The Sunday Mail
Edmore Ndudzo
Zimbabwe is emerging from yet another clearly man-made socio-economic crisis.
Fuel supplies and those of basic commodities have improved markedly, though prices remain far higher than they were a month ago.
Observably, prices are in tandem with black market exchange rates between the bond note/RTGS value and the US dollar.
Price differentials are now governed by the mode of payment and the type of currency used from the basket of currencies.
The mode of payment ranges from cash (US dollars, rands and bond notes/ coins), real time gross settlement, and other electronic transfers.
This has created the phenomena of multiple prices quoted for one product/service, which is illegal but is the reality on the ground.
Last year, I wrote an article titled “A crisis that never was, that should not have been or even allowed to have happened”, which captured the situation around the weekend of September 30, 2017 and October 1, 2017.
During that period, Zimbabwe experienced sudden and largely unexplained shortages of basic goods and where they were found, the prices were extortionate.
Service stations also ran dry. Again, where available, prices shot up.
Social media platforms and the private media were characterised by attention-grabbing headlines that created unnecessary panic buying, alarm and despondency.
Many were quick to compare the situation to the hyperinflationary era of 2008.
I remember that I was forced to put on hold plans to fence my farm as the price of barbed wire spiralled out of reach.
Social media and the private media wheeled out its so-called economic experts who told everyone who cared to listen that the problem was the mismatch in economic fundamentals.
I will try to juxtapose the socio-economic fundamentals leading to the 2008 crisis and the September/ October crisis.
- In 2008, we were in the throes of hyperinflation. Prices were volatile. In 2017, Zimbabwe was emerging from deflation (negative inflation), and year-on-year inflation figures were around one percent or a fraction thereof. The Bretton Woods institutions predicted year-on-year inflation of around two percent by December 31, 2017.
- In 2008, supermarket shelves were virtually empty and the few goods found then were mostly imported. In 2017, most shops were fully stocked, albeit still mostly with imported items.
- In 2008, the economy — to use the words of former US Assistant Secretary of State for African Affairs Mr Chester Crocker — was screaming. Obviously the sanctions imposed on Zimbabwe following the land reform programme were supposed to cause disaffection and overthrow of the Zanu-PF Government.
This almost worked if results of the 2008 polls are anything to go buy. In 2017, Zanu-PF had consolidated power after convincingly winning the 2013 elections.
- The economy was obviously in reverse gear in year 2008, but in 2017 it was growing. The currency had transitioned from the Zimbabwean dollar to the multi-currency system. The current account position, however, remained unsatisfactory given that imports were more than $6 billion against exports, Diaspora remittances and other foreign currency inflows of about US$3 billion.
- Most importantly, in 2008, Zimbabwe was in the unpleasant aftermath of a drought. In 2016 /2017, output had improved. Command Agriculture and favourable rains were the major driving force.
Investigations
So it becomes difficult to explain the origins of the September 30 to October 1, 2017 crisis.
Even the implosion of economic fundamentals — whatever that means — as claimed by so-called economists becomes difficult to explain.
Government, therefore, needs to get to the bottom of the issue through establishing the causes of price hikes.
Zimbabweans have been made to suffer greatly, unjustifiably so, on numerous occasions.
Lest we forgot, some of our citizens actively worked with foreigners to impose sanctions on Zimbabwe. And we know these people by name.
Zimbabwe has paid a heavy price through massive social dislocation and attendant economic challenges, including the premature and possibly avoidable loss of dear lives.
Enough is enough. The September/October 2017 crisis was unnecessary.
The said crisis was never supposed to happen and should have never been allowed to come to pass.
Zimbabwe now has to strategically manoeuvre diplomatically and leverage on Brexit and the Trump administration to push for removal of sanctions.
A nuanced interrogation of the recent crisis on the local market and the September 30, 2017 to October 1, 2018 crisis shows that while they might be somewhat similar, there are definitely some subtle differences.
- Almost always these crises are preceded by a negative media frenzy. Private media serve as conduits of the negative stories, most of them unverified. The news stories serve as fodder for the international news media. This is precisely the reason why Dr Tafataona Mahoso’s recent piece in the Patriot newspaper titled “Is the crisis worse in the media or the economy?” makes so much sense.
The media also tend to narrow and limit the public view of the national economy.
The record-breaking tobacco production, mainly from black beneficiaries of the land reform programme, was ignored or downplayed. Encouraging prospects for both gas and oil deposits in Muzarabani are ignored or trivialised.
Messages that cause alarm create a self-sustaining vicious circle of panic-buying, hoarding and shortages, which, at the end of the day, is self-defeating.
- The main authors of the crisis remain the same, and these are the sanctions on Zimbabwe, and the MDC Alliance, whose principals Mr Nelson Chamisa and Tendai Biti visited Washington in December 2017 and expressed their wish for the Trump administration to maintain the embargo.
Even after the July elections, which the world observed, the MDC Alliance is still desperate to engineer a legitimacy crisis though it is apparent to everyone, including themselves, that they lost.
Remedial actions
Clearly, these crises are man-made. Why do we allow people who clearly work against national interest to go scot-free?
Honestly, canvassing for sanctions against one’s country, especially for people who know full-well that this causes human suffering and deaths, should be criminal.
Similarly, laws that account for shadowy social media actors who spread alarm and fake news calculated to cause public disorder have to be enacted.
Considering the toll fake news takes on ordinary members of society, allowing these characters to go scot-free is a travesty.
Further, customers are no longer king. They are in bondage to retailers. The tail is now wagging the dog.
Now more than ever, the observations of the late economic Mr Erich Bloch made in an article published on March 30, 2007 ring true even today.
“Since the beginning of February 2007, much commerce and industry has been pursuing operations in a manner that can only hasten Zimbabwe’s economic collapse.
“The captains of business are apparently now driven to pursue self-destructive or, in other words, to commit hara-kiri, but to do so with the same philosophy as suicide bombers, being to destroy not only themselves, but also all others ie the ever greater number of industrialists, wholesalers and retailers, have abandoned the traditional approach of determining selling prices by aggregating direct costs of goods produced, the proportion of operational costs as attributable to the sale of such goods and other such overheads, and the desired profit margin.
“Instead they have resorted to calculations based on the anticipated replacement costs, plus a forecast inflation-adjusted profit margin.”
Such strategies hinge on guessing and predicting what inflation should or would be next year and the year after.
What makes this whole practice disastrous is that negative inflationary outlooks become a self-fulfilling prophecy driven by negative cost pricing.
Many people, however, choose to blame Government instead of the businesses that are behind these practices.
In “Power, Crime and Mystification”, author Stephen Box aptly captures why this is so.
“Corporate crime is rendered invisible by complex and sophisticated planning and execution, by non-existent or law enforcement and prosecution, and by lenient, legal and social sanctions which fail to reaffirm or reinforce collective (majority) sentiments on moral boundaries.
“In addition, the type of media to which the majority of people expose themselves under-reports corporate crime.”
It is time that we also fix some of these delinquencies that are causing untold suffering.
Edmore AM Ndudzo is the first black Treasurer of the City of Harare. He was lead consultant in compilation and drafting of the Public Finance Management Act of 2009
