Fiddling while Rome Burns
In the past two weeks the Zimbabwe economy has seen two really significant
developments. The first is the total collapse of the Zimbabwe dollar and the
second is the sharp deterioration in basic food supplies.
On Tuesday a local banker told me that the cost of money transactions in
Zimbabwe dollars now exceeded the value of their transactions. Simply put
that means if you are trading or shifting money in the form of the Zimbabwe
domestic currency, you will be losing money even if you are charging
interest and other charges related to the transactions that are involved.
So business here is now only possible if you work in a hard currency - the
Rand or the US Dollar. This creates two other problems - how to obtain the
hard currency in the first place and then, once you have the money, to use
it without breaking the law which still prohibits such transactions.
For a small fortune you can secure a licence to operate in hard currency but
even then the operating conditions are nearly impossible. So the reality is
that most businesses have closed their doors or are now operating on a care
and maintenance basis until better days - whenever that will be.
In the rural areas the position is even worse and people are now operating a
barter economy or relying on the small remittances that come in from
relatives in the Diaspora. If you cannot use either system, you are facing
On the food front the situation has deteriorated sharply in the past month.
Humanitarian agencies have full warehouses but cannot get the food to the
people who need it. The reasons are that the agencies cannot access cash for
their operations - hard currency transactions are still illegal and the cash
withdrawal limits and other restrictions imposed by the Reserve Bank are
making local payments impossible - they cannot pay for hotels or staff
salaries and cannot pay transporters to take the food to where it is needed.
But it goes beyond this, at the start of the year it was estimated that we
needed 1,8 million tonnes of maize. Of this total the humanitarian agencies
said they would try to supply 400 000 tonnes. The Zimbabwe government
estimated maize production at 600 000 tonnes and that left a shortfall of
800 000 tonnes for importation.
So far all we can find evidence of are contracts for a total of 175 000
tonnes and even this meagre import programme seems to have spluttered to a
halt. That leaves a total shortfall of 625 000 tonnes - possibly 800 000
tonnes because it is most unlikely that local production was 600 000
tonnes - most commentators say 425 000 tonnes.
This means that the shortfall is still probably 50 per cent of consumption
and we still have 5 months to go to the end of the forecast supply period
(April 2008 to March 2009). In October the donors fed 2 million people at
the level of 15 kilograms of cereals a month per capita. In November they
expect to go to 3,5 million people at a reduced rate of 10 kilos of cereals
per capita. They plan to go to 5,5 million in January 2009 but at present
they do not have the money or the supplies for that programme.
Remember that this is just the donor community completing what they
committed themselves to at the start of the year and does not in any way
alleviate the shortage in commercial supplies from the GMB. Therefore we can
deduct from this in the absence of any information from official sources
that food supplies are now down to critical levels.
If this is not addressed and soon, widespread starvation and deaths are now
Perhaps the worst aspect of this is that the State has not admitted there is
a problem and that they need help. No appeal has been made for help and no
response is forthcoming from the authorities who have been approached to
help rectify the problems with payments and the need to appeal for resources
to help meet the needs in early 2009.
But the crisis goes beyond these basic problems - there is growing evidence
that the Reserve Bank has used its power to loot the hard currency accounts
in the banking system for its own purposes. This includes the accounts of
the UN system and has led to a suspension of future transfers that will
affect the tens of thousands of people with HIV/Aids who are on UN funded
If that was not bad enough, the Junta is running a programme called
'Champion Farmers'. These are all those individuals in Zanu PF who have
access to farming property, to draw on State funded inputs (fuel, seed,
fertilizer and chemicals as well as farm equipment) to grow crops this
summer. In a rush to take advantage of these offers (partially funded by a
grant of R300 million from the South African government) Zanu PF thugs are
harassing remaining commercial farmers and driving them off the land.
This whole programme is illegal and has been the subject of a lengthy appeal
to the SADC Tribunal in Windhoek. The Tribunal has already ruled in favour
of the farmers and is expected to knock the whole land reform exercise down
at the end of November. That does not make any impression on these thugs and
This exercise includes a deputy Governor of the Reserve Bank and the
Commissioner of Police. They are taking over farms where the commercial
farmers have prepared land and secured some inputs and the new occupiers are
then simply picking up where they left off and planting crops on land that
does not belong to them using equipment looted from their owners.
All stocks of seed and fertilizer and all agricultural fuel is going to this
programme leaving small scale farmers and 700 000 peasant farmers without
these essential supplies. The result, tobacco plantings are down 50 per cent
and cereal production is likely to fall below the level achieved last year.
So the suffering of the majority continues - ordinary men and women,
children and the elderly without food and opportunity (95 per cent of
teachers are not at work) and more particularly, without hope. The region
has not even announced the date of the SADC/AU summit due in less than 10
Bulawayo, 1st November 2008