John Kachembere and Ndakaziva Majaka 2 February 2017
HARARE – Economists and leading opposition figures say Zimbabwe is heading
for a disaster of mega proportions if Zanu PF remains fixated on its
seemingly unstoppable tribal, factional and succession wars, and the
country’s economic meltdown is not arrested soon.
This comes as poverty continues to ravage millions of hapless citizens –
with many choosing to flee the country into neighbouring states, and some
emigrating as far as Australia, the United States, the United Kingdom and
Canada – as Zimbabwe’s economy continues to die.
Former Finance minister Tendai Biti was among the people who told the
Daily News yesterday that Zimbabwe was “definitely” heading for disaster,
and that as long as President Robert Mugabe and Zanu PF remained in power,
there was no respite for long-suffering citizens in sight.
“You can force-march the electorate to vote and engineer an election
outcome because you control the securocrats, but you can’t rig the
economy,” he said.
The People’s Democratic Party (PDP) leader’s dire prognosis for Zimbabwe
came as the International Monetary Fund (IMF) is expecting the country’s
economy to shrink by a precipitous 2,5 percent this year, after last
year’s 0,3 percent fall.
At the same time, economists have warned that poverty levels in the
country have skyrocketed since 2013, shooting up alarmingly from about 35
percent then, to around 80 percent today.
Statistics from the United Nations also show that at least 72 percent of
the population is living in extreme poverty – with malnutrition, disease
and death incidences rising as a result of the absence of basic health
care services in the country.
Available stats also show that only about 11 percent of Zimbabwean
children aged between six and 23 months receive a minimum, acceptable diet
– resulting in about one-third of children showing stunted growth.
Biti also said damningly yesterday that it was little wonder that for the
first time in more than 127 years of the country’s history, civil servants
were failing to get their salaries on time – all thanks to “Zanu PF’s
sheer incompetence and proclivity for profligate lifestyle at the expense
of infrastructure development and production”.
“We have become the pothole capital of Africa. We must actually apologise
to DRC (Democratic Republic of Congo) president Joseph Kabila for stealing
his position,” he added tongue-in-cheek.
On its part, opposition leader Morgan Tsvangirai’s MDC said it was only
“through God’s grace” that Zimbabweans were somehow managing to survive in
the face of the country’s severe economic challenges, the serious typhoid
outbreak, lack of food, high unemployment and the resultant breakdown in
social and health delivery systems.
“A snowball has a better chance of surviving in hell than that of the Zanu
PF regime successfully turning around Zimbabwe’s comatose economy.
“If this decadent regime manages to rig the economy, then Obert Gutu will
successfully manage to sell ice to an Eskimo,” MDC spokesperson Obert Gutu
Since Zanu PF controversially won the 2013 elections, the country’s
economic plight has worsened after years of steady progress during the era
of the country’s government of national unity.
Zimbabwe’s external debt has ballooned to more than $10 billion, while
economic deflation has taken root as consumer demand has shrunk, as the
Once bustling factories in Harare, Bulawayo, Gweru, Mutare and other
cities are now rusty shells due to the economic crisis – which is
manifested by a severe liquidity and cash crunch, high production costs
and Stone-Age government policies that retard business development.
In addition, the poor agricultural policies being implemented by the
government have resulted in millions of citizens requiring food aid. At
the same time, joblessness now stands at a staggering 90 percent, with
power shortages also getting worse by the day.
Gutu described Zanu PF scathingly as “structurally and politically
fractured, and deformed beyond redemption”.
“With a nonagenarian autocrat at the helm of the regime, the chances of
resuscitating the economy are zero.
“What Zimbabwe needs and very urgently is a new people-centred and
accountable government that will repeal the foolish and retrogressive
indigenisation laws imposed by the Zanu PF regime, and also craft and
implement a sustainable land reform policy, while respecting private
property rights and upholding the rule of law,” he added.
Debilitatingly, it has also been revealed recently that Zimbabwe has only
$304 million in hard cash in circulation, including $73 million in bond
notes as of January 2017 – about a third of demand.
An advisor to the Office of the President and Cabinet, Ashok Chakravarti,
also said last week that the hard cash in circulation, inclusive of bond
notes and United States dollars, was five percent of total bank deposits –
which had contributed to the country’s liquidity crisis.
“If you look at comparative studies from other economies, cash to deposit
ratio should be between 10 percent to 12 percent. If an economy has got
less than 12 percent, it faces liquidity crisis … We need $900 million
in cash to have adequate liquidity,” he said.
Respected economist Tony Hawkins told the Daily News that the introduction
of bond notes at a time when the greenback was fast disappearing from the
market was a clear indication that Zimbabwe was on the way to
re-introducing its own currency.
“Despite official denials that the bond notes are not a new currency, the
country is already on this path,” he said.
“In this case, by virtue of the bond notes being bad money, they are
driving out good money, and resulting in dollars being externalised and/or
held informally, not in banks,” he added.
Zimbabwe, which introduced bond notes last year to ease the dire cash
crisis, abandoned its own currency in 2009 in favour of a multi-currency
system dominated by the United States dollar.
Hawkins noted that cash premiums had invaded the market, with some
supermarkets offering discounts to customers using the greenback, while
others were rejecting bond notes outright.
“When talking about the bond notes, it is crucial to realise that there
already is money printing, which is worsening the excess demand for forex,
with higher inflation inevitable.
“In my view, the country is at risk of disorderly devaluation as happened
in the early 2000s, and this will have a devastating impact on savings,
corporate balance sheets and pensions,” he said.