Zimbabweans opting out of the system

via Withdrawal symptoms: Zimbabweans opting out of the system – DailyNews Live 2 JANUARY 2014 by Francis Harawa 

Zimbabweans started withdrawing from the economy long before it collapsed.

There was a lot of “wheeling and dealing” (madhiri) in offices and other places in the late 1980s and early 90s as  foreign exchange shortages began to bite and those who could source it bought machinery spares for companies, making a killing.

As incomes shrunk during the period of the Economic Structural Adjustment Programme (Esap), many discovered they could operate outside the formal economy and do even better — government did not have the capacity to monitor their incomes and therefore tax them.

In 1989, the late Sungura maestro Leornard Dembo released the hit song Shamwari yangu warova (Where have you been my friend?), The answer: “I was busy wheeling and dealing.” The record sold over 100 000 copies and became a must song at weddings.

Many may not have fully digested the gist of Dembo’s message but it typified the time and continues to do so.

Zimbabweans began operating outside the system  because the State was failing to meet its obligations to citizens — first and foremost, providing employment, housing, affordable food and other social amenities — health  services, medicines, water and electricity.

The shortage of water spawned a well digging and borehole sinking frenzy for those who could afford, and power blackouts have led to a flourishing power generator sales boom, with hundreds of thousands of households turning to gas. They have been disengaging from the system.

The cross border trade with Zambia, Malawi, Tanzania and neighbours Botswana and South Africa, created a class of people who made money by avoiding duty and tax, while doubling or tripling profits — a mentality some economics says continues to haunt pricing in the country.

In addition, Zimbabweans have kept Tobias Mudede, the Registrar-General busy issuing passports year in and year out because they consider the travel document as good as a job. With a small start-up capital, one can cross the border and bring some trinkets for sale. No wonder some economists have said Zimbabwe is now a nation of traders — everyone is trying to sell something to somebody.

Company closures after 2000 created “home industries” where the skilled who did not want to look for greener pastures outside the country, started making furniture, window and door frames, shoes, you name it, by the road side. Again the earnings were not visible to government.

As shortages of commodities and foodstuffs persisted, people opened tuck shops at their homes to supplemented family incomes.

This was not limited to ordinary citizens, ministers were accused of commandeering basic commodities like sugar and cooking oil and the staple maize meal, maximising their profits as they were the only ones with the commodities.

Some top officials even had warehouses filled to the rafters with commodities that were in short supply.

In its 2002 presidential manifesto, Zanu PF promised to create 500 000 jobs, yet by 2005, the economy was losing thousands of jobs as industry failed to source forex for raw materials, sending more Zimbabweans onto the unemployment queues and many more into the diaspora.

Those who migrated later saved family members left behind, sending hard earned forex which “Gono’s boys” gobbled up.

At one stage, wealth was measured by the number of sons or daughters one had in the UK.

Those who had honest relatives bought numerous properties but for others, it was “Nhava izere mhepo” (a wasted effort), according to the Katekwe  composer Oliver Mutukudzi.

Flea markets sprouted in the city overnight, with most of the car parks filled with goods from neighboring countries.

The markets also doubled as bureaux de change.

During Murambatsvina, hot on the heels of the 2005 general elections, some people said flea markets had been targeted to flush out the forex in the streets because Gono wanted it. The streets were later awash with “boys” who traded in forex, offering the best rates. They were conveniently well connected.

In the high density suburbs,  people built shacks which they also rented out to make ends meet. This overburdened the sewerage and water systems built before independence for a limited population which was strictly monitored under the colonial government. Rentals  went into the pockets of the landlords. City Councils and the government didn’t benefit.

Government was accused of demolishing unplanned structures behind people’s residences which “haboured” the many people who voted against Zanu PF in the 2005 polls. The opposition MDC had won 47 seats most in urban centres.

Zimbabwe government began printing money in 1997 to pay restive war veterans who were reeling from the effects of Esap. The dollar lost over fifty percent of its value overnight. When Gono became governor in 2003, the printing presses never stopped as he implemented his quasi-fiscal policies, driving the inflation rate to a record 230m percent.

The Zanu PF  government said the shortages of notes was variously caused by forex dealers who spirited away the notes for trading at border posts.

The truth was that at the rate at which inflation was  growing, it was impossible to print money to meet demand.  At some stage banks bought money from people who generated mounds of daily cash.

But perhaps the biggest damage to Zimbabweans during the hyper-inflationary era was  the destruction of their confidence in the banking system.

Hundreds of thousands of Zimbabweans lost their money when banks and financial institutions started collapsing in 2006 when Gono pounced on banks, and money transfer agencies canceling licences of those that were skirting the laws.

After the bank closures, the central bank imposed cash withdrawal limits that saw people queueing for amounts that were barely enough to pay for fares to get back home. This prompted people to open numerous bank accounts in attempts to beat the system.

I remember in one month when I was on leave, I went to the bank every day of the week.

When month end came, I was told there was no money in my account, charges for the daily withdrawals had wiped out my salary.

When dollarisation was introduced in 2009, Zimbabweans had rejected “Gono’s money” the 100 trillion dollar note could not be used in combis and shops. The Zim dollar then froze at One US dollar to Z$64 trillion.

Then came the earth-shattering event,  people woke up one morning to find their bank balances had been reduced to naught — years of savings, insurance policies, retirement packages and all. That did it. Zimbabweans lost their confidence in the banking system — completely.

After dollarisation, Zimbabweans nursing scars from the hyper-inflationary era, shied away from banks.

They preferred to keep their money “under mattresses.” The result: over $2 billion circulating outside banks and a paucity of savings to be used for borrowing.

With the informal sector employing 3,5 million, Zimbabweans have decided to do it for themselves.

But the money will continue to circulate outside banks, worsened by the fact that  indigenous banks have begun collapsing again. A number are failing to meet daily cash withdrawals.

One has already been closed, others are teetering on the brink of collapse.

When Zannu PF won the July 31 polls, people made a run on the banks and withdrew of billion of dollars.

In its election manifesto this year, Zanu PF promised to create 2,2 million jobs.

A recent  Confederation of Zimbabwe Industries survey shows over 900 companies have closed since 2009 and many more are reeling, throwing more people into the streets and strengthening the informal sector.

With the economy grinding to a halt, it is not surprising Chinamasa has no funds in his kitty.


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    A sobering analysis. It’s hard to see how anything can change for the better with Bob and his un-educated thugs running, or rather ruining, the economy.

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    Tjingababili 9 years ago


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    John Thomas 9 years ago

    Good article. I enjoyed the trip down memory lane.

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    Africanson 9 years ago

    Francis your chronological analysis and narration is sport on. I vividly remember seeing new banks notes circulating from fourth street before they are formally launched in banks. This was coming straight from the Reserve bank in huge amounts by Gono guys. Indeed Zimbabweans have long lost confidence in every operating system in the economy and country. Citizens have and are still being milked dry from all faulty systems be it Police, Registrar General, Tax, Zesa, Refuse collection or indigenousation or even education. The formal sector is naturally dead and confidence can only be resurrected by instituting proper into corruption procedures from the top that are practical and transparent. I don’t see that happening in 5 years or even after because there is no will or desire in the system. Who do you entrust to do that because its unnatural or impossible to assign hyena to watch over your goats or a rapist to watch over a girl child. The long and short of it is that we are screwed.

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    ani cha chinja dzimwa chiedza?

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    Redemption 9 years ago

    Robert Mugabe has ruined this country

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    Senzachena 9 years ago

    Regretably the situation is going to get much worse. Be sure that more banks will close, be sure that basic food stuffs will run out, be sure that there will be a massive crack down by the so called Government on political freedom. You people who voted for Mugabe and his thugs are to blame. When are we going to see the people say enough is enough, rise and rid our beautiful country of this filth!

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    DANDARO 9 years ago

    That was an accurate and factual analysis on how we got where we are today. Unfortunately the dimwits instead of learning from their mistakes (understatement) believe you me they are going to come out guns blazing blaming the west, the British or anyone else for having watched and let them do what they have been doing to Zimbabwe. ‘How and why did these imperialists leave us to do this to Our Zimbabwe’ kikikikikiki!!!!!

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    Very good article. Puts the business and personal life of people living and working in Zimbabwe into context.

    The half wit from the Herald who wrote the article ‘Deal with reserved sectors racketeering should read this article if he really wants to know why people keep their money out of the formal banking system.

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    Sekuru Mapenga 9 years ago

    As one of the economists said during the hyperinflation: “Any Zimbabwean business that operates strictly according to the government rules will go bankrupt in days, if not in minutes.” That is why Zimbabweans have opted out of the system. The system has been designed to strip them entirely of their every asset.

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    Having recently spent the worst 3 weeks holiday in zimbabwe I can only have pity on the zimbabwe people. From a tourist point of view zims has the most corrupt and thieving police force in the world.I did not feel at all comfortable with their persistent intimidation and threatening attitude to every south african I saw up their.We were fined $20 US at nearly every roadblock(and there are plenty on the main routes)The worst was when we were pulled over by 4 ZRP BABOONS in harare and fined $200 US (over R2200) for not stopping at a zebra crossing.We reported this at a harare police station and the response was very layed back as if all of these excuses for human beings were in it together.It is very clear that the election was stolen as stealing from people by zanu pf and the “goon” police force is mandatory.Food and most things are approx 3 times more expensive than SA so the so called private sector is in on it aswell.It is my intention to alert every forum magazine of this most pathetic country in africa.I heard the odd rumour etc about this police state but never imagined I would be treated like this as an african tourist.All I hope for is for every policeman that stole my money will be cursed for the rest of his life for ruining a hard earned holiday.

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      @Tourist thank you for making my day reason being when we locals speak out against corruption we are always classed as malcontents intent on causing agro for the present goverment . For your bad expieriance some of us are truly sorry for , for putting pen to paper i thank you

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    Apolitical 9 years ago

    Or, we turn to reality:-
    A few saw an opportunity of gaining power and lining their pockets.
    The unions are always a good cover, so we saw a riot of new dimensions where the leader seeing the success of looting and burning of kiosks announced he didn’t see why he shouldn’t be president.
    All you have to do is get the west on your side, grtbinto economic sabotage and they are the experts and end up where we are today.
    Without power companies will close there will be further unemployment, its obvious, that’s the way to go.
    So from a country that was capable of supplying industry with energy in the good times we went to a country where the generating capacity suddenly disappeared where the population thought nothing was wrong – its rumours cant be economic sabotage going on it would be in the press.
    Enter control by the west of the press.
    In the midst of all this, Harare Power Station was ordered closed, not bey government but by the saboteurs.
    in 2007 not even a light bulb was working in the power station and no smoke from the chimneys at all – with a free press of the west putting their pocket before family and country, no comment was made.A group of pensioners undertook an investigation and found it was sabotage.
    The MD of ZPC was fired, the CEO eventually, and the power station restarted now making a million a month profit.
    The western propaganda press helped by stating there was no coal at Wankie, that was the problem couldn’t be sabotage becaudse we are loyal to the west. Coal had been tested at Sengwa, there is 500 years supply available and can be used in Harare.
    My goodness the smoke has returned to the chimneys at Harare power station, it needs to stop say the sabateurs. Lets get Nam power put 2 more generastors in and with kickbacks to sabateurs the generators at 10 million could be inflated to 85 million. To make it look good we don’t need cash payment in
    power we don’t have will destroy the country for another 5 years.
    Problem we have a new minister who wont toe the line and pay in energy- but hes on leave – lets ok the tender incresease it after the tender closed to 135 million because we may get fired and need a package.
    Lets see we have a maintenance engineer in Wankie and normally close one generator at a time for maintenance, lets close a lot down so people think the new government cant manage, call Nam power in then present the bill.
    Then how will he pay 135 million to Nampower, you may ask in power of course he has no cash. Exit government plans, Zanu promises to revamp agriculture and industry- as is shouted out in parliament by the opposition currently you don’t have power, they of course are within the knowledge of course being on the same side after personal wealth and power at any cost.
    Then there are the small cash deals to line saboteur’s pockets, lets con the public into prepaid meters – Zesa say it is mandatory by legislation, its a lie and the AG has ordered investigation by the serious crimes unit on the second floor.
    Idea is they can up the tariffs without government permission making it too expensive to live and run a business.
    Don’t read this and think its journalistic propaganda go to Harare power station check with serious crime and then all we need is a journalist without a yellow streak who cares about his family and the nation to put a factual report in the press, not those written by propaganda advisors.
    Don’t be like the sheep who believed the press and let all this happen to our country and children.

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      Apolitical 9 years ago

      I note that according to one comment people are called malcontents when they report corruption. – my point was that journalists don’t report corruption anyway because some is deliberate and promoting regime change like the one above.
      To make it easy for an almost extinct responsible investigative journalist.
      1. A DI Nduwa, is the investigating officer at serious crime on the ZESA prepaid meter scandal. phone him on 0773273726 and ask if its compulsory to have a pre paid meter – when he answers no, then ring zesa/ZPC and ask them.
      Is the meter installed free – no it, cost plus installation will be charged as an outstanding bill on your bill and then the units per dollar will remain the same. There is legislation saying if you want one you pay cost plus installation as an outstanding bill.
      Its easy!
      2. Visit Harare Power Station ask an employee even thev security guard what has been happening.
      Then research the ZPC announcements like the ‘tender’ for 2v generators which closed in August last, with Nampower winning and after the tender closed the price and payment still under discussion now inflated accpording to a subsequent announcememnt to 135 million.
      There is no tender procedure in the world that operates like that, where you choose a winner and discuss price later – proof is easy.
      All we need to sort the problems out is one responsible journalist, interesting to see if we have one.

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      Mafirakureva 9 years ago

      U hv no single idea of what u r talking about….zim power woes are a direct result of zpf policies..when the batoka power station plan was 1st muted it took a zpf minister ‘chikowore’ to derail the whole process insisting it was ‘cheaper to import’..ffwd during e height of hyperinflation power thru ZERA laws had to be sold in zim dollars even though imports had to be paid in forex resulting in zesa being saddled wth hundreds of million of dollars which it is up to now still struggling to pay…those saboteurs u r refering to are the very same hand picked boards and managers appointed by ‘non other than who’ zpf

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    Many zanupf criminals will be frogmarched to the snakepit at our new chikurubi. Excellent exposee. This has actually been 33 years of well planned well organised terrorists who never ever liberated our nation. It’s a free for all circus with an imminent inevitable end.one of the biggest thieving heists orchestrated in history by the most despicable self enriching kleptomaniacal. I foresee great retribution soon on the accountable by povo

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      Apolitical 9 years ago

      Revenger – you have a serious problem there are criminals everywhere, its people like you that have allowed those in Zesa to get away, “cant be saboteurs because they are in the party I support”. What an idiot – you have been conned like a new born baby.

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    Kitsi-yatota 9 years ago

    @ tourist, yu are right, was fine $20 for not having a sticker showing GVM and NVM on a SA isuzu high rider. Its just our family car, a double cab. I had the traffic register and the “sergent” could not entertain that. Luckily I did not have a $1 with me, and being a Zimbabwean, I asked him to take me to court as i believe the courts would explain the laws better to me. he told me that SA vehicle were only supposed to pay spot fines as they may “slip” out of the country. I asked him to take the car, impound it pending the court case. he said the process will be too “long and complex” according he told me that he will be “lienient to me” and gave me a “cautioned and wanned statement”. he gave my documents and i left

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      As I parked my borrowed car I was approached by two Police, one of them a woman. They said I had went through a red traffic light.I asked which one. They insisted it was the one from the opposite direction that I had come from. The man said “just give him a warning and let him go”. The woman said “no he must pay”.I asked how much. She said “50 u.s”. I said I didn’t have that amount. “How much do you have?” she asked. I paid 10 u.s. And went on my way.You cannot win with these guys because if you report them it’s like reporting a thief to another thief.

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    Katsi-yatota 9 years ago

    we are heading to doom

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    Charles nykadzino 9 years ago

    Then they say he has seven degrees…The first one was under Bantu education. The rest confined to the four walls of prison cell. Economics 101 must have been jumped because of an excellent score in History 101. Its mind boggling.

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    Johnny k 9 years ago

    A great article, points out all the failings and not one iota of blame can be pointed at Tony Blair or George Bush.

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    guy Gusu 9 years ago

    Things fall apart and they will continue to do so as long as the ZANU(PF) thieves are in power. What does Chinamasa know about finance? Absolutely nothing and he knows this! When people in a country opt to use the Zimkwachas as toilet paper (as happened during the hyperinflation period)because they can’t afford the paper, then let us get worried. Yes indeed, they can cheat us everywhere else, BUT they cannot cheat the economy.

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    Patriot 9 years ago

    Spot on analysis. Forgot to mention the involvement of our troops in the DRC war without parliamentary approval and how much damage that did to our economy while a few big fish benefited from the minerals in the DRC.

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    It will end when Mugabe can no longer pay the police or the army, be patient

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    Mr Mixed Race 9 years ago

    @apolitical,I have read your comments with great interest however the real problem at ZESA is very poor management as I have mentioned it before on articles about ZESA.The top management at ZESA has no clue what is happening on the ground, maybe its due to lack of experience.The problem is that we have political appointees at these vital parastatals with specific political agendas.It should be very easy to pick up mal-practices at a power station if the CEO or his subordinates are switched on.Some times I feel frustrated because our current system does not allow us to help in these vital organisations without exposing ourselves.Maybe one day things will change to allow us to help freely to develop our dear country.
    As the economy gets worse many people will ignore bank savings and the government will have to tax the rich to pay the army and the police.The government has to come out with solutions since they formulated all the policies causing these problems.Recent statistics claimed that our unemployment is only 11-13%,therefore the government can tax the so-called employed people if these figures are true.

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      adam jones 9 years ago

      Without bragging – when I completed my ‘A levels’ I did my apprenticeship at NRZ them worked on the railways – boots on the ground in Zimbabwe – then railways in the UK because we earned less than could take one to work in Zimbabwe at that time. So I went to the UK and studied railway engineering and now am doing consultancy (railway engineering) internationally. Keen to return to Zimbabwe to get our railway system working again. We are rebuilding the railways in SA and we will soon be building the post Mugabe transport network in our native Zimbabwe. Long live Zimbabwe.

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    adam jones 9 years ago

    Chinamasa – advance kushuga

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    happison Muchechetere kind of people are destroying our nation while we are watching and doing nothing

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    Oldsoldier 9 years ago

    A wonderful analysis. I hope someone in a position to take decision is listening. Zimbabwe is still a great country that has been blessed in many ways. What is needed is the political will to formulate the right policies.