HomeCommentErich Bloch: Government Detached From Reality

Erich Bloch: Government Detached From Reality

THE government’s irrationality on economic issues is intensifying exponentially, with cataclysmic consequences.

 

It is so myopically oblivious of the realities of Zimbabwe’s catastrophic economic circumstances that it not only fails abysmally to address them, but through its dogmatically paranoid beliefs that all of Zimbabwe’s economic ills are attributable to the machiavellian machinations of others, it compounds those issues unendingly. Moreover, it has such deep-seated convictions of its absolute and total omnipotence that it is determinedly deaf to all representations targetted at motivating the critically essential changes to policies as would reverse the appallingly deteriorating economic circumstances which are devastatingly afflicting all Zimbabweans (other than the political hierarchy, their families and cronies, who thrive from the economic morass that government has created).

The harsh economic facts are:

*Year-on-Year inflation now exceeds 9 000 000%, with it rising by geometric progressions on a daily, or even more rapid, basis. Current escalation trends are such that inflation is likely to exceed 100 million% by September, 2008, being the second highest rate of inflation in recorded history. Already, monthly inflation is in the region of 1 000%.

*Actual inflation impacting upon most of the populace is markedly greater than indicated by official rates, for virtually all shops are barren of almost all essential commodities. If at all available, the basic necessities of life can only be sourced in the Black Market, at prices considerably greater than the notional prices applied in the determination of the Consumer Price Index (CPI) and therefrom of the Inflation Rates. Maize meal, flour, bread, sugar, salt, cooking oil, soaps and detergents, candles, meat, poultry and eggs, and petroleum products, are but a few of life essentials which, if at all obtainable, are only available within the Black Market.

*So great is inflation that all Zimbabwean currency is devoid of any meaningful substance. Any monetary transactions are denominated in billions and trillions, with neither the financial or commercial sectors able to cope with the necessary plethora of zeros. The banks are unable to produce meaningful statements of accounts, no computer programmes, desk calculators and cash registers are operating effectively, and housewives and other shoppers are unable meaningfully to quantify prices and their movements. To an ever increasing extent, with total disregard for law, economic transactions are being (unofficially) denominated in foreign currencies, suppliers of goods and services declining to transact unless payment is effected in such currencies. Concurrently, because of the rampant pace of inflation, ever fewer enterprises are willing to accept payments by cheque, or even by interbank transfers, demanding to receive cash before the value thereof falls yet further. In the rare instances when cheques are accepted, a massive premium is generally demanded over the cash price.

*The infrastructure is collapsing increasingly, with many industries losing 20 or more hours of production each week as a result of non-availability of electricity, and in some instances exacerbated by erratic supplies of water. Roads have become pot-holed obstacle courses, inflicting endless damage to motor vehicles, and telecommunication services have become unreliable in the extreme, be they land-line or mobile services.

*The productivity of the manufacturing sector is not only suffering as a result of the deteriorating infrastructure, but also due to a combination of irregular availability of essential manufacturing inputs, occasioned primarily by inadequacies of foreign exchange availability, and the immensely rapid decline in worker motivation and morale, with all employees endlessly despondent as a result of the horrendous impacts of inflation, of fast falling employment security, of constrained domestic circumstances due to the economic and political environments, and much else.

*More than a third of Zimbabwe’s population has departed the country in desperate endeavours to generate livelihoods to support themselves and their families. The magnitude of the “brain drain” is collapsing all sectors of the Zimbabwean economy, and of society. Not only is the gargantuan loss of skills destroying the operational ability of industry, mining, tourism, financial services, commerce, and agriculture, but it has reduced to the point of near-total destruction Zimbabwe’s health and education services.

*The aforegoing, and many other, factors are causing ever-greater numbers of businesses to discontinue operations or, at best, to downsize their operations, thereby intensifying the pronounced unemployment, weakening further the economy, and aggravating yet further the hardships of the population in general.

To such limited extent as government is even prepared to recognise these, and innumerable other economic ills, it ascribes them to non-existent, or minimal, international sanctions and other actions of the European Union in general, and the United Kingdom in particular, allegedly aided and abetted by the USA, and various Commonwealth countries, and to conspiratorial interaction with them by the business sector (which Government claims is deliberately raising prices in pursuit of profiteering and to motivate the populace to enforce a regime change. Presumably that is why the State-controlled newspapers last week increased their prices from $200 million to $8 billion!).

Concurrently, the Zimbabwean government embarked upon more than a decade of profligacy, spending vastly beyond its means, accumulating ever-greater levels of debt, which it could not service, whilst vigorously fuelling inflation. It progressively reduced the already inadequate autonomy and independence of the Central Bank, shifting much of its funding burdens to it by forcing it to engage in quasi-fiscal operations.

And, at the same time it increasingly distanced itself from the international community, taking extreme exception to even the most muffled of criticisms, and responding with vitriolic, vituperative insults. As a result, international funding support progressively declined, and Foreign Direct Investment (FDI) became ever less. In the last week government has done even more to discourage FDI by its petulant reaction to voices in the UK calling for economic sanctions against Zimbabwe, inclusive of investment barriers. Government’s reaction has been childish outpourings that Britain is welcome to withdraw its investments, disregarding that FDI is one of the prerequisites for Zimbabwean economic recovery.

The harsh fact is that, as unacceptable as it is to government, it is almost totally culpable for Zimbabwe’s economic woes, and those woes will become ever greater until government is prepared to face up to realities, climb down from its high horse of self-edification, be willing to accept guidance from others, interact constructively with the world at large, and restore genuine democracy and respect for law, justice, and human and property rights.

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