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Zimbabwe's dying economy a 'ticking bomb'

by Staff reporter
30 Apr 2017 at 14:19hrs | Views
Long-suffering Zimbabweans have laid into President Robert Mugabe's misfiring government, warning that the country's dying economy, worsening cash shortages and rising poverty levels are "a ticking time bomb" that now requires emergency measures.

This comes as the country's usually restrained church leaders have also waded into the cash crisis saga, saying that this is indicative of "a complete failure" by the broke Zanu-PF government to deliver on any of its 2013 electoral promises.

It also comes as there are growing fears that the Zimbabwe's dying economy is hurtling towards the debilitating lows of 2008, as bond notes - which were meant to mitigate the country's cash crunch - are themselves fast disappearing from the market.

United States dollars long vanished from the formal market - with the coveted greenbacks now only easily available in the thriving black market.

On its part, the Reserve Bank of Zimbabwe (RBZ) recently ruled out injecting more bond notes into the economy, arguing that Zimbabwe's worsening cash crisis would only improve when the country's production and export performances improved.

This has seen overstretched banks resorting to giving desperate depositors bags of inconvenient bond coins when they withdraw their money.

The leader of radical pressure group Tajamuka/Sesijikile, Promise Mkwananzi, was among those who warned authorities in an interview with the Daily News on Sunday yesterday that the country's worsening economic woes and cash shortages were "a ticking time bomb".

"We said it last year that the useless bond notes were not the solution. The current cash shortages are also evidence that President Mugabe and his government have failed.

"The people are very angry about the state of the economy and the fact that they are not getting their money. They are also angry at politicians who are externalising money.

"The only solution available to Zimbabweans now is a change of government, as the president no longer has the ability to lead this nation.

"The banks must also make sure that people are served and that they get their money. Where indeed is the people's money?" Mkwananzi said.

The RBZ introduced bond notes at the end of last year to help ease the country's severe cash shortages, but so far this has failed to satisfy the market's cash needs.

The acute cash shortages have seen banks limiting the amount of money both individuals and companies can withdraw, sometimes to as low as $20.

So bad has the situation become that desperate customers are also now having to make do with sacks of coins when they withdraw their money.

"We don't have an economy to talk about. When these guys came up with bond notes they said it was to ease the cash shortages, but now the situation is even worse.

"The United States dollar has completely disappeared and even bond notes are also now disappearing and people are being given kilogrammes and kilogrammes of coins.

"By the time we get to the end of the year I can only imagine that the situation will have reached dire levels.

"I hope the people are watching and that they will vote wisely next year," forthright Zimbabwe Divine Destiny pastor, Ancelimo Magaya, told the Daily News on Sunday.

Outspoken National Vendors Union of Zimbabwe (Navuz) chairperson, Sten Zvorwadza, said the government should, in addition to apologising for its misrule, also consult the people on what to do to solve the country's worsening economic crisis.

"The people are not happy. In fact they are very angry. They entered into contracts with banks to get their money on demand, but are failing to do so ... and there has not been a proper explanation on where their money went.

"We need the government to consult the people on all this so that it comes up with lasting solutions," Zvorwadza said.

"I don't know how we will get to December if this continues. I can tell you that most vendors are now finding it difficult to trade, as they have not been able to access their money in the past few weeks.

"None of them have been able to get more them $50 from the banks.  The bond notes were the biggest mistake this government ever made ... and without confidence, the economy will continue to crumble," he added.

Last week economists also warned that the country was headed for a major crisis and that the disappearing bond notes were indicative of an economy "in deep distress".

"The fact that it is so difficult to get money out of banks also makes people reluctant to put their money into their banks.

"With 10 million Zimbabweans each carrying a few bond notes in their pockets, wallets or handbags, 10 million times that number can easily add up the total amount of bond notes in issue," veteran economist, John Robertson, told our sister paper, the Daily News.

Piers Pigou, senior consultant at the International Crisis Group, said bond notes were now also circulating in the informal sector.

"There is no market for bond notes outside Zimbabwe, so I can only imagine the notes are moving into and circulating within the informal economy of Zimbabwe.

"This would not be unusual given the scale of the informal economy," Pigou said - referring to a sector that has been burgeoning, with nearly six million micro, small and medium enterprises absorbing the bulk of the country's retrenched workers and unemployed graduates.

"It never seemed likely that bond notes could ever provide anything other than temporary relief. But like US dollars, they will seep out of the formal economy ... just not as rapidly as the Benjamins," he added.

Last week the International Monetary Fund (IMF) also noted that bond notes had failed to solve the country's deepening fiscal crisis, further calling for comprehensive reforms.

"Zimbabwe is in a very, very difficult situation, as you know. There is a limited amount of foreign exchange inflows coming in and no monetary policy tool.

"So, it's very important to have a more comprehensive policy package which also addresses a lot of the fiscal challenges that the country faces," IMF director for the African Department, Abebe Aemro Selassie, said.

Zimbabwe is deep in the throes of a debilitating economic crisis which has led to horrendous company closures and the consequent loss of hundreds of thousands of jobs.

At the same time, economists have said that poverty levels in the country are skyrocketing, with average incomes now at their lowest levels in more than 60 years - with more than 76 percent of the country's families now having to make do with pitiful incomes that are well below the poverty datum line.

This comes as Zimbabwe has now been officially ranked as the poorest country in Africa.

According to the Africa 2016 Wealth Report, Zimbabwe has been ranked as the country with the poorest people on the continent, with average wealth of $200 per person.

In the report, AfrAsia - a Mauritius-domiciled financial institution which once operated in Zimbabwe after acquiring the now-defunct Kingdom Financial Holdings Limited - noted that back in 2000, Zimbabwe was one of the wealthiest countries in sub-Saharan Africa on a wealth per capita basis.

It listed Mauritius as the country with the wealthiest people, with an average wealth of $25 700 per person.

Source - dailynews