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Zimbabwe's economy
Zimbabwe's economy Africa's Titanic problemApr 5th 2007 | HARARE found at Economist.com AFP Zimbabweans are fed up with a dreadful economyJUDGING by the pot-holes, rusting street lamps, broken traffic lights and pencil-thin residents of Harare, Zimbabwe’s capital city, the former model of an African economy is at the end of its tether. The water supply fails in much of Harare as frequent electricity cuts hit. With each passing month the city is darker, a bit more decrepit and home to more child-beggars. Those with jobs are forced to walk for hours to get home, as wages no longer cover the cost of public transport. A two-day national strike over pay called by the country's trade unions that ended on Wednesday April 4th made little impression. Many workers passed on the opportunity to air their grievances and to call for a minimum wage, perhaps sensing that it would have little effect on the ruling regime. Hunger is spreading. Life expectancy has dropped to roughly 35 years as AIDS and lack of food bite. More families skip meals entirely. Any spare bit of earth is tilled, even in the city centre. Urban cemeteries and roadside verges are now planted with maize. The road to the airport is dotted with agricultural plots. The country’s bakeries are closing, unable to sell bread at the make-believe fixed prices ordered by the government. Cooking oil, among other basic commodities, can no longer be found. There are many reasons why political tension is so high in Zimbabwe right now: sharp divisions in the ruling Zanu-PF party; a series of violent attacks by police on the opposition Movement for Democratic Change this month; increasing pressure from neighbours fed up with the turmoil in the country. Recently Zambia’s president, Levy Mwanawasa, likened Zimbabwe to the Titanic and called on others in the region to help bring about change there. But an underlying cause of the tension is the clapped-out economy. Hunger, frustration, joblessness and anger that a once-successful African country is falling to bits are helping to pull angry young men onto the streets. Probably more important, the economic woes are beginning to persuade close allies of Mr Mugabe that it is time for the old despot to hang up his boots. For now the government has no idea what to do, so it prints money as fast as the presses allow. Hyper inflation is spinning out of control—it is likely to reach 5000% by the year’s end. Many shops dispense with price tags. Monthly wages are spent immediately, before the notes become worthless. Unsurprisingly, the currency is dropping faster than a stone down a well. In this financial fantasy-land ATMs spit out half-a-million dollars at a time and every other man on the street trades in foreign currency. Speculation on the local stockmarket has become extreme as investors borrow from banks and bet on shares rising in ever greater leaps. One day, soon, notes a local economist, it will all come crashing down. For eight straight years the economy has been contracting; it has shrunk by half since 1999. The collapse of agriculture, after Mr Mugabe snatched commercial farms to give to political cronies, is one big problem. Lack of confidence in the rule of law deters investors. A once booming tourist industry is all but dead, with safari lovers deterred by violent repression. Most aid money stopped long ago. The rapid spread of corruption does not help either. Some 3m Zimbabweans, many of the brightest and best trained, have fled the country in the past few years. More run for the border every day. The money they send home to relatives—no one knows exactly, but guesses are that $400m is returned each year—is proving to be the only lifeline for some. Where next for Zimbabwe? Political change will come before the economic sort. Most likely a scrap within the ruling party will, eventually, force Mr Mugabe to go. If a semi-decent government is formed and democratic elections are called, some sort of rebound should follow, at least if donors, tourists and investors are reassured. South Africa, especially, is likely to lead efforts to invest. But experience in other bits of Africa, such as Uganda under Idi Amin, shows that destroying an economy is done far quicker than rebuilding it. What has taken a decade or so to sink is likely to take a generation to get afloat again. related Zimbabwe business Transport, Zimbabwe weigh on S.Africa business mood |
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