“Countries don't go bankrupt” he laughed dismissively. The interviewer bravely assured him they most certainly do. His argument was persuasive – to all except Comrade Mugabe. Trillions of dollar notes were printed to prove his point.
The lesson was not learned in 2008. Under a new President, the lesson has not been learned in 2018.
Last week the newly appointed Minister of Finance Mthuli Ncube, recently chief economist and vice president of the African Development Bank (AIDB) announced that cognisant of the scale and urgency of the challenges ahead “our plan is bold and far reaching and will have the desired effect.”
Sadly, the plan has been bold and far reaching enough to have devastating consequences. Within even a marginally healthy economy, it might have had a chance – in Zimbabwe, it has simply tipped it over the edge.
Within a couple of days it was confirmed that Treasury Stocks had risen by billions of dollars.
Lawyer Alex Magaisa in his regular Big Saturday Read stated that “the total public debt is USD16.9 billion, with USD$7.4 billion in foreign debt and USD$9.5 owed to local creditors.”
The issuing of those Treasury Bills – irresponsible and excessive enough to mean that interest payments can no longer be met, has caused most of domestic debt – a borrowing by Government of USD9.5 billion in the last 6 years. A mere mention was made to say that the limit on the government overdraft at the Reserve Bank was three times the amount permitted.
The bottom line is that Zimbabwe has no foreign currency. Rumours are rife of men in suits and dark glasses, who sweep bank queues aside to get to the front and take out every last US Dollar or South African Rand in locked boxes.
It was agreed, but never said that a population demographic of over 90% unemployed reflects the desperation of the people to merely survive - somehow. Into that void comes Eco-cash. This means everyone has to have a smart phone with ‘a line’ in order to trade at all. In this way with a pattern of numbers of asterisks or hash characters, a formalised barter exists – ostensibly with legitimate ties to the USD or Rand – in reality with no relationship whatsoever.
However it has allowed that informal sector to make enough to live – just. Eco-cash and the huge returns sent back to families from the millions who have left the country have made life possible – just. It has also created an enormous burden on those trying to make their way in their new countries.
The government could not get its hands on Ecocash effectively enough. First of all extensive vendor markets in the major cities were ruthlessly destroyed – ostensibly to prevent the spread of cholera – more likely to bring this ‘illegal trade’ to its knees.
It didn’t work.
So government tax rose from 3 cents per Ecocash transaction to 2 cents per dollar of each transaction – estimated at a rise of 3900%. Almost instantly the Eco-cash dollar devalued from 1.5 Eco-cash dollar to the US Dollar to 3 to 1. Nobody knows who sets that rate. Everybody knows it has no bearing whatsoever to reality.
At the same time, it was announced that punitive taxes would be applied to all monies being remitted to families and friends by relatives internationally and that if it was not paid, those relatives would no longer be eligible for Zimbabwe visas.
The pressure is rising and two days ago a man sporting ruling party insignia was chased down the road by angry vendors. As they caught up with him, he shot one dead.
There is no fuel. Flour has been rationed with the dictum that it is only to be used by bakers to make bread, not biscuits or cakes. Pharmacies closed early this week unable to provide life-sustaining drugs and as the week draws to a close, supermarkets shut their doors on empty shelves unsure when they will be able to open again.
The prevailing anguish on social media is “have we the strength to go through this again?”
The Zimbabwe Congress of Trades Unions (ZCTU) was fronting a massive demonstration due to take place nationwide today. Last night almost 100 leaders were arrested and detained ‘overnight’. At the same time, those brave souls who attempt to change money in such tourist traps as the Victoria Falls, were all arrested and broken up by ‘security’
Today – the Victoria Falls despite being the only point in the country with a regular inflow of foreign exchange, is all but in lock-down. No petrol to run tourists to the airport and certainly no petrol for game drives.
Tomorrow – is anyone’s guess.
The speed at which shelves have emptied, fuel is no more and medications are unobtainable, has shocked everyone.
When it happened in 2008, everyone had the odd US dollar or a few Rand to meet emergencies – this time they have nothing.