Zimbabwe: Is Zimbabwe Broke or Broken?

ZIMBABWE’S economic crisis is worsening, and government is beginning to feel the pinch as much as the governed.

Source: Zimbabwe: Is Zimbabwe Broke or Broken? – allAfrica  19 May 2016

The State, now the bellwether of the country’s economic health, has been scrounging for monthly salaries to pay civil servants.

Is the country, once a breadbasket in southern African, broke or broken?

Economists and analysts are divided, but many agree the situation is cause for grave concern.

While others agree that Zimbabwe is now broke, Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya, insists it is not broke, but has been damaged by errant entrepreneurs and rouge dealers.

Mangudya said Zimbabwe had been ruined by charlatans mercilessly milking its economy.

“What I believe is that Zimbabwe is not broke but damaged by people who abuse (its) resources,” said Mangudya.

“People are taking the money out of the country. It’s leaking outside the country. The money is going out either through wire transfer or cash. I am concerned with the misuse of foreign exchange. We need to promote the use of plastic money,” he argued.

Industrialist, Busisa Moyo, disagrees.

“Zimbabwe is a broken economy that requires mending, healing and a new soul,” said Moyo, the Confederation of Zimbabwe Industries (CZI) president.

Moyo, the chief executive of United Refineries, a fast moving consumer goods manufacturer, said there was apprehension over current measures since the hyperinflationary period that ended with adoption of a multiple currency system in 2009 had “left a trail of destruction and in its wake — collapsed industries and institutions that could not operate in that environment”.

He was referring to the planned introduction of bond notes by the RBZ, which many view as the return of the Zimbabwe dollar through the backdoor.

Reflecting on the hyperinflationary period, Moyo said there was a “loss of skills, corporate governance and ethical behaviour that had been embedded in our way of life from the family to the corporate board room. (There was) nauseating levels of corruption and rent seeking behaviours that still continue the agenda of economic turnaround.”

Economist, Godfrey Kanyenze, said it was difficult to categorise the country as broke.

“(But) it is in paralysis, in stasis, logjam as a result of a predatory state,” he said.

“The presidential system where power is centralised in the Presidency promotes clientelism, cronyism and creates a dependency syndrome, and hence the dominant culture of consumption,” said Kanyenze.

John Robertson, an economic consultant, disagreed, saying Zimbabwe was “certainly broke”.

“The economy is certainly battered and bent, but all the damage can be fixed. Unfortunately, the nature of the damage can be largely described as the result of government interference,” said Robertson.

Robertson said government had for years imposed many regulations and controls designed to place its officials in positions of authority that allowed them to demand submissive obedience from the business sector.

“This has turned the country into a hostile environment for new businesses and a very discouraging place that has stopped most existing businesses from growing,” said Robertson.