Tough times
Zimbabwe still suffering
In most countries, a 79% leap in share prices over just 11 days would normally suggest a surfeit of investor confidence.
In Zimbabwe, home last month to the world’s best-performing stock market, it has been a sign of panic and inflation, just another terrifying financial statistic in a country that has been a world-beater at producing them.
Nine years after inflation hit 89.7 sextillion percent and the central bank authorised a $100trillion Zimbabwean dollar bank note – still too little to pay for a bus fare – the country is again mired in financial woes.
In recent weeks, Zimbabweans have experienced a wretchedly familiar reprise of aspects from that grim period, experiencing anew soaring prices, petrol queues, bare supermarket shelves and pharmacies running short of lifesaving medicines.
It should not have been this way. A year ago this month, Robert Mugabe, the nonagenarian autocrat blamed for turning one of Africa’s most promising economies into a dysfunctional supplicant, was ousted through a coup.
Zimbabweans celebrated on the streets, dancing euphorically with the soldiers they hailed as liberators. Many felt their country would be unleashed both from tyranny and immiseration.
But in the 12 months that have passed, many have reached the gloomy conclusion that getting rid of a dictator is easier than erasing his legacy.
As a result of past mismanagement, profligate government spending and a failure to institute economic reforms by Emmerson Mnangagwa, the new president, Zimbabweans are facing a twin currency and inflation crisis.
The collapse of industry in Zimbabwe means that the cost of about 90% of goods, including staples such as flour, sugar and cooking oil, have gone up by about 20%. Getting enough to eat is again a major challenge for hungry families.
Hyperinflation was finally brought under control in 2009 after the Zimbabwean dollar was finally abolished.
The economy stabilised after Mugabe was forced to accept a coalition government with opposition control over the finance ministry, and the country adopted US dollar as the base currency.
Government overspending saw the dollar largely disappear two years ago and the government launched new quasicurrencies, such as locally-printed cash known as bond notes, and electronic money spent via mobile phones.
These methods of payment were at first interchangeable with the US dollar, but values deteriorated and plunged in the last few weeks, with the rate briefly hitting 10 local dollars to US$1. So prices began rising, and panic quickly set in as some – remembering the economic crash of 2008 – went to spend their money before, they feared, it would lose all its value.
Crowds formed outside fastemptying supermarkets, with people desperately trying to stock up on basic items.
South African-owned franchise Kentucky Fried Chicken said it had to shut down because it ran out of chicken, and locally produced fast-food outlets almost doubled prices.
Richer Zimbabweans found that often the only way to turn bond notes into dollars was to buy shares in foreign companies listed on the local stock market, explaining why prices have soared.
But nowhere has the situation been as grave or as tragic as in the health sector.
Inside a hospital in Chitungwiza, a commuter town outside Harare, HIV-positive Zimbabweans have been queuing in an increasingly frantic attempt to source antiretrovirals.
Patients used to be given a month’s supply of the medicine at a time, but now there is only enough to give four days’ worth to each patient, necessitating more frequent trips for those who use them.
In Bulawayo, many have resorted to social media to get medication.
“Urgently need the following anti-psychotic medications: either Sodium valproate or Epilim,” reads one message on a WhatsApp group used mainly by the old and the poor.
For Portifa Mwendera, president of the Pharmaceutical Society of Zimbabwe, the crisis has reached nightmare levels. Pharmacies were either selling medication only in US dollars, which most people do not have, or had ratcheted up the prices to unaffordable levels for those who could only pay with bond notes, he said.
Efforts by a cash-strapped government to intervene have inevitably been paltry, with only £2.3m (about R43m) made available for an emergency fund for medicines.
“That will only cover us for about a week,” Mwendera said. “We also owe suppliers about $30m (R426m). It is a crisis.”
Zimbabwe once made three quarters of its own drugs, but like in so many other sectors, mismanagement ultimately resulted in ruin. State-owned health facilities, which were sophisticated when Zimbabwe won independence in 1980, are now dilapidated or barely functioning, while nearly all medicines are now imported.
Mnangagwa, who has positioned himself as a pragmatic moderniser despite having been a deeply loyal ally of Mugabe, will have to act fast to end the crisis.
Yet his options are limited, and he has been blamed for exacerbating the turmoil by increasing already unsustainable levels of government spending to win votes ahead of the nationals elections held in July.
But cutting government expenditure would mean slashing Zimbabwe’s bloated civil service – a deeply unpopular move sure to alienate many in the already divided ruling Zanu-PF.
Nor can the president approach the World Bank or IMF pays off more than £1bn (R18bn) in debt arrears.
US sanctions are likely to remain in place until Mnangagwa can show democratic discourse. Suspicions that he is not prepared to do so mounted when soldiers fired on unarmed protesters just two days after the July contentious election.
As he grapples with the poisoned legacy of the man he ousted and a country again flirting with financial disaster, Mnangagwa is likely to find it increasingly hard to deliver either.