Zimbabwe: Freefall

by hilzoy

That's the term the International Herald Tribune uses to describe Zimbabwe's economy, in an article many of whose points seemed somehow familiar. However, today's truly scary story about Zimbabwe comes from South Africa's Mail and Guardian. It's called Prices in Zimbabwe quadruple in one week:

"Zimbabwe has witnessed a spate of unprecedented price increases for most goods and services in the past week, many of which had been raised in anticipation of a devaluation that did not materialise, Harare's Herald Online reported on Tuesday.

A price survey conducted by the Reserve Bank of Zimbabwe just before the monetary policy pronouncement last Wednesday, and another just after, showed the cost of foodstuffs, alcohol, clothes, rent and furniture, among others, had risen by up to 400% in less than one week.

The survey was conducted in most chain stores and other wholesale and retail outlets.

For instance, the price of a two-litre bottle of cooking oil went up by 118% to Z$17 000 from Z$7 782, tomatoes shot up by 205% to Z$4 400 per kilogram from Z$1 440,97 while a 10kg bag of roller meal rose by 48% to Z$2 500 from Z$1 689.

A standard size full chicken went up by 75% to Z$8 300 from Z$4 755,59 only a few days ago.

On the clothing front, the highest climber was men's neck ties, which shot up by 400% to Z$30 000."

Prices doubling and quadrupling in a week? That's insane. And it absolutely can't last.

As I said before, I lived in Israel under hyperinflation. It was good for some people: I knew people who had taken out mortgages on very nice houses ten or fifteen years before, and what had once been hefty monthly mortgage payments had dwindled to pennies a month. The problem, of course, wasn't just that for every borrower who had made out like a bandit, there was a lender who had gotten hosed. It was that all of those loans, and the inflation that had caused them, represented a massive unpredictability in the economy, and when no one can predict what will happen next, no one is willing to invest their money, unless they can do so in a way that's protected against inflation. Israel had not only milder inflation than Zimbabwe but access to hard currency, so for a while people just started denominating rent, loans, and the like in dollars. Zimbabwe does not have access to hard currency, and it is collapsing, all the more so since a systematic failure to invest in capital and infrastructure means that more or less everything is falling apart.

Fortunately, there are signs that Robert Mugabe's support might be crumbling along with the economy. From the IHT:

"Many experts now believe that Zimbabwe faces a political showdown within months, as the governing bodies of ZANU-PF wrangle over whether to grant Mugabe an extended term or to put less-radical members of the ruling party in power. Few expect a democratic revolution; the one rival party, the Movement for Democratic Change, is riven by splits and lacks a competent leader.

Regardless, they say, by failing to arrest this accelerating decline, Zimbabwe is edging toward a day of political reckoning that years of diplomatic jawboning and political jockeying have failed to produce."

Unfortunately, it's not at all clear how much this will change. Timothy Burke, who (unlike me) actually knows something about this, wrote in comments:

"When Mugabe dies, I wouldn't expect things to get magically better. First, because much of what gave Zimbabwe a promising economic and social outlook circa 1988 has been thoroughly and structurally destroyed. Second, because at least some of the people around Mugabe have instincts just as self-destructive and have every reason to inhibit good management or democratization (as they will likely be the ones prosecuted by a vengeful reformist regime).

The problem with fantasizing about unilateral military action in this case is connected to this problem. You could drop a bunch of Special Forces guys on the presidential palace in Harare, take out Mugabe, and change absolutely zero. Frankly you could occupy the country with UN forces and change absolutely zero. What's needed is a huge change in the fundamental architecture of the Zimbabwean state and a change in the basic composition of the thin upper range of the most powerful elite. Those are not transformations which occupiers can readily bring about (something which I'd think should be screamingly apparent to everyone by now).

About the only positive short-term scenario is that some of the younger, smarter, more competent guys in ZANU-PF who have been carefully keeping their heads low through the last decade will move aggressively on Mugabe's death to push aside hacks like Didymus Mutasa and clean out the bureaucratic house. But to really succeed at that, they'd have to reverse a lot of brain-drain and draw back competent managerial and professional elites who have (wisely) left for other countries."

In the meantime, the country will sink further into misery, and people who are just trying to survive and bring up their kids will lose whatever they haven't lost already.

One of my mottoes in thinking about the world: never, ever underestimate what an astonishing gift a stable, decent political system is, and how hard it is to create, or to recreate once it has been destroyed.

***

UPDATE: Silly me for not checking Sokwanele before I posted. He, she, or they have a post up that's really worth reading in its entirety. A part:

"For the human face of things, consider the family torn apart by emigration: the father who has crossed the border illegally to try to earn an honest wage in Johannesburg, living in a crowded room that he is forced to share with too many others, constantly watching his back for police and immigration officials, and hampered in his bid to secure a reasonably paid job by his illegal status. He is denied the right to family life and unable to give his children the love and guidance that a father should provide. Meanwhile back home his wife struggles to bring up the family alone, and to feed and provide for them with her own meager income and the few Rand that her husband sends back. His children barely know this stranger, and resent his sad attempts at parental discipline on the occasions when he does come home. And so the cracks in the family begin to appear, and it is only a matter of time before they drift apart, by divorce de facto or de jure.

Or consider the grandmother, looking after her grandchildren whose parents - her own children - have died of AIDS. She is in her seventies, and has had her own time of child-rearing, when she was younger and more able to cope with the demands it inevitably brings. She is a widow herself, but now has four grandchildren living with her, aged from 12 years down to 18 months. She is also caring for another son who is sick with the same disease: he used to have a decent job with the Railways, but he had to leave there as the disease got worse. He did not have access to anti retroviral drugs when he needed them, and now it is too late: his body is thin, skeletal; his skin is covered with weeping sores; he is becoming incontinent and barely able to feed himself. It is only a matter of weeks before his body joins the three and a half thousand others being buried across the country every seven days. How does this grandmother survive ? Miraculously, since she has no regular income whatsoever, from a combination of church handouts, sporadic assistance from her last surviving (and working) child, and the paltry proceeds from her tuckshop selling sweets, cigarettes and whatever fruit is in season. And when she dies what happens to the children?"

Comments

[Debbie (aussie)]

Too sad for words. What must happen, is that all the monies Mugabe (and any of his cronies) has secreted away must be found and returned to Zimbabwe where it belongs.

[Kári Tulinius]

I have a friend from Zim. She used to talk about it all the time. She doesn't anymore.

In the news: Mugabe fires finance minister. From the article:

In recent weeks there have been growing signs of civil unrest and discontent in Zimbabwe.

About 60 junior doctors, who have been striking for more than a month, have been sacked by Harare Central Hospital.

Some 350 doctors across the country have been demanding more pay and better working conditions.

The doctors received their dismissal letters on Tuesday, the president of the Hospital Doctors' Association confirmed to AFP news agency.

[Lars]

While that should be done, Debbie, even if all the money they've managed suck out of Zimbabwe was returned it's hard to imagine that it could begin to repair the damage Mugabe has done to their social and economic structures. All in all, a depressing situation.

[Sebastian Holsclaw]

At this point the money itself is the least of Zimbabwe's worries. Mugabe engaged in a very systematic campaign to attack private property and drive off or kill those people who had economic success through trade (as opposed to those who had success through pillage). Those people aren't likely to return just because he dies. He didn't just attack the capital and support structures, he killed or drove off many of the people who made it work. Even if the infrastructure had survived (which it did not) he has destroyed the functioning ability of his country's human capital. There are lots of thugish rulers in Africa. The damage Mugabe did (and is still doing) is worse than your average ruthless dictator because he has destroyed the ability of the economy to function in his wholesale attacks on private property.

[togolosh]

Part of the structural problem hurting Zim today goes back to the independence war. Prior to the war nearly all of the high quality farmland was owned by white settlers. Land reform was an absolute necessity in order to create an economy that wasn't essentially sharecropping. It's the utter corruption and incompetence of ZANU-PF in carrying out land reform that has lead to this point. Experienced farmers have left the country, sometimes taking experienced senior farmhands, the very people who could be successful farmers if they had access to land. The nascent core of a Zimbabwean professional class has also been driven out of the country.

[Gary Farber]

The Michael Wines story is on the front page, top section, of the NY Times today, by the way. (The IHT, which once was jointly owned by the Washington Post and NY Times was bought in whole by the Times a few years ago, and most important stories are in both papers, either simultaneously, or a day, later, as we all know.)

[kvenlander]

Every man gotta right to decide his own destiny,
And in this judgement there is no partiality.
So arm in arms, with arms, we'll fight this little struggle,
'Cause that's the only way we can overcome our little trouble.

Brother, you're right, you're right,
You're right, you're right, you're so right!
We gon' fight (we gon' fight), we'll have to fight (we gon' fight),
We gonna fight (we gon' fight), fight for our rights!

Natty Dread it in-a (Zimbabwe);
Set it up in (Zimbabwe);
Mash it up-a in-a Zimbabwe (Zimbabwe);
Africans a-liberate (Zimbabwe), yeah.

[hairshirthedonist]

I would guess that I'm far less well-informed than most of the commenters on this site, but I also think I'm a bit more well-informed than most of the people I associate with personally. What strikes me as odd is that this blog is the only place I'm getting any information on this situation. Even the Times article cited above only came to my attention via this site. Is it just me? I hear more about Britney Spears than I want to even while actively avoiding such information.

[blin]

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[Hank Scorpio]

Sebastian:

You'd be surprised. After Yoweri Museveni took power in Uganda, he invited back the Indian-Ugandans that Idi Amin had kicked out. A large number took him up on the offer, both because of the opportunities in rebuilding the economy and from enduring emotional attachments to the country itself.