FINANCE Minister Mthuli Ncube’s claim three weeks ago that his policies had helped the country tackle a fierce economic crisis demonstrated just how out of touch with reality people can easily become once they are pampered with the luxuries that come with taxpayer-funded lifestyles.
Those that have been relegated to a life of hunger and struggle thought Ncube’s shocking claims were just a slip of the tongue. But reality immediately sank when Reserve Bank of Zimbabwe (RBZ) governor John Mangudya glossed over tell-tale signs of a relapsing economy when he presented the Monetary Policy Statement (MPS) last week.
Like his boss, Mangudya said he would stick to current policies and targets because, again, he thought they were working. True, a few things may have worked since the 2021 national budget was presented in November. And a few more may have worked since the MPS came through in February. But a serious administration would know that the past few months have been difficult for Zimbabwe.
The foreign currency auction system, a symbol of hope when it was introduced by the RBZ last year, has been overrun by steep demand as companies scale up production following a difficult 2020, which was dominated by hard lock-downs. By industries’ own assessment, while manufacturing capacity utilisation grew to 56% in Q1, from 47% last year, companies have been unravelling under nine-week backlogs.
Up to US$200 million could be trapped in the auction system. Terrified industrialists have sought respite from the expensive currency black market again, with disastrous consequences. In June, US dollar prices rocketed by 40%, throwing hard pressed consumers to the brink. For those still working, employers have struggled to increase salaries because lukewarm demand is threatening to ground firms.
About 5,7 million informal sector Zimbabweans have seen their sources of income destroyed by lock-downs. Surely, it was an insult for these vulnerable groups to boast that Zimbabwe is charting a positive trajectory. This is dreaming. The two gentlemen’s claims were based on political expediency, rather than economic fundamentals.
It is shocking that those in strategic positions make wild recovery claims when the parallel market has returned to haunt the markets. Zimbabweans are working under difficult circumstances, earning Zimbabwe dollars to buy foreign currency at US$1:ZW$150 on the parallel market for daily expenses.
This figure was only US$1:ZW$90 in December, which means buying power has diminished by wide margins. For the majority, it has been a vicious cycle of struggle and pain. The World Bank says pandemic-related headwinds have thrown 500 000 Zimbabweans out of their jobs, while half of the country’s population, about 7,5 million, has slipped into the ranks of extreme poverty. Those lucky enough to be still employed have seen the cost of living rocket to ZW$41 680 per family of five, against average salaries half this figure. Surely, this level of anguish should be enough to attract sympathy through important blueprints like the MPS. Instead, they chose to abandon the poor.