Probably the two most prominent events in Zimbabwe in the last few months have been the universal adoption of foreign currencies and the swearing in of a power-sharing government. The new government is drawn from only the biggest three political parties. Other political parties were not invited to the party. So my political career remains in the doldrums. This may not be such a bad thing because I still have misgivings over the whole idea of power sharing in lieu of democracy. It is like compelling a Lotto winner to share their prize with the losers. The silver lining is that it affords the new crowd some opportunity for “apprenticeship”. Yes, even bad guys can have some useful experience to share. Continuity is a virtue and conversely, the bane for much of Africa has been the instant overnight power and government transfers at independence. The downside of this silver lining is that bad habits can be passed on too, for example a penchant for Mercedes Benz limousines.
A veneer of normalcy has appeared in the last few weeks. The shops are well stocked again
and school children are back at school. I say a veneer because the sustainability of these positive developments remains in the balance. Some of the rogues that ransacked shops eighteen months ago remain empowered, and they could strike again. Also for all we know, the money to pay the next round of teachers’ salaries is not there yet. Furthermore Harare remains untidy and unkempt. This is how my neighbourhood still looks.
I have not had running municipal water at home for eight weeks and my garbage has not been collected for more than nine months.The shops may be well stocked but with 94% of the workforce out of formal employment, only a tiny minority has access to them. Foreign currency is in short supply because Zimbabwe is still not producing let alone exporting much. Even though we have learnt to do without many things, we continue to consume more imports than we are exporting. So as a country we are bound to get poorer everyday. Needless to say at this rate the shortage of foreign currency will continue to worsen.
Furthermore the prices are generally twice what they are in South Africa for groceries and worse for pharmaceuticals. The silver lining is that the prices are actually coming down! The official rate of inflation last week was -3%. At the height of shortages not long ago, general price levels were as bad as eight times those in South Africa. With the recent liberalization of foreign currency usage and relevant trading licenses, goods are flowing into the country fast and furious. This proves that bad government policies were exacerbating the shortages last year. Prices continue to come down tending towards a limit which is parity with South African shops. Of the things that I buy, First Choice UHT milk is now close to that parity. The foreign currency may be hard to get hold of but dropping prices are like a breath of fresh air after the tyranny of hyperinflation. When I emerge from a bad cold, I really savour good health, at least for a few days. So it is with emerging from hyperinflation. We have had choice in the shops before, but this time I appreciate it that much more. Convenience foods are back on the shelves. So, even when there are prolonged power outages, I can still eat. This was not the case during the severe privation of last year. Now I have even started to put on weight.
Formal business is starting to twitch out of hibernation. Unfortunately the financial services sector is in dire straits. With nowhere to borrow, particularly for working capital, meaningful recovery is likely to remain hamstrung for a while yet. Even though full recovery is a long way away, small jobs that were not worthwhile last year are suddenly attractive now that they pay real money. We had forgotten how much less stressful it is to conduct business in a stable currency. The main currencies in circulation are US dollars and South African rands. US dollars remain the more popular of the two, even among peasants selling firewood deep down in the bowels of Masvingo province. This is strange at least at first glance. More than 90% of the goods in the shops are of South African origin. So, one would expect the South African rand to be a more practical currency. However, after the ordeal of hyperinflation, Zimbabweans are now extremely averse to any currency whose value oscillates. The value of the South African rand swings more than that of the US dollar. Furthermore South Africa continues to deploy currency exchange controls, possibly as a hangover from the apartheid era sanctions. So South African rands are more difficult to move across borders. This is an important consideration for Zimbabwe’s populace that is now scattered around the globe.
Dollarization (i.e. the switch to using US dollars) slew the hyperinflation monster almost overnight. This proved that hyperinflation was caused by fiscal ill discipline. Thankfully the authorities are not able to print US dollars. However they have not taken it lying down. They have printed some “foreign currency vouchers” that at one stage looked set to threaten the semblance of order we now have. Fortunately that threat has not crystallized, so far anyway.
It is in order to count our blessings. After decades of neo-Marxist price controls and other persecution of business, the Zimbabwe economy has de facto liberalization at last. It was easy because with an already broke economy, such policy changes did not cost much. Where competition is possible prices are coming down. However, without developed antitrust legislation, we are now exposed in some sectors. Monopolies are being abused. The telecommunications sector has been particularly villainous. My last two months’ phone bills have been so ridiculously high that it is proving attractive to import telephone services from South Africa. It is believed to be now cheaper to roam on a South African sim card than to use a local service! Sure, the poor telecom companies were forced to limp along on controlled sub-economic tariffs for many years. Now they have swung to the other extreme. They are attempting to recoup a decade’s losses from one month’s bills.
In the corporate world, poor-performing asset rich companies get taken over or at the very least have their management’s wings clipped. It is interesting to observe similar scenarios playing out at country level in Zimbabwe, albeit only symbolically at this stage. A few weeks ago a friend invited me to join a Facebook group called "I'm not South African, and No, Zimbabwe is not the same as South Africa!" I joined. However with each passing day I cannot help noticing the inexorable blurring of the distinction between the two countries. Walking into a Harare supermarket is now like walking into a South African shop. Even the carrier bags have been imported from South Africa! Even the cholera in South Africa has been imported from Zimbabwe!
A sense of humour has been necessary to survive in Zimbabwe so far. Apparently the downturn has given humour a shot in the arm. When business is down, one thing that thrives is email jokes. People who used to be very busy now find themselves with plenty of time on their hands. I have been sending and receiving a lot of email jokes!
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