Zimbabwe is now-spiralling downwards into an economic-crisis so vicious and acute that it leaves no possibility that the president, for all his famed-political skills and notorious readiness to resort to violence, can save himself. The situation is more serious than the hyperinflation of 2008, which was solved by switching to the dollar. This time there is no way out.
Robert Mugabe has led Zimbabwe to ruin, since Independence 36 years ago.
A healthy economy relies on trust, so when low-trust thugs break the trust the economy plummets because people do not trust it.
The problem dates back to the election of 2013, when Mugabe’s Zanu PF resorted to fraud to win outright victory over Morgan Tsvangirai’s Movement for Democratic Change — and ditched the Government for National Unity, which had governed Zimbabwe since 2009. …
Zanu PF [finance minister] Patrick Chinamasa … returned to the old Zanu habit of using public spending as a source of patronage, for instance allowing the near-doubling of the civil service. To begin with he funded the deficit by issuing treasury bills. But that source had dried up by the end of last year as the money market realised they were next to worthless. Since then Chinamasa has resorted to devious and probably illegal alternatives.
First he plundered the Reserve Bank’s cheque-clearing system. Zimbabwean firms and individuals signed cheques in good faith, only to discover that the payment had not arrived at its destination. Exploitation of the clearing system is thought to have raised about $800 million dollars. But this short-term ruse has had dreadful consequences. The system is now paralysed, while Zimbabwean banks are in practice bust.
And so on spiraling downwards. Financial thuggery was a short term gain for the government, but destroyed trust and is a long term loss.
Robert Mugabe was told by President Julius Nyerere of Tanzania that he had inherited the ‘Jewel of Africa’ when he became leader 36 years ago. He has ruined that inheritance but nevertheless has a chance to quit with some honour in the near future. If not, horror looms.
hat-tip Stephen Neil