Zimbabwe on knife edge

With the country teetering on the brink of another ginormous economic meltdown akin to the horror experienced in 2008, there are growing fears that ordinary Zimbabweans are becoming increasingly restless and that this could soon blow up into deadly riots.

Concerned analysts who spoke to the Daily News yesterday said the ongoing cash shortages and long bank queues, looming food shortages, the threatened ban on the importation of basic commodities, an inevitable rise in basic food prices and the broke government's failure to pay angry civil servants their June salaries did not bode well for continuing peace and stability in the country.

They said it was telling that normally pliant and peace-loving Zimbabweans had rioted against the Zimbabwe Revenue Authority in Beitbridge at the weekend, after President Robert Mugabe's cash-strapped government suddenly banned the importation of basic commodities - threatening the livelihood of tens of thousands of people and their families who live off street vending.

Economist Witness Chinyama said unless the government introduced measures to boost local industry - currently operating at a lowly 30 percent capacity - Zimbabweans should brace themselves for food shortages and massive hikes in the prices of basic commodities.

"A total embargo on the importation of basic goods will be painful to consumers who would be forced to buy local products at higher prices," he said emphatically.

This was after Industry minister Mike Bimha evoked Statutory Instrument 64 of 2016 last Friday, banning the importation of coffee creamers, Camphor creams, white petroleum jellies, body creams, baked beans, potato crisps, cereals, bottled water, mayonnaise, salad cream, peanut butter, jam, maheu, canned fruits and vegetables, pizza bases, yoghurts, flavoured milk, dairy juice blends, ice-creams, cultured milk and cheese, among other products.

Chinyama said while the measures could breathe a new lease of life into local producers who were struggling to stay afloat due to stiff competition from imports, "in the absence of competition, chances are very high for local companies to effect price increases to match their high production costs".

This was more so given that the recent import duty increase on cooking oil products had seen local retailers hiking their product prices from $2,99 per two litres, to an average of $3,60 as producers failed to meet demand.

Other economists have also previously warned that food prices were set to rise substantially due to looming shortages and the severe drought that has left more than 5,5 million people in need of food aid.

Veteran economist John Robertson was among those who said yesterday that the latest government intervention to ban the importation of some commodities would result in the acute shortage of basic goods, reminiscent of the 2008 era, as local companies had no capacity to fill the gap that was being filled by imports.

"Scarcity generates high prices and this often leads to a rise in black market, which will make life very difficult for ordinary citizens," he said.

Robertson said the government should have put basic market fundamentals in place, to ensure that local industries were operating at full capacity before banning some imports.

"If we had enough time, perhaps industry could be revived, but that would all be dependent on fresh capital for retooling.

"Considering the fact that our government is broke and failing to meet its own wage bill, this capital can only come from foreign investors who, at this stage, would not want to hear about the indigenisation policy, government interference and lack of respect for property rights," he said.

Other observers say Zanu PF's seemingly unstoppable factional and succession wars have not helped matters, throwing spanners into the government's half-baked programmes and thereby dealing a hammer blow to efforts to rescue the country's dying economy.

Previously seen as a regional breadbasket, Zimbabwe's fortunes have plummeted precipitously over the past two decades, to the extent that today the country is viewed as a much-derided basket case.

But Buy Zimbabwe chief economist Kipson Gundani said the government's move to try and control the importation of basic goods would assist the country to balance its import bill.

"This timely intervention comes at a time when the country is suffering from the debilitating effects of an unsustainable import bill. It is common cause that a country that fails to rein in its import bill is surely and certainly digging its own grave.

"Even those who could import tonnes and tonnes of anything foreign are suddenly realising that without a thriving local economy that is supported by a robust industry, gains can only be short-lived," he said.

So under pressure is the government, that Finance ministry permanent secretary Willard Manungo advised civil servants last week that their June pay dates had been moved to July, due to severe revenue under-performance — a dangerous situation that has caused discomfort, including among the country's uniformed forces.

In 2008, some soldiers looted shops in Harare when their pay was delayed, at the height of Zimbabwe's hyper-inflation crisis that was triggered by the government's much-criticised fast track land reforms.

During that horror-laced period, inflation accelerated to more than 500 billion percent according to the International Monetary Fund.