A New Year gaze into the crystal ball
JA”>By Eric Bloch
THE year 2003 was one of the most horrendous, economically, ever experienced by Zimbabweans. The cost of living soared to preciously unimaginable heights, unemployment intensified, hardships became the order of the day for most, as poverty became even greater, the infrastructure became increasingly entrenched upon a path leading towards total collapse, and despondency and despair prevailed in the minds of almost all.
Inevitably, the majority of Zimbabweans having been so viciously whipped by the economic lash, perceive no likelihood of change, save for the worse, and yet have a subliminal, lingering hope that 2003 can be put behind them and 2004 has something better in store. All Zimbabwe’s economists and economic commentators have been recipients of endless inquiries as to their expectations for the economy in the immediate future, and it is appropriate, therefore, that at the commencement of the New Year that one should peer into the crystal ball and endeavour to foreshadow what lies ahead.
Regrettably all indications are that the dismal prognostications of the pessimists and purveyors of doom and gloom will materialise in the immediate or very near future. Almost all that can be seen in the crystal ball is negative and suggestive that even those who recurrently contended “it can’t get any worse” are in for the shattering experience of discovering that it can get worse and it will!
Zimbabwe will be facing another year of pronounced food shortages. It can be taken for granted that ministers Joseph Made and Jonathan Moyo will attribute the scarcity of basic foodstuffs to adverse climatic conditions, compounded by vicious sabotage by former white farmers who, inexplicably, must be the cause of inadequate agricultural production, aided and abetted by an insufferable lack of generosity on the part of the donor community.
No matter how great may be the well-intentioned philanthropy of international organisations and donor states, it can only be malice on their part if they fail to provide in the totality for Zimbabwe’s needs! The insufficiency of food, in practice caused by government’s obdurate destruction of the agricultural sector of the economy will force government to divert much of the limited available foreign exchange to the funding of food imports, and the servicing of the costs of those imports will severely swell the fiscal deficit of the state.
Payment for food will not be the only cause of shortage of foreign exchange. There will be a multiplicity of causes, and Zimbabweans can be sure that the Minister of Industry and International Trade, Dr Samuel Mumbengegwi, ably supported therein by the Minister of all Ministries, Professor Jonathan Moyo, will ascribe the near non-availability of foreign exchange to transfer pricing by exports (even when there is no credible evidence to support that contention), to the activities of cross-border traders, to the unlawful externalisation of assets by Zimbabweans via the black market, to a lack of patriotism on the part of Zimbabweans living abroad, and to unmitigated sabotage by commerce, industry and the mining and horticultural sectors of the economy, all of whom clearly have a masochistic desire to destroy themselves in order to destroy Zimbabwe.
The paucity of foreign exchange, coupled with ever-increasing impacts of rising inflation will result in soaring prices in the foreign currency auctions about to be commenced by the Reserve Bank, with consequential further inflation. When that occurs, government is certain to claim that the rise in prices is not indicative of a lowering value of the Zimbabwean currency, but is due to manipulation of the auctions by unspecified enemies of government, who will be accused of using the auctions to embarrass the government. There will be no explanation how auctions regulated and managed by the Reserve Bank can be so manipulated.
Irrespective of official figures, real inflation exceeds 700% per annum, and is continuing to rise. To a significant degree inflation is feeding upon itself, the upsurge in production and operating costs forcing price increases which in turn force a further upsurge in those costs, in a continuing reciprocal spiral. But that inflation will also continue to feed upon ongoing escalation in input costs, due to the continuing rise in the cost of foreign exchange driven by a situation where the demand for foreign exchange exceeds supply. And that inflation will also be driven upwards by declining volumes of production, caused by a combination of lessened consumer demand due to shrinking purchasing power, lessened exports as inflation coupled with continued surrender of export proceeds to the state at a ludicrous exchange rate erodes export market competitiveness, and as operating costs continually increase due to rising costs of imported inputs and to inflation itself.
A potential source of much-needed foreign exchange is the tourist industry which has the ability to be a key economic sector, but which will continue to function in very straitened circumstances. To some degree that is and will be as a result of a global shrinkage in tourism in response to continuing fears of international terrorism.
But the renowned Minister of Fiction, Fable and Myth will assure Zimbabwe that on the one hand Zimbabwean tourism is growing apace and that on the other hand if Zimbabwean tourism is not growing apace, that is solely due to foreign journalists, Tony Blair and former white Zimbabweans unjustly tainting the impeccable Zimbabwean image.
He will remain studiously oblivious to any reluctance of international tourists to patronise Zimbabwe because they fear a continuing breakdown in law and order, abuse by some officialdom at border posts and at roadblocks on major highways, unreliability of air services, and infrastructure collapse.
The Zimbabwean economy is likely to be severely hit by intensifying industrial unrest in the months ahead. The never-ending rise in inflation is impacting horrendously upon workers who live under a continual stress of trying to meet their own basic needs, and those of their families and dependants from pay packets which although frequently increased, have a declining purchasing power. The stresses upon them are immense as they desperately try to spread their wages over the costs of accommodation, utilities, food, transport, education, health care and many other basics and essentials and finding it ever more difficult to do so. That failure blinds them to the same (and often, greater) pressures upon their employers. Instead, driven by their desperation, they make increasingly confrontational demands on their employers. That such demand can culminate in the eventual failure, collapse and closure of the employer’s enterprise, and consequential unemployment is disregarded or dismissed, the immediate needs over-riding all else.
The unrest is likely to be even greater as the Zimbabwean political opposition will recurrently seek to use the withholding of labour as a mode of protest against the prevailing political and economic regime. That such form of protest has heretofore repeatedly failed to achieve targeted objectives, and only worsens the economy and the lot of the populace, will not be considered, regard being only to the need to protest, and not to the fruitlessness of that particular form of protest and to the prejudice to the protesters and the populace as a whole, without compensatory political or economic change.
All these and the many other catalysts of continuing weakening of the economy must result in a yet further deterioration of the national infrastructure including the provision of energy becoming increasingly erratic, the already appalling telecommunications resource (both land lines and mobiles) becoming worse and worse (its now more than 12 months since Econet promised an improved service — where is it? and Tel*One is unable to attend to faults for months on end!), local authorities being unable to meet the needs for water, sewerage and refuse removal, roads falling into increasing disrepair (with more potholes than tarmac), Air Zimbabwe and National Railways of Zimbabwe unable to service essential requirements and the health care resource fast becoming non-existent.
With a shrinking economy, and inflation-driven rises in its costs, the state will have no alternative but to confront Parliament with a supplementary budget, despite its resolve to the contrary, enunciated by the Minister of Finance and Economic Development only six weeks ago, when tabling his 2004 budget. So taxes or state deficits will increase, or both! And as the economic deterioration continues and increases so too will the ‘brain drain’ which is depriving Zimbabwe of the essential skills necessary for the eventual economic recovery, which skills loss must slow down that recovery when it finally commences.