Chaos in Zimbabwe
Today I went from one meeting to another using the main streets in Harare -
it was pure chaos. The City had no electricity, the traffic lights at all
intersections were not working and the traffic was gridlocked. The Police
were nowhere to be seen and even as we sat in the traffic a police car drove
past - ramped the pavement and drove though the intersection paying no
attention to what was going on around them.
At the Reserve Bank it was the same. They are printing money and creating
money in other forms so fast that the inflation rate is no longer
calculable. What we do know is that the RTGS rate - that is the rate at
which foreign exchange is exchanged in the open market for money transferred
by electronic means is moving by the hour. At the beginning of August it was
7 to 1 against the US dollar (after we dropped 9 zeros) and yesterday it was
2 000 000 to 1. Quite a change in 8 weeks! At this rate it will be no less
than 10 million to one by next weekend.
Desperate people are queuing for days at the banks and other financial
houses to try and get their money out of the system so that they can spend
it before it literally melts to nothing. In Gweru last week the main street
was almost closed by crowds at ATM's and banks. In Harare literally
thousands of people jam every cash outlet. The maximum withdrawal by an
individual is $20 000 a day worth US$ 0,001 cents.
The Reserve Bank, faced with the escalating consequences of their own
ineptitude are now printing money on plain local bond paper with no security
features. The mafia are having a field day and so many counterfeit notes are
circulating that people are refusing the new notes. Instead of adopting a
carefully crafted plan to overcome these problems and to correct the
fundamentals that are driving the system towards collapse, the Governor
today simply closed down the RTGS system and I understand even the inter
bank system; rendering the only alternative window for payments impassable.
It is illegal to trade in hard currency - you can go to jail for this if you
try, it is illegal to change money on the street, you cannot charge a market
price for what you sell unless you are willing to risk intervention or
worse. Even today there were reports of the government taking action against
retailers who were 'over charging'. Business is unable to pay their staff in
cash, they pay them by bank transfer and then watch as half their work force
is absent all day standing in queues.
Non cash forms of payments are rampant - barter is common, the use of fuel
coupons with a face value of about US$30 each is also common tender. The BBC
carried a story this week of an auction in Harare where the bids were all
expressed in coupons. Most firms are now being forced to sell their goods
and services in hard currency - Rand or US dollars even though it is
Businesses do not bank the money because the Reserve Bank keeps a close
watch on any foreign exchange balances in the Banks and simply expropriates
them. Crediting the owner of these accounts with local currency at a
ridiculous rate of exchange and then using the flow of hard currency to
support the life styles of the small elite that is still in charge. At these
rates of exchange a luxury, top of the range car costs less than the price
of a local cigarette.
Here we are, 4 weeks away from the start of the wet season and we have 2 per
cent of our fertilizer requirements in stock. All other inputs are virtually
unobtainable. The Reserve Bank is handing out expensive farm equipment to
Zanu PF fat cats like sweets to a kindergarden, but they cannot provide fuel
or seed or fertilizer or chemicals. It's madness.
Remaining farmers - black and white are being evicted from their farms by
Zanu PF heavies such as a Deputy Governor of the Reserve Bank and what is
left of the once world class tobacco industry is facing extinction. Dairy
farmers, pig farms and fruit estates are all facing illegal invasion and
disruption of activity. The Police simply respond to appeals for help by
saying that they cannot help because 'it is political'.
Our retail chains are empty, many stores are closed, the wholesalers are no
longer functional and industry is running at 10 per cent of capacity. Power
supplies are down to about half of demand, fuel is in short supply and spare
parts are unobtainable. All basic foods are virtually only available in the
parallel market at very high prices. Although government schools have opened
their doors and the children have gone to school - no teachers are at work.
The universities will not open their doors this term - the final term before
vital exams. Business cannot fix prices or salaries - their normal
activities are simply frozen in their tracks.
In the midst of this chaos Mugabe went on a 10 day spree to New York to make
a speech. The cost of a 20 minute opportunity to denigrate the leading
nations in the world, the very people who have fed his population for 8
years, was the cost of taking a Boeing 767 to New York and back via Egypt.
The 54 member delegation must have cost at least US$2 million in allowances
and expenses while there.
Then on return he wastes another week with no action on the formation of a
new government - now 3 weeks since the SADC facilitated deal with the MDC
was signed. And remember we have not had a proper government since the 29th
March - nearly 7 months. Since Parliament was convened several weeks ago, we
have had no government at all. When confronted with the need to make a
decision on the allocation of Ministerial portfolios, Zanu PF has been
frozen in its tracks like a child confronted with a cobra. Simply not
knowing what to do and beginning to realize for the first time that the end
of the road is in sight for them.
Even though Thabo Mbeki is no longer the power broker he was after his
removal from the Presidency in South Africa, they are terrified of his visit
to sort out the impasse because they know that their arguments for a
disproportionate share of Ministerial portfolios are not defensible. They
cannot hold out for much longer and Mbeki is on his way.
Bulawayo, 4th October 2008