ALMOST every branch of the Zimbabwean public sector is subsidised and any new value which may be generated from other sources is immediately gobbled by recurrent expen
diture. The net result is a continuing fall in dollar value and an inevitable increase of inflation. Evidence for this claim is demonstrated by the foreign exchange auction where the Zimbabwe dollar is weakening against other currencies.
This decline however is not keeping pace with the real value as indicated by the parallel market. The productive sector cannot get adequate resources from the auction system and has to resort in part to the parallel market for its foreign currency needs or borrow at high interest locally to sustain itself, a guarantee of increased inflation.
Agriculture, acknowledged by all to be the engine capable of driving a successful economy, is recording drastically reduced volumes of all commodities with the possible exception of cotton. These losses are taking place in tandem with the granting of massive subsidies and loans that are not being repaid. This suggests that instead of supplying the motive power agriculture is now one of the major drains on the economy.
Just to illustrate this, the Business Herald of August 15 2003 led with a story headlined “Trust, Ariston enter joint venture”, with a subhead saying “firms to assist 1 500 newly resettled farmers”.
It claimed that most of the finance in excess of $10 billion would be used to support floricullture and horticulture, the most profitable export produce. It claimed in the caption Trust Banking Corporation had emerged as one of the most successful indigenous owned financial institutions.
Just 13 months later in September 2004 all media headlines read “Trust Bank closed”. It was the fourth of the new banks to be placed under curatorship with another eight reported to be in dire straits. Trust Bank alone is reported to owe $1,4 trillion to the RBZ.
Since nearly all banks were ordered to lend money without collateral and at concessionary interest rates to new farmers in 2003, can we not infer that the agrarian reform has been a colossal failure which threatens the whole financial system?
While agriculture cannot be blamed for all non-performing loans, one suspects that the lion’s share belongs there. One is now treated to the spectacle of government operatives entreating debtors to be good little boys and girls and pay back their loans. It is quite probable that a few thousand non-performing loans are performing in a glittering parade of fantastically expensive, imported luxury vehicles up and down the streets of Harare!
Media reports suggest that the 2004/5 cropping season is to be aided by supplying 15 million litres of diesel to farmers at the subsidised price of $2 050/l. The pump price is over $4 500/l. Is there a better way of stoking inflation and breaking banks than by financing non-performing land-use? The fragmentation of farms and ranches to settle A1 farmers is totally unsustainable and destructive of resources and existing infrastructure.
To expect profitable production from A1 settlers is thoroughly unrealistic. It is not surprising that these unfortunates are now being burned out of their homes and evicted from what used to be highly productive and profitable businesses. The damage has already been done and resuscitation will take decades of expertise and hard work to achieve.
Most of the A2 farmers have other lucrative employment either in state positions or big businesses and so have little or no farming experience. It is not surprising that they are seeking the contract option so as to avoid the heavy expenses incurred by poor land-use.
The leadership is indeed lucky that suffering citizens can escape to South Africa, the Unite Kingdom and other countries to gain employment. This exodus relieves what would be unstoppable pressure for regime change. The lucky streak is improved by way of hard currency remittances from exiles who prop up the tottering economy. Ironically, the exiles who are sustaining the country are not allowed to vote so have limited influence on the politics of their homeland.
To many the suffering caused by inflation is not understood, inexplicable suffering generates anger which has to be diverted away from the leadership by all manner of irrelevancies to the Zimbabwe crisis such as Blair, Bush, colonial imbalances, sanctions, droughts, NGOs, fraud etc, etc. To stimulate support for the ruling party, propaganda has to flow nonstop from the state media. This relies on hatred and ridicule of imaginary enemies mixed up with the myths of race, land and heroes.
The young are forced into propaganda camps to be good citizens. We can only hope that these Nazi-like activities are not a prelude to even more violence against imagined enemies.
Is it not incredible that a political party which condones murder and violence, has prostituted the judiciary, sponsored lawlessness, seized property and other assets without compensation, presided over a currency which has devalued by 10 000%, watched inflation destroy all savings and pensions, lauds a police force that at best is comatose, and at worst makes common cause with the evils being perpetrated against innocent civilians, whose homegrown economy has caused 70% unemployment and where the elite and its sycophants have “acquired” billions of dollars worth of assets and live in luxury while the ordinaries struggle to survive, can present itself as a desirable party for re-election?
Given a free and fair election where all citizens, including exiles, could cast their votes without violence, threats and harassment there is no chance that the Zanu PF party, with its record of execrable governance could ever be re-elected. Yet with the contrived conditions under which the election will take place and where the army brass claim to be the final arbiters as to who will govern, Zanu PF cannot lose.