Bank collapse, famine and the return of the Z$

Banks aren’t holding enough available cash; the government can’t pay civil servants; all lines of credit to government and businesses are closed; the Zim dollar is about to return, bringing hyperinflation with it….this list of imminent catastrophes has been hitting inboxes, including mine.

The rumours are a mixture of fables and facts, with a few exaggerations thrown in.

It’s true that the banks are battling with liquidity and our foreign suppliers are tired of having unpaid debts, but the extrapolations to inevitable meltdowns ignore the survival instincts of lots of very clever people.

Our problem is that the far less gifted rewrote the law and hoped that the expropriation rights they gave themselves would deliver a never-ending stream of wealth. The fundamental error of these politicians was to believe the wealth was the money. The wealth was actually the ability to make the money.

So our centrally planned economy is mired in the incompetence of the central planners. They backed off trying to control the retail sector, so the retailers responded well and we can now buy just about anything. The retailers’ problem was that shopping space increased more quickly than disposable income, so competition held profit margins down to not very attractive levels, wiping out some of the stores, and the very adverse balance of trade constantly drains money out of the country.

We need more production, but government continues trying to regulate mining and agriculture as well as electricity, banking and manufacturing. Because they won’t back off and leave the business sectors to get on with those jobs too, production volumes remain dull, investors are discouraged and effective re-capitalisation can’t be achieved, especially while government interference is dominated by indigenisation demands.

It is anyone’s guess what might happen next, but I would discount possibilities of the Z$ coming back.

The other scare stories doing the rounds include a disastrous maize harvest; a stockpile of unsaleable diamonds, and Zanu (PF)’s ‘discreet’ approaches to white ex-farmers to lend a hand in providing food for the country. Again, we have a mix of fact and myth. I suspect maize output will be better next year, but still not nearly good enough. Tobacco might do okay again, but at enormous environmental cost. Cotton will be worse.

Some banks might fail and more Zimbabweans will emigrate in search of work. And the remittances will continue to feed about 3m people, but not very well. Aid will be needed for the worst affected and the World Food Programme is apparently planning to step up its operations.

I know that some white farmers have been approached with a view to coming back into farming in a bid to increase food production, but I have no idea how much support that idea is getting from the politburo. The politburo is the body that matters as it has more leverage than parliament.

This unelected and unrepresentative bunch, with its unlimited impunity, is not even mentioned in the constitution, but its whims and fancies set the direction all the time. It is there that the incompetence is most concentrated, but they seem to believe their powers more than make up for their inability to figure out what the hell is happening.

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