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Zimbabwe: Inflation and the Diaspora
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 Published by the government of Zimbabwe |
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The Herald (Harare)
OPINION
3 July 2008
Posted to the web 3 July 2008
Tadios Chisango
Harare
THE surge of Zimbabwe's inflation into three-digit levels has been greeted with lots of surprising enthusiasm, gleeful interest and even grim satisfaction by the "Zimbabwean media", both within and outside Zimbabwe, and by the "international Press" (of course, the "Western" news disseminators).
As has become the norm, the blame is indiscriminately laid on the doorstep of the monster called the Zimbabwean Government, otherwise referred to as Zanu-PF.
My present aim is not to absolve the Government from responsibility, nor is it to offer a holistic account of the "highest inflation" in the world. My contention is that any model we may draw to explain the rampant inflation of Zimbabwe does not have a single, monolithic factor called "Government mismanagement".
If we are ever to extricate ourselves out of the economic quagmire we are embroiled in, I guess we need to introspect, come out of denial and acknowledge our part in the whole equation.
My second objective is to show how overly simplistic and alarmist the analyses of the inflation figure have been. While acknowledging that we are indeed faced with an apparently insurmountable crisis, I believe we still need to retain and maintain our objectivity and level-headedness.
My analysis of inflation will be done in relation to the individual Zimbabwean, whether within or outside the country. It explores the causal links as well as the interpretation and meaning of the 1 000 percent inflation figure within the context of present-day Zimbabwe.
How does an individual fit in the inflation model? First, it is important to recognise that probably just less than a third of Zimbabwe's population is out of the country, and a sizeable percentage of these Diasporans is domiciled in hard-currency "Western" countries such as Britain, Canada, the US and Australia.
A close analysis reveals that the Diasporans' activities have ambivalent effects on the Zimbabwean economy. On the negative side, Zimbabweans outside the country are playing quite an active and significant role in pushing up the inflation figures.
The Diasporans, as self-serving as ever, have facilitated the sucking out of large amounts of cash from the mainstream economy, and placed it within their own mini-economy within Zimbabwe, from which they and their associates at home only benefit. How does this happen?
We Diasporans send money home through some criminals running "money transfer" agencies. These people are criminals, in the sense that they are committing a crime called money laundering.
In ideal circumstances, it is a crime both to the country of domicile and their home country, which is punishable by a jail term. Presently, however, it is not the legality of this act, but the economic effects, on Zimbabwe that is particularly disconcerting.
We deposit pounds and other forms of hard currency into these criminals' bank accounts, and they deposit Zimbabwean dollars into our relatives' accounts back home. This money escapes the legal, official routes, which include (legal) money transfer agencies such as Western Union, and finds its way straight into Zimbabwean banks as Zimdollars, exchanged using the parallel market rate, which is even higher in the Diaspora than in Zimbabwe.
More importantly, this money escapes the Reserve Bank of Zimbabwe. The Reserve Bank of Zimbabwe and consequently the mainstream economy of Zimbabwe are losing in three main ways. Without working, without any production or carrying out any formal or informal business transaction, and with the main bank of the country completely unaware, there is miracle money pouring into Zimbabwean banks every day!
Thus, there is an extremely high demand for cash that cannot be accounted for, in any way by the Reserve Bank as it represents the illegal transactions carried out abroad and within Zimbabwe via the Zimbabwean-based money exchangers and the naive banks.
It is not surprising, therefore, that miracle money in turn creates a very high demand for goods and services in the country, which has the inevitable effect of pushing up prices, and that is what inflation is all about!
The very high demand for cash necessitates the printing of cash on the part of the Reserve Bank, which maintains and nurtures the environment of very high inflation figures.
Thus, people both abroad and those in Zimbabwe who are the recipients of the forex or have access to it in one way or the other are creating a very high demand for goods and services in the country, which they only (and other already, and very, affluent people) can afford with ease.
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The high buying power of some Diasporans and the moneyed people in Zimbabwe, for example, has resulted in the skyrocketing of houses in some of the country's low-density suburbs to ridiculous figures like £250 000 which compete with some of the most robust property markets in the entire world, such as England in terms of exorbitance!
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There are two points that the author should keep in mind - a. the regime survives on the money sent into the country by the diaspora. It is well known that the RBZ is a significant purchaser of foreign currency on the parallel market. Lets see what would happen in the inward remittance of funds by the Diaspora was blocked by Zanu-pf. b. he/she should at least be honest enough to make it clear that Zimbabwe's 'triple digit'inflation of 1 000 per cent is the monthly rate, not the annualised rate which is 10 000 000 per cent!
THe author fails to appreciate the fact that the Zimbabwean government is equivalent to a Mafia. Why would a sound thinking person get his money through a charlatan like Grace Marufu? We do not want to bankroll Grace Marufu's shopping spree. She can go to hell. You don't care about us.
It's quite clear the author is either a Zanu sympathiser or, if he's serious,he's deranged just like George Charamba.It is not the duty of Zimbos in the diaspora to bankroll the dictatorship.The way for the gvt to generate forex is to have exporting industries,which the Lunatics running Zim have destroyed through misguided policies like "hondo yeminda"Let chinotimba produce cash crops to export!
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