Zim drifts towards 2008 meltdown

Source: Zim drifts towards 2008 meltdown – DailyNews Live

Maxwell Sibanda and John Kachembere      26 March 2017

HARARE – Zimbabwe is drifting towards an economic crisis as severe as the
2008 economic meltdown which eventually led government to abandon the
worthless Zimdollar after it was severely dented by hyperinflation,
analysts contend.

Banks are so short of cash that queuing has become a full-time occupation
for some of those lucky enough to have jobs. But the amount of cash the
banks are giving out each day is as low as $50.

President Robert Mugabe’s government insists the economy is foundering
because of sanctions imposed by Western powers he claims are trying to
oust him for seizing thousands of white-owned farms and redistributing the
land to black Zimbabweans.

Mugabe’s critics, such as opposition leader Morgan Tsvangirai, say that it
is in fact his policies that have ruined Zimbabwe.

Analysts said the situation looks dangerous – as it could get worse than
the 2008 crisis.

As the economy continues to implode, unemployment skyrocketing and
government struggling to pay public sector workers, political tensions and
anti-government protests are on the increase as demonstrators accuse the
government of mismanagement and corruption.

Some are calling for Mugabe, 93 – who has led the country since its
independence from Britain in 1980  – to step down.

Economist and opposition legislator Eddie Cross said the country’s current
cash crisis, which has escalated to a point where banks cannot pay out
clients more than a small proportion of what is in their accounts, is a
repeat of the 2008 economic meltdown.

“Coupled with the near total collapse of confidence and the impact of poor
policy and governance, this is again leading us down the road we travelled
in 2007 and 2008 which resulted in a near total collapse of the State and
then dramatic political changes. It will be no different this time,” he
said.

The liquidity squeeze has left companies unable to pay their workers in
cash and foreign suppliers, driving many out of business, and added to the
ranks of more than three million people who have become economic exiles.

Johns Hopkins University Applied Economics lecturer Steve Hanke said the
introduction of bond notes late last year accelerated Zimbabwe’s path to
economic failure.

“The economy is in what could turn into a death spiral,” he said.

Commentator Dewa Mavhinga said the state of the economy creates a
conducive environment for people to rally together to demand government
accountability and better governance.

“The solution to the Zimbabwe crisis lies in people uniting and so far,
what stands between the people and positive change is needless divisions
along narrow partisan lines.

“One could say Mugabe and his government have managed to rule for so long
because they have been so good at divide and rule both with the ordinary
people and also within Zanu PF itself.

“What should unite everyone is that simple desire for a better Zimbabwe
where freedom and development are the currency of the day,” the Human
Rights Watch senior Africa researcher said.

Commentator Tabani Moyo said the problem was that Zimbabwe’s leadership
was pre-occupied with power retention at all costs, including sinking the
national economy and its social services along the way.

“Our national budget is mainly on salaries. The government is likely going
to print additional bond notes to pay salaries, which will fast eat into
the real US dollars that are remaining and grounding the capacity for
retail and trade to restock,” he said.

Political analyst Maxwell Saungweme said the economic downturn and
deterioration in social conditions will force the people to push Zanu PF
out of power.

“The opposition needs to be organised and coalesce and capitalise on these
conditions to win the votes and change the fate of our nation,” he said.

Mining analyst Farai Maguwu believes Zimbabwe is fast heading back to
2008.

“It won’t be long before basic commodities start to disappear from the
shelves.

“There is no amount of economic crisis that can stop Zanu PF from holding
an election, all they need is a gullible, compromised opposition that will
participate, even as a coalition, and legitimise them.”