Zim in worst eco­nomic cri­sis in 10 years

Pretoria News - - Metro - AP Staff Re­porter

HARARE: As Zim­babwe plunges into its worst eco­nomic cri­sis in a decade, petrol lines are snaking for hours, prices are spik­ing and res­i­dents gog­gle as the new gov­ern­ment in­sists that the coun­try – some­how – has risen to mid­dle-in­come sta­tus.

Af­ter oust­ing the re­pres­sive Robert Mu­gabe al­most a year ago fol­low­ing more than three decades in power and peace­fully elect­ing Pres­i­dent Em­mer­son Mnan­gagwa in July, many hoped the coun­try would emerge from tur­moil and re­turn to pros­per­ity.

In­stead, it ap­pears to be im­plod­ing in the days since the new fi­nance min­is­ter an­nounced a “sta­bil­i­sa­tion pro­gramme”. At the week­end long lines for fuel reap­peared, some­times stretch­ing for sev­eral kilo­me­tres.

Anx­ious res­i­dents rushed to stores for dwin­dling stock as prices rock­eted and shop work­ers be­gan re­mov­ing price stick­ers. Peo­ple have started join­ing any line in sight.

“You ask what the queue is for later. The im­por­tant thing is to get in the queue, there might be some­thing there,” said Yvet Mlambo, a res­i­dent of the cap­i­tal, Harare.

Ba­sic items such as bot­tled wa­ter are now be­ing ra­tioned, even as the cap­i­tal faces a cholera epi­demic that has killed more than 40 peo­ple. Even beer is ra­tioned.

“At least al­low us to drink. How else can we drown our sor­rows?” one man shouted, as he stared at a no­tice lim­it­ing cus­tomers to two beers per pur­chase. Drinkers have formed What­sApp groups to share tips on where favourite brands can be found.

More wor­ry­ingly, drugs are in short sup­ply in a coun­try where the health sys­tem has long been on the brink of col­lapse. Out­side a phar­macy, Brid­get Chik­wimba shook her head. “I bought these same al­lergy pills for a dol­lar last week, to­day they are $13,” she said. “I waited five min­utes while they cal­cu­lated the new price.”

The coun­try’s Re­tail Phar­ma­cists As­so­ci­a­tion de­scribes the short­ages of medicines as “se­vere”.

Many fear the cur­rent cri­sis, in­duced by for­eign cur­rency short­ages and bal­loon­ing debt, could spi­ral into the kind of col­lapse seen a decade ago when Zim­babwe’s hy­per­in­fla­tion reached 500 bil­lion per­cent, ac­cord­ing to the In­ter­na­tional Mone­tary Fund.

Plas­tic bags of 100 tril­lion Zim dol­lar ban­knotes were not enough to buy ba­sics, forc­ing Mu­gabe to form a “unity gov­ern­ment” with the op­po­si­tion and adopt a mul­ti­c­ur­rency sys­tem.

Since then, daily trans­ac­tions have been dom­i­nated by the US dol­lar. But the new cur­rency short­age has forced most peo­ple to use bond notes, or bank cards and mo­bile money – all de­valu­ing quickly against the US dol­lar on the black mar­ket.

Re­tail­ers said the soar­ing rates for AS THE fi­nan­cial cri­sis in Zim­babwe deep­ens, KFC Africa has taken the de­ci­sion to tem­po­rar­ily shut its res­tau­rants in the coun­try.

Ac­cord­ing to the com­pany, the fast food out­lets “are un­able to con­tinue to trade due to the cur­rent pres­sure on the coun­try’s econ­omy. The cur­rency chal­lenges have af­fected our op­er­a­tions and sup­ply and we are ex­plor­ing var­i­ous ways to re­open our res­tau­rants soon”.

“We gen­er­ate new em­ploy­ment op­por­tu­ni­ties as we grow and with ev­ery new restau­rant open­ing. Our sup­ply chain is heav­ily de­pen­dent on lo­cal sup­pli­ers and we are pas­sion­ate about en­sur­ing that these and all other part­ner­ships are sus­tain­able,” the com­pany said. | US dol­lars on the black mar­ket, where they source most of their for­eign cur­rency, make it hard to re­stock. Some busi­nesses have been forced to close.

“The par­al­lel mar­ket is un­sus­tain­ably high and has dec­i­mated con­fi­dence. Prices have been go­ing up while mar­gins are eroded,” said Den­ford Mu­tashu, pres­i­dent of the Re­tail­ers As­so­ci­a­tion of Zim­babwe.

In the days lead­ing to the im­plo­sion, new Fi­nance Min­is­ter Mthuli Ncube, a former lec­turer at the Lon­don School of Eco­nom­ics, an­nounced the “sta­bil­i­sa­tion pro­gramme”, that in­cluded com­mit­ments to cut bor­row­ing. He plans to cut gov­ern­ment spend­ing, re­pay for­eign loans to un­lock fresh credit and ex­pand the rev­enue base.

On Fri­day, Ncube sur­prised many by an­nounc­ing that af­ter re­bas­ing the GDP and tak­ing into ac­count the large in­for­mal sec­tor, Zim­babwe was now a mid­dle-in­come econ­omy.

EMPTY shelves in a Harare su­per­mar­ket af­ter cus­tomers had cleared all the rice that was in stock. Ba­sic com­modi­ties are run­ning out and can­not be re­placed ow­ing to a lack of for­eign cur­rency to im­port some raw ma­te­ri­als. | AARON UFUMELI EPA-EFE A WOMAN walks past a “No Petrol” sign at a fuel sta­tion in Harare, Zim­babwe. |

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