What on Earth is Going On?

I have always said that if you think you know what is happening in Zimbabwe, you have not been here long enough. We are past masters at misleading everyone – including ourselves, as to what exactly is happening at any juncture.

Eddie Cross

First the economics. Steve Hanks wrote a piece the other day where he stated that Zimbabwe staggers from one major crisis to another. He was one of the few economists who carefully followed the 2000 to 2008 decent into chaos and collapse ending with prices doubling every 3 hours and the final demise of our own currency and the retreat into what was in effect dollarization. He then showed how the economy recovered and stabilized under the Government of National Unity from 2009 to 2013.

Then he plotted the journey from 2013 to the middle of 2017 and stated quite clearly that, once again disaster looms. This warning does not come from one of the multilateral institutions created for this purpose, but from an academic sitting in a study in far flung USA. If we plot the trends in GDP and debt over this turbulent period it looks like this:

Own Calculations

Talk about a roller coaster ride!! Zimbabwe goes from a reasonably stable 2000 after 20 years of uneven but gradual growth – led by agriculture and to some extent mining but associated with an average 9 per cent fiscal deficit (sustainable levels probably about 5 per cent, leading to growth in debt from US$700 million in 1980 to US$11,6 billion in 2000 including external debt). Then the wipeout in 2008 when all debt was destroyed in value along with all savings and accumulated wealth because of the long period of hyper-inflation. At the same time GDP collapsed and revenue declined to shocking levels – the Minister of Finance estimating total State revenues at just b$280 million in 12 months in 2008.

Then the restoration of confidence and the resumption of growth under the GNU when revenues climbed rapidly:

What is clear from these numbers is that during the GNU the recovery or “bounce back” of the economy was astonishing with State revenues expanding by 14 times in 4 years and with it the associated implied GDP. However, since 2012, the State has run up further debt in the form of domestic borrowings to cover the rapid growth in the fiscal deficit which has risen from a surplus in 2012 to an astonishing US$1,4 billion deficit in 2016 with a similar, if not worse performance looming in 2017. A direct consequence of this gross fiscal indiscipline has been a resumption of inflation, a sharp devaluation in the real value of domestic monetary balances, the near total withdrawal of hard currency from the domestic market and the collapse of hard currency payment systems and NOSTRO bank accounts. The reengagement process with the IMF and the World Bank has collapsed and we are back in a situation not unlike 2008 although this time with full market shelves of goods that the great majority simply cannot afford. The social statistics are catastrophic.

While this economic situation emerged and the crisis deepened, our political situation has deteriorated into conflict and confusion. After the collapse of the opposition post 2013, that community has slowly recovered but with this has emerged a plethora of Parties and Presidential candidates – we now have dozens of the former and a whole gaggle of the latter. It seems that everyone has got some courage from the persistent efforts and survival of the MDC and have decided that they can join the fray. I am sure a number of these Johnny come lately are State inspired and funded but many are serious about “having a go”.

The next elections are certainly going to be the most contested since we became a sort of a democracy in 1980. MDC has tried to put an alliance for reform of the electoral playing field and has had some success. Now it is trying to stitch together a credible coalition to fight the election and this is going to be launched on Saturday (tomorrow). I think the grouping that will emerge is quite useful and could be very powerful in the coming battles, because if we have an election it is going to be more of a democratic war than an election.

Then we have the situation in Zanu PF. They have been in power continuously since 1980 with Robert Gabriel Mugabe as leader for 37 years. The Old Man, as he is called now, is visibly frail and tired. I cannot see him reaching August 2018 when the elections are constitutionally meant to happen. His wife is a nightmare and a disgrace with her greed and variceal activities, bully tactics and total lack of curtesy or respect. A good manager must prepare for succession and have a few suitable candidates in mind and should not try to hold onto power for too long. None of us can remain fresh and innovative in leadership for longer than a decade. Mugabe has failed his Party and his country on all counts.

As a result, the contest for succession has intensified steadily since 2013 and has now reached dangerous levels. Just look at the past week – on Saturday Mrs. Mugabe made an uncalled for frontal attack on Party stalwarts while her husband dozed at her side. On Monday, the Service Chiefs and the Vice President met the President and demanded that he bring his wife under control and decide on the issue of succession to manage the conflict in the Party.

On Tuesday, the former President of South Africa and the architect of the GNU made a hurried visit to Harare, met with the President privately and then the Service Chiefs – on Wednesday it seems likely that the President made a flying visit to South Africa and then on Thursday he left the country to fly to Iran, begging bowl and salaams in hand. On Tuesday afternoon, we had the specter of the Army coming out of their barracks and attacking the Police. Thursday saw further public displays by the armed forces who are clearly unhappy with this state of affairs.

Clearly this potent mix of economic and leadership failure is suddenly threatening our fragile stability and security. South Africa and other key stakeholders are deeply concerned and something has to happen and soon, if we are not going to end up in a heap on the floor, as we did in 2008 and have to be rescued by the regional and international community.

Post published in: Featured
  1. Nomusa Garikai

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