The Zimbabwean exodus: economic crisis in the ‘Jewel of Africa’

[Dylith]

Zimbabwe, a country of 12 million and long considered to be the “Jewel of Africa” is suffering greatly from a severe economic crisis. Soaring prices have caused many hardships for producers and consumers alike. Current inflation rates in Zimbabwe are higher than 4,500 percent a year. Unemployment rates have skyrocketed to 80 percent and life expectancy has dipped drastically, currently standing at 34 years for men, and 37 years for women. With little hope of a quick recovery, the economic recession worsens daily creating a massive humanitarian crisis as millions are left without the ability to support themselves.

History

Upon independence in 1980 Robert Mugabe was elected into office and has remained there ever since. Mugabe quickly gained a reputation for having zero tolerance for those who opposed his rule. Many have accused him of carrying out genocide over operation Gukurahundi which claimed the lives of several thousand Ndebele civilians. Aside from debt and economic strain from trying to recover from the country’s civil war in the 70’s, the economy really began its plunge after the implementation of a land reform act in 2000.

The land reform program was basically a forced redistribution program, where the government seized farm land owned by whites and redistributed it to landless black civilians. Seen largely as a political maneuver, the land redistribution caused Zimbabwe’s agricultural output to fall harshly. This decline in agricultural production has left Zimbabwe with a severe shortage of hard currencies, causing helping to create the severe inflation that can be seen today.

Soaring prices

One U.S. dollar is officially worth around 15,000 Zimbabwe dollars. Runaway inflation has caused prices to climb by 300% in some markets over the past several months alone, and the current annual inflation rates are over 4,500%.

Economic predictions state that inflation rates will reach the 50,000 percent mark by December 2007; while others have estimated that it could reach as high as one million percent (one prediction printed in the Guardian stated that inflation rates would rise as high as 1.5 million percent by the end of the year). The International Monetary Fund (IMF) has predicted that Zimbabwe's inflation rate would top 100,000 percent by 2008.

In a recent attempt to cope with the rising prices, Zimbabwe’s central bank issued a $200,000 banknote. The official exchange rate for one of these notes is $13 USD, while the exchange rate for one $200,000 note on Zimbabwe’s black market is only $1 USD. The World Bank has stated that Zimbabwe has the fastest shrinking economy in the world (excluding countries which are currently at war).

Food shortages

Agriculture is an important part of Zimbabwe’s economy, but farms have been hit hard by drought and Mugabe’s land reform programs (which have resulted in poor harvests). Rising fertilizer and pesticide prices have also served to prevent decent crop yields forcing millions to live on food aid as prices for staple foods skyrocket.

United Nations food agencies claim that one out of every three Zimbabwean citizens face starvation. The UN further claims that four million Zimbabweans will run out of food by the beginning of 2008 if an increase in food aid is not received. Current food reserves won’t even last until the end of September. Mugabe rejects such claims and states that Zimbabwe is importing over 600,000 tons of maize in order to stave off starvation.

Angeline Masuku, the governor of Matebeleland South shares Mugabe’s optimism declaring in an interview with AFP that “There is not enough food but the good part of it is that nobody is going to die of hunger."

Many though, are more concerned with the food shortages and high prices. “Things like milk, which most children like, I can’t buy them. I have decided completely to do away with it,” says Charles Mpofu, a resident of Bulawayo. “Just two liters of cooking oil costs over Zim$250,000, automatically, it’s out of reach of my salary.”

Such high food prices mean that parents have a hard time feeding their families. Food programs at schools are often times the first meal a child will receive daily, and may even be his/her only meal that day."This supplementary feeding program helps them [families] a lot because it actually reduces the consumption which is done at home," Nqobile Matabiswana, a headmaster at a school in southern Matabeleland said in an interview.

Economic reform

In an attempt to fight inflation Mugabe mandated large scale price cuts on basic goods on June 25, 2007. Mugabe has demanded that producers cut prices by 50% in order to make products more available. The price cuts have sparked huge buying sprees as those with enough money take advantage of the lower prices to buy food products in bulk.

The mass purchases have caused concern as they leave shelves empty preventing others from obtaining much needed food products. The government has issued a temporary ban on buying items in bulk in order to prevent hoarding.

Many producers have failed to cut their prices claiming that to do so would force them to produce at a loss, causing them to go out of business.

Despite growing input costs Mugabe has ordered businesses to maintain current production levels, threatening business heads with jail time if they do not decrease their prices. The reform was kicked off with the arrest of over 200 business heads who were accused of charging prices that were too high. Mugabe stated at a rally "We will continue to arrest anyone who will defy the government imposed controls on basic food commodities. We will not stop until there is order in the business community."

Mugabe has made good on his threats and has since arrested over 1300 other business owners, manufacturers and company executives. Most pleaded guilty in court and received fines of three million Zimbabwe dollars (around $200 USD).

The demand for manufacturers to maintain production levels at lower prices have caused many to stop producing. Such actions angered Mugabe who stated in a national address that if factories stopped producing then they would be seized by the national government. "We are saying to all factory owners you must produce. If you don't produce we certainly will seize the factories."

Mugabe accuses firms of purposely driving up prices for the sake of increasing profit. “All companies, we will take them over if they continue with their dirty game. Take note, we will be equal to the challenge. We are capable of playing that game too," Mugabe stated.

Tony Hawkins, an economic analyst, said the government was employing a political ploy to distract people from the economic crisis. "I suppose the logic behind this thinking is because in 2000 the land invasions won them an election, company seizures could do the same in 2008," said Hawkins.

Production problems

Increasing input costs are not the only thing harming Zimbabwe’s businesses. Frequent power cuts make it very difficult, if not impossible, to maintain a consistent production schedule. Electricity supplies are very erratic and businesses cannot afford to buy their own power generators let alone the fuel that is needed to run them.

"It happens so often, on a daily basis ... We can sometimes go for up to eight hours without electricity, especially here in the industrial areas," Phillip Tapera, the manager of a bakery claims.

Farayi Dyirakumunda, an economic analyst also considers power shortages to be a major contributing factor in the closing of businesses. "It is extremely difficult. I think that is why we have had a number of business closures and a notable decline in the manufacturing sector and various other sectors of the economy. It is extremely challenging."

Another problem business owners and manufacturers face is the shortage of foreign currency in Zimbabwe. The lack of foreign currency in the region makes it difficult for companies that need to import raw materials. Importing these materials means dealing in foreign currency, but when there is none available to them, they can’t import the materials that they need.

Even when there is foreign currency available, banks almost never have enough to take care of company needs, forcing businesses to turn to the black market.

The constantly changing exchange rates add to the problem, the US dollar never stays pegged at one amount in Zimbabwe. The erratic and often times unpredictable changes in value add increased levels of risk to the equation. Daniel Chiweda, the manager of PMM plastics had this to say: "The most difficult period is between Friday and Monday because you might lose money over the weekend. What you invoiced on Friday by Monday would have lost a lot of money because of movement in the US dollar."

The Zimbabwean exodus

Hard living conditions brought on by food shortages and high levels of unemployment have caused thousands to flee the county. More and more citizens are finding life in Zimbabwe insufferable.

“I'm Charles Mpofu, I live in Bulawayo in Nketa 9. I am married with three children and as a family we are five all in all. It's difficult for me and my family considering the salary that I receive on a monthly basis. If I just calculate transport alone it's over Zim$700,000 to and fro for a month or for four weeks.

When we are shopping we have to ask 'what exactly do we need which is pressing in the home? It's not easy to budget, it is even more of a headache when you get paid than when you are not paid. Either you have not paid your rent, or you have not paid your electricity, or you have not paid your phone or you have been cut off or your water has been cut.

We are becoming poorer and poorer, we are not improving from where we were when we got married. In fact the situation is deteriorating. It's going down, down everyday. My children will miss breakfast, miss lunch, go to school having not taken anything and only have one meal to make them survive. And this is why I'm saying is it necessary for my children, if they happen to finish school, to learn, to work in this country? I don't think so, how much will they be paid? So we are now saying they should stay for their graduation and then get them to go either to green pastures or neighboring countries, or in Europe if ever they could, and that's my hope.”

Most of those fleeing the county head south for South Africa and Johannesburg. Doing so is a risky move however as Zimbabwe can’t afford to issue its citizens with legitimate papers, forcing those leaving to do so illegally. The shortage of government papers has created a large smuggling market in southern Zimbabwe. Human traffickers charge Zimbabweans $15 USD per crossing (about one and a half times the average monthly salary of an employed Zimbabwean).

Smugglers see themselves as helpers to the Zimbabwean people. "I'm considering myself as somebody who assists people, those who are stranded, those who don't have passports, because there are so many Zimbabweans who want to go to South Africa," says a smuggler named Moyo in an interview with Al Jazeera.

Crossing the border can be dangerous; people known as Goma Gomas wait at the border to attack and rob those who cross their paths. If the Zimbabweans make it across the border they then have to worry about getting caught by local police and border patrol. Over 500 Zimbabweans are picked up in the border area alone and deported back to Zimbabwe. "The issue of deporting it is not the duty of South African police per say. We are actually helping the home affairs department because the capacity is too big they can’t handle it," stated Maggy Mathebula, the police commissioner and head of the border detention centre.

Those who do make it to Johannesburg find conditions there to be only slightly better. Employment is still hard to come by and many turn to criminal activities and prostitution in order to make ends meet. "It's not of their choice, we don't blame them for being prostitutes." Chokowhero, an exiled Zimbabwean activist, said.

With the South African government failing to view these refugees as asylum seekers, Zimbabweans often find the quality of life in South Africa to be nearly as bad as in Zimbabwe and burden an area that already has enormous problems (Johannesburg has one of the highest crime rates on the continent).

Conclusion

Mugabe’s economic demands are unrealistic at best. His prize freezes simply do not take into account soaring input prices. Mugabe wants firms to ignore these increasing input prices when pricing their goods. He wants increased production levels at lower prices and thinks that he can create it simply by telling firms to operate that way. It is economic nonsense.

Such actions will only cause firms to go out of business as they will be operating at a loss, and will serve only to increase black market production (something which Mugabe is trying to crack down on). Putting producers out of business is not a good way to jumpstart the economy, especially one which has been in a downward spiral for eight years. Harming producers in this manner will only serve to increase already devastating shortages.

With regards to Zimbabweans in South Africa: it would be in both parties best interest to treat these people as refugees and asylum seekers and place them in organized refugee camps where they can be kept track of while being given the aid that they need. Such an action would serve to ease the humanitarian crisis in the region while minimizing the damage that such a large influx of desperate immigrants will have on the area.

What should be done to solve Zimbabwe’s economic crisis? There is no simple solution. Rainfall would certainly help ease drought conditions, but it is productivity that really needs to rise. It was productivity that went down during the land reformation as farms were taken out of the hands of skilled farmers and given to those with little farming experience. Government sponsored farming education programs would help to boost worker productivity in the future. Also, Mugabe should increase government subsidies to producers of fertilizers and pesticides in order to bring down their prices allowing more people to engage in agricultural farming.

President Mugabe is looking for a quick fix by implementing prize freezes, but they will not help the Zimbabwean economy in the long run. Mugabe needs to stop implementing programs that simply aim at gaining him public support (such as his 2005 slum demolition program that left thousands homeless and without jobs) and needs to start doing what is in the best interest of his country.

[Darko]

That's a bitch. Not our problem though.