By Charles Frizell
MOST ordinary people in Zimbabwe are confused about the reason for the frightening level of inflation. Who knows where it will go from here?
Economists will give you many complicated reasons for the causes of runaway inflation, and indee
d the reasons are many and complicated.
However, in the case of Zimbabwe, the reason is that the value of Zimbabwe’s exports is far smaller than the value of essential imports. And it continues to shrink.
Added to this and compounding the problem is the fact that as local industries close, the products that they used to manufacture now have to be imported.
This requires far more foreign currency than the small amount needed by the manufacturer.
We should all remember from school that when you divide one number by a smaller number the answer is a larger number.
We should also remember that when we divide a number by zero, the answer becomes an infinitely large number.
Now if we divide the value of our imports by the value of our exports we will get a number larger than one if exports are smaller than imports.
As exports shrink, this number becomes larger and larger. And then, when exports cease the number becomes infinite.
At this point the currency becomes valueless and the economy can be said to have collapsed.
With official inflation of nearly 800% (and unofficially estimated to be much higher) we are obviously getting very close to the “divide by zero” situation.
The reasons of course are known by all: the destruction of agriculture leading to the collapse of many industries, the continual attacks on all productive businesses and now the proposed nationalisation of the mining industry.
Even the government no doubt knows the reasons but as it caused them in the first place, it is very unlikely to have the courage to rectify them.
Charles Frizel is a Zimbawean writing from the UK.
By Charles Frizell