Mnangagwa U-turns on scrapping subsidies
Zimbabwean President Emmerson Mnangagwa’s government will scrap its plan to remove grain subsidies next year, a move it says will protect poor citizens from rising food prices.
The country is experiencing its worst economic crisis in a decade, marked by soaring inflation and shortages of food, fuel, medicines and electricity.
Half of Zimbabwe’s population needs food aid after a devastating drought across the region, worsened by an economy expected to shrink by 6.5% this year and month-on-month inflation at a four-month high of 38.75%.
Zimbabwe’s grain agency buys grain from farmers and releases it onto the market at subsidised prices, costing the treasury tens of millions of US dollars. The government had planned to remove the subsidy in its 2020 budget.
Mnangagwa was quoted in the state-owned Herald newspaper as saying that would no longer happen.
“We cannot remove the subsidy,” he said. “So I am restoring it so that the price of mielie meal is also reduced (next year).”
The removal of the government’s grain subsidy would have seen a 10kg bag of maize meal, the country’s staple, costing Zim$102 (about R93), against Zim$60 now, in a country with 90% unemployment.
Last week the government removed import controls on maize and wheat flour to try to prevent food shortages.
Zimbabwe’s reintroduction of a local currency after 10 years of dollarisation, coupled with the removal of subsidies on fuel and electricity, unleashed inflation, triggering frequent and sometimes deadly protests against Mnangagwa’s government.
Rights groups say at least 17 people were killed and hundreds were arrested in January, after security forces cracked down on protests against fuel price increases. Police have banned further protests.
Early hopes that Mnangagwa, who took over from Robert Mugabe after a November 2017 coup, would revive the economy are fast fading amid a worsening economic crisis and slow-paced political reforms. —