Zimbabwe waits for change, and waits, and waits

Zimbabwe, a once-prosperous land now impoverished, waits for change, writes Barry D. Wood.

Source: Zimbabwe waits for change, and waits, and waits

HARARE, Zimbabwe (MarketWatch) — The chalk board at Harare station said the train from Bulawayo would arrive at 1 p.m. A half dozen people waited on the platform. The train had not arrived at 1:30. The people waited. Two hours later the station master, seated in an empty office, answered a visitor’s question saying it might arrive at 5, or perhaps 6. The overnight train had departed Bulawayo, a five-hour drive from the capital, the previous evening.

Waiting is what Zimbabweans do every day. They wait at banks for cash that is in short supply. They wait for transportation to and from home. And most of all they wait for change in this once-rich now-impoverished land where unemployment is put at 80%.

Robert Mugabe, who turned 93 this week, has ruled Zimbabwe for 37 years since it gained independence from Britain in 1980. He is the world’s oldest head of state. In Africa only Angola’s Jose Eduardo dos Santos has ruled longer, 38 years. However, unlike Mugabe dos Santos says he will retire next year.

This week, state media quoted Mugabe as saying he is willing to continue as president after next year’s parliamentary elections. He said his Zanu-PF party “wants me to stand for elections…The majority of the people feel that there is no replacement, successor, who to them is acceptable.”

In recent months Mugabe has become increasingly frail but he continues to travel extensively. In December he attended the funeral in Cuba of his long-time ally and friend Fidel Castro.

Zimbabweans also await the fate of their government’s surrogate money called bond notes, which since December circulate alongside the U.S. dollar in $2 and now $5 denominations. The Zimbabwean dollar — destroyed by hyperinflation — was abandoned in 2008, but not before the central bank printed a Z$50 trillion note!

Adopting the U.S. dollar as its unofficial currency brought stability but created new problems. Unable to issue U.S. dollars and running a trade deficit, Zimbabwe ran out of money. The cash squeeze is what prompted the authorities to issue the bond notes, which they say are backed by a loan from a bank in Cairo.

Zimbabweans distrust the bond notes and they already trade at a 15% discount. Except for a red bond note banner at the top the surrogate notes are identical to the discredited Zimbabwe dollar.

Lenders like the International Monetary Fund and World Bank say they can’t provide loans to Zimbabwe until outstanding arrears are cleared and a clear market-based reform plan is put in place.

Steve Hanke, an economist who specializes in currency meltdowns, says the bond-note scheme will fail. Hanke, a professor at Johns Hopkins University in Baltimore, says Zimbabwe’s economy is approaching a death spiral. Stagnant in 2016, the economy is projected to decline 2½% this year.

The financial problem is closely tied to the political one. How long, Zimbabweans ask, can Robert Mugabe carry on? Analysts say government decision-making is paralyzed in advance of next year’s election. Mugabe has not designated a successor, the opposition is splintered, and there are multiple contenders for power within the ruling party.

Mugabe is revered by African leaders for his fight against white minority rule. He’s become increasingly despotic. Elections have been rigged, political opponents attacked. thousands killed, 2 million people fled to South Africa, white commercial farmers were evicted and thousands of people in rural areas are dependent on food aid. Mugabe’s atrocious human rights record led to sanctions and isolation from the global community.

Through it all Zimbabweans wait.

For all its problems Zimbabwe is a rich land. Gold, platinum, chrome and diamonds account for most exports. Once a prosperous city, Harare retains a veneer of modernity, although basic services deteriorate while Zimbabweans wait.

Washington-based journalist Barry D. Wood, has been regular visitor to Zimbabwe over several decades and spent several days in Harare earlier this month.