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.



  • comment-avatar
    mwana wevhu 10 years ago

    With all these fundis who portray our economic outlook with surgical precision and profer sound advise, what will it take for the erstwhile educated authorities to take heed? Please homopoliticus spare a thought for the sufferring populace & listen to reason!

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    Old Man River 10 years ago

    Those of us unfortunate enough to need banking facilities have to pay the bank just to keep it there, then pay them again to take it out, while the bank itself uses it to earn fat sums in interest, dividends etc. While we’re at it, why in this day and age does it take five days or more for an international transfer to arrive in one’s account? Why, so the bank can have use of it for those five days, to make itself even more money – and then has the gall to deduct enormous charges. Good luck to those who can keep their money in their wardrobe/wallets etc. They may get it nicked, but at least they aren’t ripped off (or getting it nicked) by the bankers.

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    Africanson 10 years ago

    Mr. Block I attended one of your presentations in Zimbabwe some 7 yrs back in just before I prepared my departmental budget. Soon after your presentation I doubted your forecasts and went ahead with mine. As a result my budget was a disaster. I should have taken your advice. I respect you for your economic know how. Please keep coming to post on this site. Most of us need your input, we’re in the dark. We need to free our minds from politicians and embrace economic knowledge

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    Nyoni 10 years ago

    What insurance do the banks give if there is a crisis?

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    Johann 10 years ago

    Mr Bloch. The reality on the ground is that Zpf Kleptomaniacs rule. They have ruled since independence and hind sight does not suggest anything positive. The tail is wagging the dog.

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      Coenraad Brand 10 years ago

      But how on earth can we know what the realities are when nobody in government is willing to tell us what is going on? We have to wait for some periodic report fromn the World Bank to have a backward glimpse. Can Erich Bloch inform us about these realities?

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    Rwendo 10 years ago

    Well 1. If a government is faced with a nervous, unsettled populace, banking and private sectors, why delay the budget, whatever consultations are needed? 2. Similarly, if there are rumours and uncertainty about the Zim dollar, let us see if the government will move speedily to appoint a new RBZ Governor who is competent, respected by bankers and the financial sector. Someone who is independent minded and who quickly lays out a reassuring program. As opposed to delays while government “consults” for the best candidate.

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    Charlie Cochrane 10 years ago

    Never claim to know, nor try to predict, the future actions of sociopaths and psychopaths…….one day your head will rest upon your neck the next on a platter!!

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    Boss MyAss 10 years ago

    Stop barking, stop mumbling the hands that can feed your people you useless.

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    zim is in serious need of economic know how and practical sense.