Zimbabwe: Economic Crisis a Damning Indictment On Mnangagwa

President Emmerson Mnangagwa.
opinion

President Emmerson Mnangagwa's administration's failure to address the economic challenges bedevilling the country - despite lofty promises - could have been described as spectacular if it were not so tragic.

Since assuming power on the back of a military coup which toppled former president Robert Mugabe in November 2017 -- amid joyous celebrations by large sections of the Zimbabwean society, including the gullible opposition which believed that perhaps there could be a new dawn for the country -- Mnangagwa has worsened the country's economic crisis.

The biggest casualty of the economic meltdown has undoubtedly been the worker.

Since Mnangagwa's ascendancy, workers' salaries have been eroded eight fold while prices have risen in many cases by over 500%.

Crucially however, salaries have remained largely stagnant.

Year-on-year inflation has surged to 75,86%, which is the highest since the introduction of the multi-currency regime in 2009. It has been driven by skyrocketing prices of fuel, basic commodities as well as currency volatility and speculative behaviour by business because of lack of confidence in the government and monetary authorities.

As an example, a person who used to earn RTGS$850 in November 2017, at a time the government insisted the US dollar and the RTGS dollar were at par, is effectively earning only US$100. A teacher who earns RTGS$650 is earning only US$55, which falls far short of meeting basic needs.

The plunge in purchasing power has resulted in low aggregate demand for goods and by extension production has gone down. Most companies are therefore struggling to pay workers a salary which is adequate to cushion them from the vagaries of the prevailing inflationary environment.

The standard of life for the majority has deteriorated since the coup and people's livelihood has become more desperate.

Most Zimbabweans can no longer afford a decent meal or manage to discharge their social and moral responsibilities and obligations such as paying school fees for their dependants or providing health care.

The Reserve Bank of Zimbabwe's decision to separate RTGS and foreign currency accounts in the Monetary Policy Statement in October last year, though welcomed in many quarters, resulted in workers' savings being wiped out. Those who had made savings in US dollars found themselves with RTGS balances whose value is being eroded daily, leaving them vulnerable and exposed.

The rate at which the RTGS dollar is being eroded at a time prices are ballooning, has evoked memories of 2008 hyper-inflationary era which led to the demise of the Zimbabwean dollar.

In 2008, the Zimbabwean dollar became so worthless that some workers chose to be paid in groceries and coupons. Sadly, it appears that we are heading in that direction.

The truth of the matter is that workers were far better off in November 2017 than they are now, which is a damning indictment on the Mnangagwa administration.

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