liquidity crisis is deepening by the
day, with banks now disbursing coins after running out of the bond notes –
a currency surrogate to the United States dollar introduced last year to
mitigate the cash shortages.
So bad is the situation such that restive tobacco farmers – who besieged
banks last week demanding their cash after crop sales – clashed with
police who ended up tear-gassing and bashing them to restore order at the
auction floors.
Apart from the crippling cash crisis, the bond notes have fuelled the
parallel currency market, as desperate traders seek foreign currency to
fund imports, a move which has stoked inflation.
This week, equities firm IH Securities warned that the country’s inflation
will continue to rise, resulting in rising food prices because of the
retailers turning to the thriving black market, where they pay steep
mark-ups.
In relation to that, the International Monetary Fund has also cautioned
that Zimbabwe’s annual inflation could hit a dollar-era record high of 6,6
percent next year, due to rising food prices and election expenditure.
On the back of all this, the country’s moribund economy is dogged by
massive unemployment, dwindling national revenue collections and a
collapsed service delivery system.
“It shows a dying economy,” Maxwell Saungweme, an analyst, said.
He said government is so far implementing stop-gap measures in solving the
country’s challenges.
“It shows that bond notes were a short-sighted attempt at quick-fixing an
economy without addressing fundamentals,” he told the Daily News.
“It’s a clear sign you play tricks with politics, but no tricks work with
economy,” he said, adding that Zimbabwe “needs drastic measures to inject
life into its dying economy”.
Another respected economic analyst, Witness Chinyama, said the protest by
frustrated tobacco farmers was only a tip of the iceberg, and a sign of
long-running and unaddressed problems.
“The rioting of tobacco farmers is a reflection of cash shortages the
country has been experiencing since the introduction of bond notes last
year,” he said.
Instead, Chinyama said; “a lot of production is needed in the country to
ensure that basic commodities and other things are found locally”.
“This will help reduce Zimbabwe’s dependency on imports,” he said, adding
that the government imposed protectionist Statutory Instrument 64 – which
barred the importation of many basic commodities, including cereals, rice
and cooking oil – “helped stoke inflation”.
He however, said the instrument may “in the long term . . . help with the
preservation of foreign currency as most products will be available
locally”.
In its latest report, pan-African think tank Afrobarometer said “almost
two-thirds (63 percent) of Zimbabweans consider the present economic
condition of the country . . . very bad while only one in five (20
percent) see it as “fairly good”.
“In fact, almost half (48 percent) of the population think that economic
conditions have gotten “worse” or “much worse” compared to 12 months ago,”
the research organisation – which measures public attitudes on economic,
political, and social matters in sub-Saharan Africa – said.
Afrobarometer said while negative assessments of the country’s present
economic condition are the majority view in almost all socio-demographic
groups, they are especially common among urban residents and
better-educated respondents.
“City dwellers are far more likely to describe the economy as fairly/very
bad (73 percent) than rural residents (56 percent). Negative assessments
increase consistently with educational attainment, from 39 percent
of respondents with no formal schooling to 71 percent of those with
post-secondary qualifications.
Older respondents (above age 55) are less negative in their assessments of
the economy than their younger counterparts. Perceptions of the country’s
economic condition also seem to vary greatly by province. Three fourths of
residents in Harare (75 percent) and Manicaland (74 percent) see economic
conditions as very bad.”
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