(Received yesterday from the Zimbabwean Agricultural Economist, Eddie Cross.)
How much longer?
I set out in the following table the growth in prices [at an annualized rate] in a local supermarket over 12 months in the past year.
April 781%
May 1139%
June 992%
July 1050%
August 1283%
September 1026%
October 2285%
November 1875%
December 1895%
January 3425%
February 3298%
March 5202%
What is really scary are the results for the first week of April – 13 081 per cent!! I know there were other influences of this latest increase (it was Easter) but all the same there has been another huge jump in prices in April. Certainly more than in March and I do not think this supermarket owner would claim that the volume of his sales are rising like this!
If we add to this the outturn of the worst agricultural season in perhaps 50 years (we have grown barely 20 per cent of our food requirements), the near collapse of the mining industry under the burden of completely unrealistic exchange rates (the official exchange rate is 1,25 per cent of the market
rate) and a nonsensical gold price of Z$16 000 a gram when the market price is nearer half a million dollars a gram in the market. The continued, even accelerated collapse of industry and the almost complete absence of tourists and you get the picture of an economy in even deeper trouble than last year.
The IMF has revised its estimates of the decline in our GDP but even that does not reflect what is happening right now. The response of the government has been catastrophic – the Governor of the Reserve Bank has abandoned any attempt to influence exchange rates – he simply handed that over to the Minister of Finance who is the most ignorant Minister we have had in that portfolio since independence. The Ministry of Industry is trying to hold prices down and we have not seen sugar for three weeks, cooking oil has all but disappeared and bread is selling at ten times the controlled price. The Statistics office simply suspended publication of the inflation rate, knowing full well that the rate for March – even after they had massaged the figures and used the fictional controlled prices for key commodities, had surged to new heights. My personal view is that inflation in March was about 4000 per cent for the average consumer in Zimbabwe.
To compound the crisis the Customs department is now demanding payment of import duties in hard currencies. To give you an idea of just what that means my son imported a second hand vehicle from the Far East a month ago. He paid US$8000 and Z$1,7 million for the vehicle. If he were to try and do that deal today he would have to pay US$6 800 in import duties – the market rate for that would be Z$136 million. In addition he would have had to find the additional currency because he could not get it from the Bank.
The immediate effect was a huge accumulation of vehicles and goods at the border – people could not clear their imports, as the foreign exchange is simply not available. So essential imports that have been keeping the country going are now being strangled by the new regulations. This will make conditions very much more difficult for all Zimbabweans – unless of course you belong to the elite in power in which case you get your foreign exchange at less than 2 per cent of its value and a new vehicle imported from South Africa will cost you about US$85 – with import duty.
Does this mean anything to the regime here – on the surface, no! On Independence Day we saw the usual performance from Mr. Mugabe – the MDC were the puppets of the western powers, our economic problems are caused by the denial of my right to shop in London (targeted sanctions) and our business leaders are "greedy".
More seriously he made no reference to the SADC initiative to resolve our crisis, he made no concessions to the mediation of Mr. Mbeki. He swore ("on his ancestors grave" – about the strongest term a Shona leader can use) that he would "never" allow the MDC to come to power. Quite a statement for a man whose sole constituency is now about 2000 individuals living the life of Riley in a starving nation and some 40 000 thugs on government payroll whose task it is to beat and bludgeon the perceived enemies of Zanu PF in preparation for another farcical election.
For the benefit of those who will have read the SADC statement that Mugabe was elected democratically in 2002 we need to remind ourselves of that event which was the turning point in his relations with other genuine democracies around the world.
In the 2002 presidential elections the regime here used massive violence and intimidation in the run up to the election. Food was rationed only to those who supported Mugabe in rural areas. He disfranchised at least 500 000 voters prior to the election and in the election itself the authorities fabricated up to 800 000 votes and allowed 53 000 Zanu PF functionaries to vote more than once. In addition the postal ballot was clearly manipulated with the armed forces voting under supervision and some 400 000 potential MDC supporters were denied the vote on the day when polling stations closed without registering their votes.
Mugabe claimed he won the election by 400 000 votes and this point of view was faithfully endorsed by South Africa and the AU – but not be the SADC observer mission. Other observers rejected the result as a travesty. MDC challenged the result in the Courts and have yet to get a hearing. Mugabe lost his status as a democratically elected leader. Prior to the election the armed forces said they would not accept the result if Mugabe was not elected and since then they have been rewarded with heavy salary increments and perks and are now effectively running the country. Cabinet and Parliament are largely sidelined in the exercise of power.
If nothing is done soon to turn this situation around we are headed for a catastrophe – and I do not think that is too strong a word. Already 3 million Zimbabweans are in South Africa, 80 per cent illegally. Their numbers are rising by the day and I would not be surprised if another million flee the country this winter. Just on Thursday I spoke at a local meeting organised by Civil Society (Transparency International) on the subject of corruption in local authorities. Members of the audience who subsequently asked pointed questions about national politics or made statements suggesting that what we needed was regime change, were followed after the meeting and beaten. I spoke to three of them yesterday and sent one to a medical center for attention for what looked like a broken arm, the others had not eaten since the day before so we fed them then gave them money to get out of town. They were frightened for their lives.
Mr. Mbeki better understand that he is running out of time.
Eddie Cross
Bulawayo, 21st April 2007
