Looking for the economic smoking gun that got us here

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By Hlomenkulu Mnondo

BACK in primary school we used to wear these uniforms with a logo that said, “Knowledge is power” and so, in the interests of empowering fellow citizens with the right insights, I decided to pen this article.

Unless the ordinary citizen knows who is poisoning the well, we may never get out of this hole that someone has seemingly dug for us. We may even unwittingly help the digger and dig even harder than them. And so, it is my wish to explain in the simplest of terms what’s really going on here and what it’s likely to translate to in the coming near to medium term.

So, what is really going on in Zimbabwe, why is the economy getting worse instead of better after the New Dispensation? Why are we in a state of unrest right now? Why can’t we just replicate the exact same blueprint employed during the GNU and get the country back on a recovery path?

Yes, there are sanctions now, but they were there too during the GNU, so what has changed now? We dollarized, and before we even had sufficient dollars in the system, things picked up. We’ve now lived with dollarization since, but suddenly we don’t have enough dollars in circulation at an alarming rate. What’s really going on here?

The explanation for this, in all probability, starts where most people may not, at first glance, expect. Following the coup-not-a-coup or military-assisted transition of November 2017, the drivers of the transition process that helped us see the back of possibly the most evil, vindictive, selfish, cynical and grudge-bearing leader Africa has ever seen were desperate to launder their project.

The transition really did help in a big way in that respect, but it came at a price. The new dispensation wanted to hold an election and seemingly return the country to legitimacy in the eyes of the world in the cleanest possible way and thus begin engaging the international community.

But the brand they were riding on, Zanu PF was so tarnished it had no chance in hell of ever winning a free and fair election in Zimbabwe. So, the machinery to enable such an outcome had to be bought, not to mention the incidental rent-seeking opportunities such a process would provide its architects.

Yes, believe it or not, a violent, unfree and unfair election is a lot cheaper financially than one that’s intended to resemble its opposite. You only need to ride on the threat or actualization of violence and other means to manipulate the process and you are sorted.

A most telling sign that something was afoot was the level of domestic indebtedness by the Zimbabwean government just after the coup/transition and the middle of 2018 when the elections were finally held. Authoritative sources report that the volume of treasury bills issued by the government doubled in that period; reports suggested that it was close to $8bn dollars around October 2018.

A treasury bill is really just one of a number of instruments governments use to borrow money domestically and these typically mature within twelve months at most; in other words, place an obligation on government to repay the money plus interest at maturity.

Now when government sucks up liquidity or funds available for lending to the private sector you then run into the problem we are now facing.

In economics it’s called ‘Crowding out’ the private sector. This then means the likes of Delta, National Foods and whoever else can no longer get access to funding to restock and get operations up and running again like we did during the GNU. Not only them but especially entities whose inputs are by and large imported.

Just like that, Zanu PF transferred its problem onto the rest of Zimbabwe – whether Zanu supporting, MDC supporting or APA supporting. Unfortunately, such a crisis does not discriminate, we all live in the same country.

The problem gets even worse when citizens resort to importing the most basic things these manufacturers made locally all along like soap, cooking oil, toothpaste and whatever else. It’s a further drain on the meagre dollars we had circulating in the economy. In essence the citizenry, out of necessity joins Zanu PF in digging the hole deeper.

At the same time, essential commodities which we must import whether we like it or not like wheat and fuel start competing with these other goods for the same pool of foreign currency reserves and so the vicious cycle feeds on itself.

Fuel shortages then become the norm as can be seen today. One shudders to think about the availability of agricultural inputs, including fertilizer during the recent planting season. We may yet see the consequences in a few months’ time.

Now, had the money raised on the back of these treasury bills been employed to refurbish and restock hospitals, build infrastructure and fix broken sewer systems, it would be better but no; no one can account for what they were used for.

But coincidentally Zanu PF, a non-revenue generating no- profit political party was painting the countryside green with envy with expensive narcissistic looking billboards of their leader, buying cars for the chefs and chiefs alike, holding massive rallies where the handing out of all sorts of clearly imported goodies was the order of the day.

There are high ranking provincial party chefs with brand spanking cars parked in their yards as we speak, never mind the chiefs and other VIPs. The reader can easily verify this article if they have relatives in Zanu provincial structures.

In other words, to borrow from their terminology, Zanu PF was “externalising” whatever forex or liquidity we had on the streets and in the banks to places like China, Germany, Japan, South Africa and heaven only knows where else to buy trinkets that were only of use to themselves and not Zimbabwe.

Add onto that, the fact that 90% plus of all government revenues are utilized on recurrent expenditure and you are now staring into the abyss. Zanu PF was squandering the seed that was meant to provide today’s harvest. Without seed there’s no harvest. That’s how important power is to Zanu PF; for them it comes before Zimbabwe.

When the minister of finance and economic development Professor Ncube was appointed, his first order of business was surprisingly to waffle on about monetary policy issues i.e. to get rid of the bond note or not to; to explore the possibilities of joining the rand monetary union etc. the issue was clearly never a monetary policy one but that of a failing domestic production and supply side one. We were closing Zimbabwe for business while, ironically, saying the exact opposite.

It is also not surprising that doctors and other civil servants would go on strike right now, there’s no real US dollar money to pay them. There’s no one to tax, industry has ground to a halt and the only recourse for the regime is to resort to paying people in fictitious RTGS entries and bond notes. Aziko Mali as some would say.

Meanwhile, the minister of finance, instead of focusing on cutting back government expenditure, is doing the only thing ZANU know when cornered and that is to go and beg and borrow outside. Taking the pain by becoming more frugal is way too far beneath our chefs.

So, the reader may now be asking themselves what next. Because Zanu PF is a political party some of my compatriots support, one has to grant them the right to exist but ZANU tendencies MUST, without a doubt, die. Their party cannot continue elevating themselves above Zimbabwe.

If there’s a debt of gratitude we owe them for the liberation struggle, even that must have a limit. So, if the reader is a Zanu PF supporter, my appeal to them is to help us get rid of ChiZANU and, for the opposition to work extra hard to replace Zanu PF legally as a matter of urgency.

Hlomenkulu Mnondo is a Zimbabwean and writes from South Africa