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State of the economy – Zimbabwe, a developing story

13.06.2019
Article from AFRIC Editorial
These are some of the questions that linger each stakeholder in Zimbabwe from an individual to general perspective. This is a developing story as we monitor and watch, the turn of events remains very worrying but it is clear that the efforts made to get the country out of the ordeal that took place long before Robert Mugabé’s departure.

Ministry of Finance delivering a State of the nation address in Parliament, opposition Members of Parliament noticed that he still had a huge pile of papers to go through while the session was about to be adjourned. They filed a motion to have the minister’s time extended and after caucus consultations, the house ruled that the small matter of delivering the State of Nation Address (SONA) was not urgent enough to warrant extending the session. The house immediately adjourned!

The quick lesson to be learnt there is that progress is only possible when all parties have the same agenda and are pulling in the same direction. It boggles the mind how a fully functional House of Parliament will arrive at the conclusion that a Finance Minister’s SONA is not urgent. This is all happening an economy with cash shortages, long winding fuel queues, daily power cuts, massive water rationing among other challenges facing the nation of Zimbabwe – barely a year after elections without the only known Zimbabwe Head of state since Independence, Robert Mugabe and his 19 years arch rivalry and arguably Zimbabwe’s icon of democracy Morgan Tsvangirai.

Fuel sector was opened up to private players with free nostro funds to bring in their own fuel. This was expected to ease pressure on current channels and perhaps shorten or eliminate winding queues which have become a permanent feature on our roads. However, existing pricing disparities between local and forex pricing put paid to that notion. To the financially astute, which Zimbos are, it is still way cheaper to buy fuel using the local RTGS dollar “currency” as opposed to buying with forex. A litre of diesel costs ZWL $4.89 with the same litre setting you back USD1.40. If one is to sell the USD1.4 on the parallel market at the current rate of USD1: ZWL7.5, you would get ZWL $10.50 which is enough to buy 2 litres of the scarce resource. There’s no motivation whatsoever for one to part with their US
dollars at the pump when they stand to get more than twice the quantity by using the much maligned local RTGS dollar currency.

A fortnight ago, state owned power utility published an unforgiving load shedding schedule where each household in the country was guaranteed to be without power for each and every day of the week. This sudden and abrupt turn of events jolted the country into crisis mode. Our neighbouring South Africa has seven stages of load shedding whilst ours only has two. Talk about simplifying things!

The effect of this load shedding on industry is unimaginable. Zimbabwe already has one of the highest costs of production on the continent, if not the world over. The choice for captains of industry looks rather simple, match production runs with the load shedding schedule or find alternative sources of power and pass on the burden to the consumer!! Even if one where to choose the former, the power
utility cannot be relied upon to stick to their own schedule – as we have previously experienced firsthand, one too many times.

This power situation is exacerbated by the fact that our usually reliable escape route, Eskom of South Africa, is also having issues of their own and can’t be bothered to even entertain us at the very least. Who would have thought that we all would live to see the day when Mozambique would be asked to bail us out, considering that this is a country that was recently ravaged by two consecutive disastrous
cyclones (Idai and Kenneth) which left horrifying trails of destruction in their wake. Our local political spin doctors found a silver lining to that dark cloud in that their water bodies are now filled to the brim thus increasing their electricity generation capacity. A soliloquy of mine when I heard this over the radio blurted out the obvious question, generate electricity with what infrastructure after all that
destruction?

Not to be outdone, the thermal power generating was reported at the beginning of the week to be having output challenges. To the demise of the already troubled citizens, the State Broadcaster aired  on national radio and television that power cuts will increase as a result of Hwange thermal power plant. Are these woes the effects of Austerity measures announced by the Finance Ministry in its annual budget, one shudder to think. Questions lingering in the minds of citizens, until when walking in the valley of shadow of abject living conditions.

The generality of the urban citizens had resorted to use of liquid petroleum gas affectionately referred to as LP Gas but alas, the majority of LPG vendors are demanding hard currency or the equivalent bond cash benched marked with the volatile parallel market rate of the day. These are some of the myriad of challenges awaiting the man on the street on a daily basis, where the future remains oblique and as the tunnel seem to be getting dimmer.

When will this spiral effect on economic instability last? What does this mean for the sitting President and his Cabinet, is their future safe seeing that such a scenario caused revolt against Robert Mugabe. How about the main opposition and pressure groups like Tajamuka, #Thisflagamongst others, will they remain spectators and onlookers amidst these harsh economic turmoils? How about the vulnerable few employed citizens whose income has been eroded by inflation? Is 2008/2009 reckoning for Zimbabwe where the economy was dollarized?

Article from AFRIC Editorial

Credit image : google image/illustration

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