Rumours intensifying economic morass – Eric Bloch

via Rumours intensifying economic morass November 29, 2013 Eric Bloch  Zimbabwe Independent

The Zimbabwean economy has been in a tailspin for more than 16 years, notwithstanding a marginal recovery during the last four years. So emaciated has the economy been that the majority of the populace struggles to survive on incomes considerably below the poverty datum line (PDL).

Thousands are homeless, with most unable to access essential health care services and formal education for their children.

Government, by its own admission, is bankrupt as are most parastatals, and as a result, there is an appalling deficiency in infrastructural services and utility supplies in general. The country has an accumulated debt in excess of US$10 billion with monetary outflows considerably exceeding inflows.

The agricultural and manufacturing sectors have suffered almost unending contraction, only marginally compensated for by some growth in mining and in tourism. Foreign direct investment (FDI), a pre-requisite for economic upturn, is minimal, notwithstanding the magnitude of Zimbabwe’s medium to long-term potential.

The causes of the endlessly abysmal state of the country and of the consequential innumerable national ills and discomforts are many. Overriding the number of economic debilitating triggers, the foremost have been the never-ending, ill-considered, wholly politically motivated policies, actions or inactions on the part of government during the period 1997 to 2008.

In a myopic disregard to facts and realities and the contemptuous dismissal of all well-founded advice and input from the well-informed private sector, the government has obdurately pursued economic destruction tactics, clearly driven by political considerations, self-enrichment of many in the political hierarchy and those who are well-connected.

There is widespread corruption in the private sector.

However, yet another economically destructive mechanism which has been developing at an excessively dismaying pace has been the reaction of the population in general and the business sector in particular, to the rumourmill. Having been mislead and deceived for so long by the political regime, which is determined to divert public opinion from the actual causes of the country’s ills, rumour-mongering has been accelerating exponentially. Each and every rumour is immediately disseminated far and wide and usually is concurrently expanded and embroidered upon.

Any rumour which tends to be positive is immediately rejected as being specious and devoid of any substance whatsoever. In contradistinction, if the rumour is negative, it is immediately accepted as the truth.

Among the many such hallucinatory imaginations being transformed into actual economic hurdles is the recurrent contention (made with alleged factual knowledge, but actually wholly devoid of substance) that reinstatement of a national currency is imminent. The disseminators of the rumours claim authoritative knowledge that government and the monetary authorities are not only determined to immediately bring back the Zimbabwe dollar (although possibly with a new name), but have recently engaged in the printing of the defunct local unit.

Those claiming that the re-introduction of the Zim dollar is imminent are in total disregard of statements made by the Ministry of Finance and the Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono that the earliest that such currency can be brought back would be 2016. The authorities have also pointed out that if that happens, the local unit would be a component of a continuing multi-currency system.

In the new government’s proposed economic recovery and development plan, the Zimbabwe Agenda for Socio-Economic Transformation (ZimAsset), the rumour-mongers have been dismissed as disseminators of economic doom and gloom.

As a result this rumour has sucked out confidence in Zimbabwe’s banking and financial sectors by the general populace, and also the business sector in particular, hence preferring to hold on to their cash be it in US dollars, rands, sterling pound, or others, in their wardrobes, home and business safes, wallets and handbags. By so doing, they are actually creating instability in the financial sector causing imaginary circumstances which do not exist. That, in turn, constrains the ability by the financial sector to provide funding necessary for the operations and progressive recovery of the many economic sectors. It also further weakens the interest of potential FDI, thereby hindering the revitalisation of commerce and industry and the development of other economic sectors.

Similarly, the rumour-mongers contend that the rescheduling of the presentation to parliament of the 2014 national budget from November to December or January is evidence of dysfunctional government and imploding economy.

The fact that such presentation is legislatively mandatory by not later than January 2014 is disregarded as is also the fact that the motivation for the rescheduling is to enable comprehensive interaction between government and the private sector as to the budgetary provisions and policies proposed for the next financial year. Instead, the delay has stimulated the doom and gloom merchants to read negatives into the rescheduling further depressing the national economic prospects despite the deeply low levels at which they already are.

It is long overdue for the private sector to cease jumping to unsubstantiated, negative assumptions and conclusions on each and every economic occurrence without considering the realities on the ground.