Ruthless Zanu PF youths from President Mnangagwa’s hometown in Kwekwe have reportedly killed a man at the vicinity of the Mbizo constituency offices. The suspects who are known Zanu PF youths have since been arrested and are currently being taken…
Why Robert Mugabe’s ruinous legacy will live on as long as his party is in power. Source: Zimbabwe’s History of Hyperinflation Repeats Itself – Foreign Affairs A man poses with Zimbabwean bank notes in the capital, Harare, June 2015Philimon Bulawayo / REUTERS In August 2008, I visited a hospital roughly 100 miles outside the Zimbabwean capital, […]
The post Zimbabwe’s History of Hyperinflation Repeats Itself appeared first on Zimbabwe Situation.
Why Robert Mugabe’s ruinous legacy will live on as long as his party is in power.
In August 2008, I visited a hospital roughly 100 miles outside the Zimbabwean capital, Harare. Hundreds of patients lay in overcrowded wards and on makeshift beds in hallways and in waiting areas. Outside, hospital employees scrambled to pitch tents in order to accommodate the sick and dying still streaming in from the countryside. Doctors stood by helplessly, unable to do anything without the necessary drugs and equipment.
Zimbabwe was in the throes of a hyperinflationary meltdown. Basic sanitary services had collapsed, unleashing a cholera epidemic that would eventually claim thousands of lives. Two years before, in 2006, President Robert Mugabe’s government had abandoned the Zimbabwean dollar in favor of a new quasi-currency called the “bearer check.” But prices continued to skyrocket and zeros quickly accumulated on the bearer checks. Soon, the Central Bank was printing hundred-thousand-trillion-dollar denominated notes that could barely buy a bottle of soda. Inflation would peak at 500 billion percent in December 2008, the second highest in recorded history after Hungary in 1956.
Mugabe’s ruling party, the Zimbabwe African National Union–Patriotic Front (ZANU–PF), blamed external forces, but the crisis was entirely of its own making. For more than a decade, ZANU–PF had raided public coffers in order to shore up political support. The party ran enormous budget deficits, which it partially plugged by printing money. Such was the habit the ruling party had formed back in 1997. That year, war veterans took to the streets to demand better compensation. Mugabe offered the veterans hefty new allowances, even though the budget had not provided for these. The announcement spurred a dramatic selloff in the Zimbabwean stock exchange and caused the currency to plunge more than 70 percent in a single day.
So began an 11-year decline, during which the economy lost 60 percent of its value. Mugabe’s government spent profligately. It intervened militarily in the Democratic Republic of Congo, at vast expense to the country (but to the profit of many in Mugabe’s inner circle). The economic slide naturally led to political agitation, with sporadic strikes spreading across the country. The country’s main trade union, together with its allies in civil society, formed a political party, the Movement for Democratic Change (MDC). Faced with the threat of an insurgent MDC, Mugabe embarked on a bloody and reckless land reform program. His government seized thousands of farms and turned them over to ZANU–PF loyalists, decimating Zimbabwe’s once vibrant agricultural sector and triggering the kind of economic collapse rarely seen outside of a war zone. By 2008, government debt was unserviceable, social services had disintegrated, and life expectancy had plunged to 32 years for women and 34 years for men.
Not surprisingly, the economic crisis precipitated a political crisis. In the March 2008 general election, the MDC won more parliamentary seats than ZANU-PF and Morgan Tsvangirai, the MDC’s presidential candidate, delivered Mugabe a resounding defeat. The Southern African Development Community (SADC), a regional bloc that played a mediating role in the crisis, acknowledged that Tsvangirai had won, but claimed that he had not cleared the 50-percent-plus-one threshold for a first-round victory — this despite the fact that the Zimbabwean government refused to release the official results for another five weeks.
SADC decreed that a runoff election be held in June, but by then the government had unleashed a horrific wave of violence aimed at intimidating the opposition and its supporters ahead of the planned second round of voting. Security forces and ZANU–PF-linked militias, popularly known as the Green Bombers, killed hundreds of people and displaced thousands of others. As the secretary-general of the MDC at the time, I was arrested on treason charges and accused of having unlawfully declared Tsvangirai the winner. Eventually, SADC forced Mugabe and Tsvangirai into talks that led to the formation of a unity government.
Cleaning Up Mugabe’s Mess
When I became minister of finance in the unity government, it was my job to tame the hyperinflation and repair the wrecked economy. By the time I took office in February 2009, there was no escaping dollarization, which meant recognizing the U.S. dollar as legal tender in Zimbabwe. The market had already jettisoned the Zimbabwean dollar and its cousin the bearer check, both of which had become little more than instruments of arbitrage for politicians with privileged access to hard currency. There would be a long-term cost to dollarization, as we knew from other countries that had been forced to take this step. The experience of Panama, El Salvador, Peru, Argentina, and other Latin American countries showed how difficult it is to resurrect an abandoned currency. Those countries that have succeeded in doing so, such as Mexico, Pakistan, and Sierra Leone, have been forced to use the dollar as a peg. The truth is that currencies are only as strong as the public’s trust in them, and where a foreign currency has supplanted the local one, trust can never be salvaged.
Dollarization solved the immediate issue of hyperinflation, but I knew it wouldn’t be enough to restore macroeconomic stability. For that, Zimbabwe needed to slash its budget deficit and begin paying down its burgeoning public debt.Through a carefully managed process of cash budgeting, my team oversaw fiscal surpluses from 2009 until 2012, the last full year of the unity government. At the same time, we lifted cumbersome regulations, including price controls and a minimum-wage regime that had inhibited growth. By December 2009, inflation had fallen to negative 7.7 percent, and for the first time in 12 years, Zimbabwe recorded a positive growth rate, in this case 7.5 percent. The average real growth rate during the unity government’s tenure was nine percent, peaking at 11.9 percent in 2011.
Regrettably, ZANU–PF seemed to forget the lessons of the unity government as soon as it regained power in 2013. After winning an election marred by intimidation and manipulation of the voter rolls, among other electoral swindles, Mugabe’s government reverted to its default setting and embarked on a reckless spending spree that swelled the budget deficit to 25 percent of GDP. To fill the gaping hole in the budget, the government borrowed some $4 billion from the Central Bank over the next four years, far beyond the limits allowed by law. In addition, between 2013 and 2016, it issued over $7 billion in treasury bills, despite being effectively broke. And so it was that by November 2017, when the military toppled Mugabe and installed former Vice President Emmerson Mnangagwa in his place, Zimbabwe was once again on the brink of economic collapse.
Learning the Hard Way
The 2018 general election offered a golden opportunity to reverse course. But instead of the free and fair election that Mnangagwa promised, Zimbabweans got one that international observers called “deeply flawed” and that was followed by a brutal crackdown on opposition politicians and their supporters. Facing threats to my life, I briefly sought refuge in Zambia, from where I was deported back home to face charges of “falsely and unlawfully” announcing the election results—this time, in favor of MDC leader Nelson Chamisa.
Mnangagwa has tried to strike a more business-friendly tone than his predecessor, but his government hasn’t charted a meaningfully different fiscal course. Finance Minister Mthuli Ncube refused to cut the bloated government wage bill, even though it accounts for 95 percent of total expenditure and employs an estimated 200,000 “ghost workers” whose real job is to keep ZANU–PF in power. Instead, he has attempted to increase revenues by imposing regressive taxes on money transfers and increasing fuel levies. Even with these measures, Ncube anticipates a budget deficit of at least four percent of GDP for 2018.
Mnangagwa is also playing a dangerous game with Zimbabwe’s unwieldy currency regime. Back in 2016, following the binge budgets of the post-unity government years, the country began to experience severe shortages of hard cash. To ease the currency crunch, the government introduced a quasi-currency known as the bond note, which was pegged one-to-one to the U.S. dollar. Along with the real-time gross settlement dollar (RTGS dollar), another artificial currency that the government used to repay bondholders, the bond note immediately began to trade at a discount in the black market.
Soon after the election, Mnangagwa’s government tampered with the currency regime again, first requiring separate accounts for U.S. dollars and bond notes (despite maintaining an official one-to-one peg) and then merging the RTGS dollar and the bond note into a single electronic currency, also called the RTGS dollar. It then proceeded to partially liberalize the exchange rate, adopting a new peg of 2.5 to one for the new currency—although its value on the black market quickly fell below that. In June 2019, the government recognized the RTGS dollar as legal tender and rechristened it the new Zimbabwean dollar, while at the same time barring the use of the U.S. dollar. Today, the Zimbabwean dollar is worth around ten cents, and inflation is roaring back, having hit 175 percent officially in June and closer to 300 percent unofficially.
Although these quasi-currencies were ostensibly introduced to provide liquidity, their real value to ZANU–PF elites stems from the arbitrage opportunities they create.
Although these quasi-currencies were ostensibly introduced to provide liquidity, their real value to ZANU–PF elites stems from the arbitrage opportunities they create. Paired with preferential access to hard currency, bond notes and RTGS dollars fuel the patronage system that has kept the party in power for nearly four decades. For the rest of Zimbabwe’s 16 million people, de-dollarization has made things much harder, slashing salaries once earned in U.S. dollars, spurring inflation, and slowing growth. For the second time in Zimbabwe’s post-independence history, most people have had their savings wiped out overnight.
Sadly, the International Monetary Fund has gone along with this strange brand of economics. In May, it issued a staff report that all but endorsed Harare’s attempt to de-dollarize. The report claimed that “significant economic reforms are underway,” even though the promised reforms have yet to materialize. It also turned a blind eye to rising inflation, burgeoning shortages of basic goods, and huge currency distortions. It whitewashed Mnangagwa’s record and glossed over his extralegal path to power, noting that he “headed the transitional government following the resignation of former President Mugabe in November 2017,” despite the fact that he came to power through a military coup. Finally, it claimed that the 2018 elections “were viewed by international observers as mostly peaceful, free, and fair,” which was certainly not the view of the opposition supporters who were brutalized or the international observers who expressed grave reservations. In May 2019, the IMF approved a staff-monitored program for Zimbabwe, which, if the government plays its cards right, could lay the groundwork for a program of debt relief or debt cancellation in the future.
For Zimbabwe, the indicators are stark. The economy is reeling. Underemployment and unemployment are widespread (roughly 95 percent of Zimbabweans work in the informal sector). State utilities have all but collapsed, and electric power cuts out frequently. Lately, the blackouts have lasted for more than 18 hours a day, even as the country suffers shortages of fuel, water, food, and medicines. More than 40 percent of the population — some seven million people — survives on emergency aid from the international community.
Politics is the Answer
Ten years ago, forming a unity government offered a political solution, albeit a temporary one, to the crisis of hyperinflation. A solution to today’s economic crisis must be similarly political. More precisely, it must address the legitimacy deficit of the current administration, which stems from the military coup that brought it to power and the disputed election that kept it there.
A political deal must also provide a framework for the reforms needed to right the economy. Most urgently, it must offer a path away from the multiple quasi-currency regime and back to the U.S. dollar. The government must halt its compulsory appropriation of the U.S. dollar export proceeds, which constricts the supply of foreign currency and hurts Zimbabwe’s export economy, especially in the mining and agricultural sectors. Eventually, the country should transition to the South African rand, which is weaker than the U.S. dollar and would help make Zimbabwean exports more competitive.
Once the monetary environment is stable, the government can focus on cutting costs by reforming the public-sector wage bill and curtailing expenditures that are wasteful or corrupt. These cuts would help pay down the country’s $22 billion public debt, half of which arose from overzealous borrowing from the Central Bank. Zimbabwe needs to pay back its creditors both within the country and outside it: the country is currently $2.6 billion in arrears to international financial institutions such as the World Bank.
Corruption is both a cause and a consequence of Zimbabwe’s economic difficulties, and no reform program can succeed without tackling it. The ruling party and the military still dominate Zimbabwe’s economy, as do vested interests connected to both. Profiteering and rent-seeking on virtually everything with a price tag, from commodity exports to petrol imports, define the country’s economic life. Foreign exchange, fuel, minerals (particularly diamonds, platinum, and chrome), and agriculture have all become citadels of arbitrage and loot. To begin to change all this, the government must liberalize the market and eliminate the need for import permits, which for years have been used to reward party loyalists. To attract foreign investment, Zimbabwe needs to show that it respects the rule of law, including by strengthening property rights and guaranteeing that profits can be repatriated outside Zimbabwe.
The current government cannot be trusted to undertake such a program. That is because ZANU–PF stands to lose from serious reforms, since they would inevitably eliminate the party’s traditional sources of finance, patronage, and control. A transitional government arrangement, akin to the unity government of 2009–13, has to lead the reform effort. To bring one about, the IMF and other major multilateral organizations should offer ZANU–PF incentives to come to the negotiating table—not reward it prematurely as the IMF did with the staff-monitored program. Zimbabwe needs help from its international partners, as well as from neighboring countries and regional blocs, to stave of total economic collapse. First, however, it needs to get its own politics right.
The post Zimbabwe’s History of Hyperinflation Repeats Itself appeared first on Zimbabwe Situation.
There was drama in New Magwegwe suburb when a jealous woman left residents tongue-tied after she and a group of other women threatened to kill her ex-lover’s pregnant wife. Nyarai Hofisi is reportedly furious about her ex-lover Moses Mutizwa̵…
Source: BREAKING: Likukuma removed as ZTA boss | The Herald August 22, 2019 Rita Likukuma Africa Moyo Deputy News Editor Zimbabwe Tourism Authority (ZTA) acting chief executive Mrs Rita Likukuma has been removed from her position under unclear circumstances. Sources say the removal relates to the way she bungled the retrenchment of about 35 employees […]
Source: BREAKING: Likukuma removed as ZTA boss | The Herald August 22, 2019
Africa Moyo Deputy News Editor
Zimbabwe Tourism Authority (ZTA) acting chief executive Mrs Rita Likukuma has been removed from her position under unclear circumstances.
Sources say the removal relates to the way she bungled the retrenchment of about 35 employees early July.
At the time of the retrenchment, ZTA said the move was in line with good corporate governance and the need to cut the wage bill.
But in a dramatic u-turn, Mrs Likukuma reinstated all the affected employees citing the need to follow due process,which the Retrenchment Board had suggested was not observed.
Some board members said Mrs Likukuma had not consulted them by the time of retrenching the employees.
Close sources said the move to reinstate the 35 employees came after pressure from other board members.
ZTA acting board chairperson Dr Precious Sibiya told The Herald this afternoon that Mrs Likukuma had been removed as CE and recalled to the board.
Before assuming the position of acting ZTA chief executive, she was a board member.
More to follow . . .
Source: Tongaat unit suspended from trading on Zim stock exchange | Fin24 The Zimbabwe Stock Exchange has halted trading of Tongaat Huletts unit, Hippo Valley, following a delay in the publication of its financial results for the period to March 2019. The delayed publication relates to complex accounting issues stemming from its JSE-listed parent company’s […]
The post Tongaat unit suspended from trading on Zim stock exchange appeared first on Zimbabwe Situation.
The Zimbabwe Stock Exchange has halted trading of Tongaat Huletts unit, Hippo Valley, following a delay in the publication of its financial results for the period to March 2019.
The delayed publication relates to complex accounting issues stemming from its JSE-listed parent company’s re-statement of financials following a forensic probe.
The Tongaat unit, which was supposed to have released its results for the period to March 31, 2019, missed its June 2019 deadline but asked for an extension to July 31, which it again failed to meet and applied to the ZSE to be allowed a second extension to August 14.
It missed that deadline again.
“The Zimbabwe Stock Exchange advises members of the investing public that it has put a halt in the trading of Hippo Valley Estates Limited’s (“Hippo”) shares on the ZSE according to Clause 4.13.2 of the ZSE Trading Rules and Procedures.
“This development has been necessitated by a formal request made by Hippo for the suspension of trading in its securities after it failed to publish its audited financial statements for the year ended 31 March 2019 as per the previous public notices,” the ZSE said.
ZSE has now formally requested the Securities and Exchange Commission of Zimbabwe (SECZim) to consider the application for the suspension in terms of the Securities and Exchange Act.
Investors will be advised of the determination by SECZim as soon as it becomes available, ZSE said.
The post Tongaat unit suspended from trading on Zim stock exchange appeared first on Zimbabwe Situation.
Source: Masvingo, Mutare MDC demos banned – NewsDay Zimbabwe August 22, 2019 BY TATENDA CHITAGU/Kenneth Nyangani MASVINGO was tense and under lockdown for the past two days ahead of a planned MDC demonstration which was banned on the 11th hour yesterday as the President Emmerson Mnangagwa’s administration moved to quell dissent over a tanked economy […]
Source: Masvingo, Mutare MDC demos banned – NewsDay Zimbabwe August 22, 2019
BY TATENDA CHITAGU/Kenneth Nyangani
MASVINGO was tense and under lockdown for the past two days ahead of a planned MDC demonstration which was banned on the 11th hour yesterday as the President Emmerson Mnangagwa’s administration moved to quell dissent over a tanked economy and skyrocketing inflation.
Security forces were also patrolling Mutare streets yesterday after police banned protests scheduled there for today.
MDC Manicaland provincial chairperson Prosper Mutseyami confirmed the ban on the Mutare protest march, adding that they were appealing the matter.
“We have sad news that the police have barred our demonstration claiming shortage of staff, fear of violence . . . but we don’t subscribe to violence as a progressive party,” he said.
“Our demonstration is on pending appeal at court, we are going to challenge the police decision at court, but I believe we have followed all procedures.”
Mutseyami added: “Security details are everywhere in Mutare, most of them are in plain clothes. We don’t know why this government is doing this? At least the international community is watching.”
In Masvingo, armed soldiers were patrolling the high-density suburbs on Tuesday night, while police moved with hailers warning people against participating in the protests as they would “rot in jail”.
Yesterday morning, soldiers also made drills in town in a show of force.
Shop owners, fearing violence and destruction of property, delayed opening, with some opening at the behest of the soldiers.
However, the situation was generally calm.
The MDC Masvingo province appealed against the ban yesterday morning, and the case was postponed to 12pm, before being deferred to 3pm by provincial magistrate Marehwanazvo Gofa.
Gofa dismissed the appeal at 4pm with costs due to technicalities, saying the right to demonstrate is not absolute and that there was no appeal to talk about.
Collin Maboke and Martin Mureri appeared for the MDC, while Kenias Chimiti and Gift Chihuta appeared for the respondents.
The application cited Commissioner-General of Police Godwin Matanga and officer commanding Masvingo Central district Superintendent Godwin Chikuma.
Police maintained a heavy presence outside the court.
MDC Masvingo provincial chair James Gumbi accused the judiciary of being captured and claimed everything was stage-managed.
“It was given and it had been clear from the onset that everything is command, directive and consultative. Who will stage a demo that was supposed to start at 10am and end at 4pm when the ruling was given at 4pm?
It’s stage-managed,” he said.
He said the State applied delaying tactics simply to frustrate their planned protest.
“This was a delayed match . . . the judiciary is captured by Zanu PF. The magistrate kept postponing the case so that the time we were supposed to have the demonstration lapses. In other words, they have foiled our
attempts,” Gumbi said.
MDC provincial administrator Peter Chigaba, who notified the police of the demonstration, was also arrested on Tuesday evening for allegedly distributing fliers, while mobilising for the anti-government protest.
His lawyer said he was being charged with contravening section 31 (a) of the Criminal Law Codification and Reform Act for allegedly publishing or communicating statements which are materially false with the intention to incite public violence because the fliers were reportedly written that Mnangagwa stole last year’s elections.
The lawyer said Chigaba was supposed to appear in courttoday, but the case is now set to proceed by way of summons.
Source: SA on brink of further power outages: Eskom – NewsDay Zimbabwe August 22, 2019 An acceleration in economic growth in South Africa could trigger power cuts, with State utility Eskom Holdings’ fragile generation system unable to respond to increased demand for electricity. The energy availability of Eskom’s generation fleet is supposed to be as […]
Source: SA on brink of further power outages: Eskom – NewsDay Zimbabwe August 22, 2019
An acceleration in economic growth in South Africa could trigger power cuts, with State utility Eskom Holdings’ fragile generation system unable to respond to increased demand for electricity.
The energy availability of Eskom’s generation fleet is supposed to be as high as 80%, but is currently as low as 69%, and even a 0,1% rise in gross domestic product could result in outages, Nelisiwe Magubane, an Eskom board member, said at an event organised by Afriforesight in Johannesburg yesterday.
The State-owned utility, which supplies about 95% of South Africa’s power, has a mountain of debt and was reliant on government bailouts to remain solvent. It
is also contending with operational issues — most of its power stations are nearing retirement age and haven’t been properly maintained, while the construction
of two new plants are running years behind schedule and way over budget.
The country has experienced intermittent power outages — known locally as load shedding — since late 2005, a measure Eskom said was needed to prevent the
national grid from collapsing.
Outages have eased over recent months largely due to the poor performance of the economy — gross domestic product slumped an annualised 3,2% in the first quarter, the biggest contraction in a decade.
“We haven’t seen load shedding because demand is going south,” an independent energy adviser, Mike Rossouw, said. “If demand picks up tomorrow, you will be seeing load shedding everyday.”
Source: Robberies spike in Byo – NewsDay Zimbabwe August 22, 2019 BY CRAIG MOYO Bulawayo residents have raised concern over the increase in armed robberies taking place in the central business district (CBD) in broad daylight. The knife-wielding robbers corner residents walking in secluded areas in the CBD and force them to surrender all their […]
Source: Robberies spike in Byo – NewsDay Zimbabwe August 22, 2019
BY CRAIG MOYO
Bulawayo residents have raised concern over the increase in armed robberies taking place in the central business district (CBD) in broad daylight.
The knife-wielding robbers corner residents walking in secluded areas in the CBD and force them to surrender all their valuables and speed off in getaway cars.
Residents said although the police have apprehended a number of suspects, more needs to be done to protect lives and property.
Bulawayo acting police spokesperson Inspector Abednico Ncube confirmed the spike in robberies in the city.
“We have received cases of knife-wielding robbers in the city’s central business district,” he said.
A resident who spoke to Southern Eye said he was robbed of his laptop, US$150 and mobile phone just after parking his car in the CBD.
In yet another incident, a student was reportedly robbed of his mobile phone and $20 while disembarking from a commuter omnibus by knife-brandishing thieves
who then drove off in their getaway car.
In another case, two men were recently attacked and robbed of $500 in similar fashion in the CBD.
Source: Mupfumira approaches Supreme Court for bail – NewsDay Zimbabwe August 22, 2019 BY CHARLES LAITON FORMER Environment, tourism and Hospitality Industry minister Priscah Mupfumira, who is detained at the Chikurubi Female Prison on charges of criminal abuse of office after she allegedly swindled the National Social Security Authority (Nssa) of over US$95 million, has […]
Source: Mupfumira approaches Supreme Court for bail – NewsDay Zimbabwe August 22, 2019
FORMER Environment, tourism and Hospitality Industry minister Priscah Mupfumira, who is detained at the Chikurubi Female Prison on charges of criminal abuse of office after she allegedly swindled the National Social Security Authority (Nssa) of over US$95 million, has approached the Supreme Court for bail after her attempt at the High Court hit a snag last week.
High Court judge Justice Erica Ndewere dismissed Mupfumira’s bail bid on the basis that there are compelling reasons justifying her continued incarceration, including that as a former Cabinet minister she was a flight risk and could interfere with witnesses.
Mupfumira, who is also Senator for Mashonaland West Province, was remanded in custody in July after acting Chief Magistrate, Munamato Mutevedzi, upheld Prosecutor-General, Kumbirai Hodzi’s certificate which ensured she was further detained for 21 days without applying for bail.
But in her submissions before the Supreme Court through her lawyers Chinyama and Partners, Mupfumira maintained that the State’s evidence against her was weak, adding the High Court, had erred in many respects when it denied her a chance to be tried out of custody.
“The court a quo (High Court) wrongly accepted and relied on bald allegations made by the investigating officer which were not backed by any cogent evidence, contrary to the principle long established in applications of this nature,” the lawyers said, adding that Justice Ndewere also erred and committed a gross irregularity when she sanctioned investigative detention that has since been outlawed in bail regime currently in force.
“The court a quo further erred and misdirected itself when it departed from the mandatory provisions enshrined in section 70 (1) (a) of the Constitution of Zimbabwe Amendment (No 20) 2013, which guarantees the right to be presumed innocent until proven guilty. The court a quo further erred in holding that they were compelling reasons to justify the applicant’s continued stay in custody which could not be cured by conditions,” they said.
The matter is yet to be set down for hearing.
ONE of President Emmerson Mnangagwa’s top aides, Petina Gappah, has quit her trade and investment advisory role and vowed not to renew her contract after being frustrated by the Zanu PF leader’s close lieutenants, who she accused of pursuin…