Zimbabwe's intelligence agency reportedly stopped former Botswana President Ian Khama and Pelonomi Moitoi, a key rival to incumbent Masisi, along with a South African tycoon, from holding a secret meeting at Victoria Falls border town.
 
Zimbabwe’s well-informed state-owned Herald reports that the South African billionaire was transporting a whopping 90 million Botswana Pula (5.5 million dollars).
 
TheSunday Standard of Botswana, which broke the news says it was able to track down the passengers of the chartered flight from Gaborone’s Lanseria Airport, where the chartered plane until its arrival at the Zimbabwean border town.
 
In Harare, the Herald reported that Pelonomi Moitoi, who plans to run for president with the ruling Botswana Democratic Party, her delegation, and the South African tycoon Bridgette Motsepe (who turned out to be South African President Cyril Ramaphosa’s sister-in-law) were detained and interrogated by Zimbabwean intelligence officers before being deported.
 
South African connection
 
“It’s likely that diplomatic immunity, friendship agreements and niceties among neighbours may have prevented the Zimbabwe security forces from seizing the money,” says Tichaona Zindoga, Editor of the state-owned Herald.
 
In an interview with RFI, Zindoga observed that the CIO had declined any comment about the real purpose of the meeting because of the sensitivity of the matter.
 
The publication’s editor went on to dismiss speculation that the group travelled to Victoria Falls to plan a military coup. “Money laundering, illegal funding, yes, not something so extremist,” he said.
 
Tichoana Zindoga claims that while Ian Khama took to Facebook to discredit what he described as “shallow, shallow lies," he did admit taking part in the meeting with Pelonomi Moitoi, Kabelo Binns, founder of Botswana’s leading PR group and ex-Minister Daphne Kadiwa and axed intelligence chief Isaac Kgosi.
 
Drawn political daggers
 
Zindoga recalls that Khama retired last year, handing over power to Masisi. But he points to ruptures within the party which saw Khama wanting to retake control, leading Masisi to take drastic action against Khama and his cohorts.
 
The latest consequence of the factional fighting going on inside the ruling Botswana Democratic Party is that Khama is supporting the opposition at the expense of his successor, six months away from the October 2019 elections, according to the Zimbabwe Herald editor 
 

Source: RFI

President Emmerson Mnangagwa's government, has begun registering former commercial white farmers who lost their land under the chaotic land redistribution exercise.

In a statement Sunday, the Ministry of Lands said it was identifying and registering former white farm owners who want to participate in the interim advance payments scheme. The scheme according to the statement is targeting those "in distress."

The programme is being coordinated by Commercial Farmers Union (CFU) and the Compensations Steering Committee (CSS) representing former farm owners according to the statement.

"The ad-hoc Compensation Working Group, comprising government officials and the representatives of former farm owners, is currently working towards the compensation and establishing the compensation quantum figure for farm improvements based on an agreed method of valuation," the Ministry headed by former Air Force chief Perrance Shiri said.

The statement added that the latest move reflected government's commitment to settling its side of the bargain.

"Given the significant progress made to-date, it is anticipated that this comprehensive farm improvements valuation will be completed by end of May 2019.

"Reflecting government's commitment to compensate former farm owners, for farm improvements and recognising that a larger number of farmers are still to be compensated government allocated RTGS$53 million in the 2019 National Budget for interim advance payments," said the statement published in the State media.

"These interim advance payments will be made to former farm owners affected by the land reform programme and who are in financial distress."

In a separate statement the CFU said it has developed a form which applicants will complete. The form according to the statement does not jeopardise future claims for full compensation.

"As this is a limited fund, it is hoped that those who are not in financial distress do not take up the offer so as maximise the effect on others not so fortunate," said CFU.

"Whether you take it up or not, does not alter your rights to be compensated in any way, except that what you receive now will be deducted from your final computation."

In his inauguration speech in 2017 President Emmerson Mnangagwa, promised to compensate over 4000 former white farmers whose land was forcibly taken away under the fast track land reform program. While the former farm owners have been demanding full compensation, government has passed a law that provides for payment in respect of developments only.

 

Credit: New Zimbabwe

The Zimbabwean government has brought back the Chinese to the Chiadzwa diamond fields, three years after former President Robert Mugabe drove them out on allegations of looting.

Chinese-owned Anjin was expelled by government on February 22 2016, along with Mbada Diamonds, on grounds that their special grant licences had expired. Prior to that, Mugabe had accused them of massive leakages and smuggling the gems out of the country. Now under President Emmerson Mnangagwa, Anjin and Russian diamond mining company Alrosa will spearhead the government’s target of raising at least US$400 million in revenue by the end of 2019.

They will form partnerships with the Zimbabwe Consolidated Diamond Company (ZCDC). “Anjin, which used to operate in the area, is now back on the ground. We expect that it will commence production, at the latest, by end of May. We are looking at it being a significant producer in that regard,” said mines and mining development minister Winston Chitando.

The Russians and Chinese – Zimbabwe’s “all weather friends”, key to the Mnangagwa administration – take up the diamond fields after neighbouring Botswana passed on an offer tabled by Harare.

As part of Zimbabwe and Botswana’s bi-national relations, Harare initially tabled an offer that would have seen Botswana give Zimbabwe a US$500 million loan facility – which is a US$100m more than the year-end revenue target. In return, Botswana would mine diamonds from Chiadzwa.

However, Botswana said that due to budgetary constraints, Gaborone would not be able to support the proposed Diamond Backed Loan facility.

Since the diamond find in 2005, it had been expected and targeted that the mineral would revive Zimbabwe’s ailing economy that was under targeted sanctions owing to human rights abuses and disbanding of the rule of law. However, the local community was only left with unfulfilled promises and human rights watch organisations accuse the government of using the diamond revenue to prop up the regime.

 

(Source, Sunday Times)

There is a commonly held view that Zimbabwe used to be the breadbasket of Africa, although the specific timeframe in history is usually unclear.

This vague narrative gives an impression that Zimbabwe lost its “breadbasket” status during former President Robert Mugabe’s tenure. While Mugabe’s land reform programme seemingly contributed to a decline in Zimbabwe’s agricultural output, there’s limited evidence to suggest that the country was a dominant player in Africa’s food production prior to that period – at least from a staple food production perspective.

Zim’s production never topped 10% share

A country should be able to meet its staple food consumption needs and simultaneously command a notable share in exports of the same food commodity to be considered a “food-basket”.

Looking at the production data of the key staple foods maize and wheat, Zimbabwe’s production of these commodities has never surpassed a 10% share on the continent over the past 55 years. (Note: The Food and Agricultural Organisation of the United Nations started recording African agricultural statistics in 1961.)

While that is the case, a closer look at the data paints a fuller picture.

For example, in the two decades prior to Mugabe’s leadership (1960–1980), Zimbabwe contributed an average share of 6% of Africa’s maize production, almost at par with Nigeria, but lower than Kenya’s contribution of 7%. During that period, Zimbabwe’s maize production outpaced consumption by an average 400,000 tonnes a year – making it a net exporter.

During the first half of Mugabe’s rule (1980–2000), the country’s maize production contributed a share of 5% to Africa’s output. While it was a net importer in most years, on average, the country remained a net exporter of maize, with a declining maize trade balance (the difference between a nation’s exports and imports).

The decline in Zimbabwe’s maize production and trade balance worsened following theintroduction of the country’s Fast-Track Land Reform Programme in 2001.

The country’s share of maize production on the continent dwindled to an average of 2% between 2001 and 2016. During this period, Zimbabwe’s maize consumption outpaced production by an average of 550,000 tonnes per year – turning it into a net importer.

Wheat and other grain commodities present a similar trend in Zimbabwe’s contribution to Africa’s food system.

Fails to fit idea of food-basket

A woman smiles as she inspects the maize crop on a small-scale farm in Chinhamora, Zimbabwe, in February 2011. Photo: AFP/ALEXANDER JOE

The available data, which covers three distinct phases in Zimbabwe’s agricultural sector, suggests that the country was self-sufficient before and in the two decades after Mugabe came to power.

Even then, Zimbabwe’s maize and wheat output were generally modest and volatile. It wasn’t sufficient to support strong exports to the rest of the continent and world – which fails to fit the idea of a food-basket.

In the third phase, the country’s maize and wheat production significantly declined, which further weakened Zimbabwe’s standing in the continent’s food system.

Overall, we view Zimbabwe as a self-sufficient food producer prior to its land reform programme. However, there is limited evidence to support the notion of Zimbabwe having ever been “the breadbasket of Africa”.

Wandile Sihlobo is an agricultural economist at Agricultural Business Chamber (Agbiz). Additional reporting by Sifiso Ntombela, trade economist at Agbiz and Ph.D. candidate at the University of Pretoria.

 

© Copyright Africa Check

The Ministry of Energy has blocked a plan by South African-owned Mining, Oil and Gas Services Company (MOGS) to construct a US$1 billion 550-kilometre fuel pipeline from Beira to Harare, arguing that the sector is oversubscribed and has no space for new players, an official has confirmed.

Zimbabwe's fuel sector, often described as opaque, is dominated by Sakunda Holdings which is owned by businessman Kudakwashe Tagwirei. The company also has interests in Puma, which is owned by Glencore and Trafigura

According to government sources, MOGS' bid to build a second fuel pipeline collapsed at a meeting held in December last year where the Ministry of Energy reportedly proposed a new fuel pipeline from Namibia to service the southern parts of the country.

Tagwirei, whose company controls the Beira to Harare pipeline that supplies Zimbabwe with most of its fuel, is allegedly blocking the construction of the second pipeline that is earmarked to go as far as Botswana.

Sakunda recently invested US$11 million into the refurbishment of the Beira-Feruka oil pipeline, and is jointly running the pipeline with the National Oil Infrastructure Company (Noic) as it recoups its investment.

Sakunda has enjoyed a monopoly over the pipeline, a move that has drawn the ire of other players.

MOGS, which has the backing of President Emmerson Mnangagwa's advisor Chris Mutsvangwa, has been pushing for a deal to build a second pipeline but some politicians have been reportedly blocking it.

Mutsvangwa, who has been vocal about dismantling Sakunda's monopoly in the fuel sector, approached Mnangagwa with a proposal to have MOGS build a second pipeline. The presidential adviser has been actively promoting the MOGS deal alongside former MDC legislator Eddie Cross.

In the meeting held in December, MOGS representatives were told that Zimbabwe was already getting sufficient fuel supplies through the existing pipeline, therefore there was no need to build another pipeline.

Speaking to the Zimbabwe Independent, the permanent secretary in the Ministry of Energy, Gloria Magombo, expressed government's reluctance to allow a new player into the fuel sector.

"So far, government is satisfied with the manner that Noic has operated the pipelines. There are no plans to bring other players to run the existing pipeline other than Noic," said Magombo.

While government argues that the pipeline is run by Noic, Sakunda has enjoyed a monopoly over the strategic facility.

Magombo was unavailable for further comment on Sakunda's monopoly over the pipeline although she had promised to respond. Energy Minister Joram Gumbo's phone was being answered by his aide who said he was busy. The MOGS deal was initially tabled in 2009, but failed to take off due to resistance from former president Robert Mugabe.

Tagwirei was also in partnership with Mugabe's son-in-law Simba Chikore in the controversial Dema Power Plant project which was producing electricity through diesel-powered generators for sale to Zesa at exorbitant prices in 2017. Zesa was making advance payment for the electricity.

MOGS proposed to construct a pipeline with capacity to move 500 million litres of fuel in the country compared to the 110 million litres supplied through the Sakunda-controlled facility.

MOGS was also promising Zimbabwe six months' steady supply of fuel and to provide government with foreign currency to assist in stabilising the economy.

Magombo said government had received numerous unsolicited proposals from potential investors in the energy sector.

"Besides MOGS, government received numerous unsolicited proposals from other investors who also wanted to invest in the fuel infrastructure. In all the instances, discussions are held in confidence and neither party can disclose such discussions without the express authority of the other," said Magombo.

Presidential spokesperson George Charamba last year said there were no laws impeding new players from venturing into the fuel sector, saying the only way to stop Sakunda's monopoly was to get a new player.

The pipeline from Beira to Mutare is owned by a Mozambican company, Companhia do Pipeline Mozambique (CPMZ), while Zimbabwe pays for the use of the pipeline up to Feruka.

The second part of the pipeline, which runs from Feruka to Harare, is owned by the Petrozim Line (Pvt) Ltd (PZL), a company 100% owned by the government.

Zimbabwe has endured crippling fuel shortages which are likely to be worsened by the devastating Cyclone Idai which has reportedly destroyed port facilities and fuel pump infrastructure in Beira.

 

Source: Zimbabwe Independent

Cyclone Idai, which struck the coastline of Mozambique on 14 March, has caused devastation and heavy loss of life.

The UN says 1.7 million people in Mozambique lived in the path of the cyclone, with a further 920,000 people affected in Malawi and many thousands more in Zimbabwe.

So how common is extreme weather in southern Africa, and were these countries sufficiently prepared?

MAP

Tropical cyclones in this part of the Indian Ocean are not that rare. Most form in the central Indian Ocean, sufficiently far enough off the coast for some preparations to be made.

Cyclone Idai was unusual in that it formed in the Mozambique Channel, close to the coastline, giving governments and aid agencies less time to issue warnings and make plans.

"The cyclone was by no stretch of the imagination the most powerful... but what made it so devastating was where and how it hit," said Clare Nullis, spokeswoman for the World Meteorological Organization.

"The ocean floor along the coast by Mozambique is conducive to give storm surges, which reached roughly 3.5m-to-4m in the coastal city of Beira - which is absolutely huge."

The low-lying coastal areas of central Mozambique are highly vulnerable to natural disasters but the budget for preparing and responding to them is very small.

Last year, the government received support from international donors for a disaster fund of $18.3m (£13.9m) for 2018 and 2019. This contingency plan is the main source of funding for any disaster response and is intended specifically for search and rescue within the first 72 hours.

For a major disaster such as Cyclone Idai, most of the funds for recovery and reconstruction are raised after a disaster has struck.

And even without this latest emergency, Mozambique was facing economic strains as a result of a controversial loan deal in 2016 which resulted in a suspension of some international donor aid to the government.

How much warning?

The meteorological office of Mozambique, Inam, issued weather alerts as the storm developed. Three days before the cyclone struck, the government raised the alert to the highest possible level, telling people to evacuate threatened areas.

Some people were moved out by boat beforehand, but many didn't respond to warnings or weren't aware of them.

"These public alerts were made in a timely fashion but it's always down to actors along the chain to decide how to act on this type of information," says Joao de Lima Rego, an adviser at Deltares, a research organisation focusing on coastal regions and river basins that has helped develop a forecasting system in Mozambique.

As part of the forward planning for severe weather, safe zones had been created in rural areas for evacuation above the flood plain. On this occasion, however, the flooding was far more severe than anticipated.

Preparations in urban areas

The port city of Beira, with a population of half a million, had introduced measures to strengthen resilience to cyclones and flooding.

Preparedness has focused on drainage systems, says Dinis Juizo, associate professor of hydrology at the University of Eduardo Mondlane in Maputo. Drainage canals and flood-control protection, such as a large water basin, have also been introduced.

However, much of the population of Beira outside the city centre live in informal housing often made of materials unable to withstand severe weather.

"The level of investment has not been high enough for an event of this scale," says Dinis Juizo.

Malawi and Zimbabwe

The storm that eventually became Cyclone Idai had caused deaths in Malawi, to the north of Mozambique, in early March. 

People in lowland areas were warned, but because warnings about flooding and rainfall are an annual occurrence during the rainy season, many people were reluctant to move and didn't anticipate the extent to which the country would suffer.

In Zimbabwe, there were also warnings about the approaching storm.

But Zimbabwe's Minister of Defence, Oppah Muchinguri, has said her government failed to anticipate its strength. By the time the storm reached Zimbabwe it had weakened considerably and was no longer a tropical cyclone.

Nevertheless, it had a severe impact on the eastern regions of the country.

Tropical cyclone Idai has made headlines across southern Africa throughout the month of March. Lingering in the Mozambique Channel at tropical cyclone intensity for six days, the storm made landfall in Beira, Mozambique in the middle of the month, then tracked in a westerly direction until its dissipation.

The greatest impact of the storm was experienced on landfall. It caused flooding, excessive wind-speed and storm surge damage in the central region of Mozambique. Adjacent countries of Malawi and Zimbabwe experienced severe rainfall, flooding and damage from the high wind speed. Madagascar also experienced bouts of high rainfall during the storm’s pathway to Beira.

The flooding has left hundreds of thousands of people homeless and displaced across the region while the death toll has continued to rise in the week following landfall. The effects of the cyclone were felt as far south as South Africa and introduced rolling blackouts due to damaged transmission lines that supply the country with 1100 MW of power from Cahora Bassa in northern Mozambique.

Historically, nine storms that had reached tropical cyclone intensity made landfall on Mozambique. A larger number of weaker tropical systems, including tropical storms and depressions affect the region, with a total landfall of all tropical systems of 1.1 per annum.

The most severe tropical cyclone to make landfall in Mozambique was tropical cyclone Eline in February 2000. It had a category 4 intensity on landfall and resulted in 150 deaths, 1000 casualties from flooding, 300 000 people displaced and four ships sunk.

The storms off Africa’s east coast are weaker than their northern hemisphere counterparts. Category 4 and 5 tropical cyclones make landfall at a near-annual rate in the North Atlantic and North Pacific.

Why the wide impact

Why have so many countries been affected?

Tropical cyclones are large storm systems. Immediately surrounding the eye of the storm – a region of calm weather, no wind and no rain – are spirals of storm clouds that span a minimum radius of ~100km. These cloud bands represent the thunder storm conditions, with the rain and winds typical of a tropical cyclone.

A ~100km radius is typical of category 1 tropical cyclones, the lowest intensity ones. As the storms intensify to categories 2, 3, 4 and 5, the size increases significantly. This means that a high intensity storm, such as tropical cyclone Idai, has a range of impact significantly larger than the storm track that it follows.

In recent years concerns have been growing about the impact of climate change on cyclones. Research has shown that changes to the world’s temperature, as well as ocean warming, are responsible for an increase in the severity of tropical cyclones. This has recently been researched for the South Indian Ocean. As the ocean is warming, the region which experiences temperatures conducive to tropical cyclone formation is expanding and temperatures in the tropical regions are becoming warm enough for cyclone intensification. Category 5 tropical cyclones, which have been experienced in the North Atlantic for almost a century, started to occur in the South Indian Ocean since 1994, and have occurred increasingly frequently since then.


Read more: Rising sea temperatures are shaping tropical storms in southern Africa


This means that as climate change continues and intensifies, so too do these storms. This will mean a greater frequency of not only severe damage from storms, but damage over a larger region. In addition to the impact of warming on the storm intensity, climate warming has also been found to increase the expanse of the storms within any given intensity.

Cyclone Idai

So how intense was tropical cyclone Idai?

Storm track records, which include the geographic location of the storm at set time intervals, the wind speed and the atmospheric pressure, are documented by a number of regional climatological organisations. This data is synthesised by the National Oceanographic and Atmospheric Association, providing a useful resource for scientists to explore storm behaviour.

Tropical cyclones are classified on the basis of their wind speed and central pressure. The weakest storms to be classified as tropical cyclones – category 1 – have a minimum sustained wind speed of 119km/hr. At category 3 the storms have a minimum wind speed of 178 km/h. As the category increases, so too does the potential for damage. Category 1 storms are classified as resulting in dangerous winds that cause some damage, whereas category 3 storms are expected to cause devastating damage.

The history of tropical cyclone Idai is documented in these records. The cyclone reached category 3 intensity between 03:00-06:00 on the 11th March 2019, while positioned at its most easterly extent of the storm track. By 03:00 on the 12th March the storm had dissipated to category 2 intensity, and it fluctuated between intensities of categories 2 and 3 over the 36 hours that followed.

From noon on the 13th March the storm maintained a category 3 intensity which persisted until landfall on the 14th.

What needs to be done

Storms that affect many countries present particular challenges. They clearly have no regard for political boundaries. The fact that they affect lots of countries presents challenges in both preparing for storm events in a proactive way and responding to prevent loss of life and livelihood. This requires countries to communicate effectively with one another, to provide coherent messages about the forecasting of the storm track and potential damage, and to facilitate effective evacuations.

This storm provides a grim prospect of the future of tropical cyclones in a region under continued threat from climate change. Effective adaptation to minimise storm damage is essential in preparing the region for an increase in the severity of these storms. Disaster risk management plans are also very important to minimise the loss of life.The Conversation

 

Jennifer Fitchett, Senior Lecturer in Physical Geography, University of the Witwatersrand

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Zimbabwe’s inflation rose to a new 10-year high of 59.39 per cent year-on-year in February from 56.9 per cent in January, the statistics agency Zimstats said on Friday.
 
Zimstats said in Harare that the inflation was pushed by increases in the price of basic goods.
 
On a monthly basis, prices increased by 1.67 per cent in February, compared to 10.75 per cent in the previous month.
 
Zimbabwe’s Central Bank Governor, John Mangudya had said on Monday that annual inflation rate should fall to between 10 and 15 per cent by the end of the year.
 
However, economists said the figure could be higher due to price pressures from the exchange rate and a drought.

The post-Mugabe regime in Zimbabwe continues to struggle to establish its legitimacy. While this is the case the terms of its future international re-engagement will continue to occupy the Zanu-PF government.

The government’s problems are compounded by the international outcry over its brutal response to the protests against massive fuel price hikes in January. At least 16 people died and hundreds were wounded from ‘gunshots, dog bites, assaults and torture".

The events of January once again underscored the fault lines in Zimbabwe’s foreign relations. One the one hand the Southern African Development Community came out in support of a member state in the face of clear evidence of state brutality against its citizens. It even went so far as to condemn the continuing “illegal sanctions” against Zimbabwe.

In contrast, the UK, EU and the US all condemned the human rights abuses of the Zimbabwean state. They called for a return to the commitment to political and economic reforms. And they renewed their calls for as inclusive, credible national dialogue to map the way forward.

These responses once again show how polarised regional and western government policies are on the Zimbabwe crisis. This has had another consequence – the sidelining of efforts to reach a consensus on economic and political reforms. There have been at least three efforts at some sort of reconciliation over the past decade. The first was during the Global Political Agreement (2009-2013), again in the aftermath of the November 2017 coup, and then again in the run up to the 2018 elections.

Another consequence of the fallout from January is that Mnangagwa’s government has reached out further to its authoritarian economic and political partners in Eurasia. The problem with this is that linkages with other autocratic regimes provide some protection against forces pushing for democratic change. In addition, these relationships tend to consolidate those in the military and business sectors who see any prospect of serious economic and political reform as a threat.

Responses

A statement issued by the current head of the Southern African Development Community repeated the official position of the Zimbabwe government. It criticised “some internal players, in particular NGOs, supported by external players (who have) continued to destabilise the country.”

Early signs of this position were clear in South African President Cyril Ramaphosa’s speech at the International Labour Organisation in January. He claimed that sanctions against the country were no longer necessary because the government had “embarked on democracy”.

Once again the regional body has conflated genuine concerns over imperial interventions in the developing world with the fight for democratic and human rights by national forces. Like Zanu PF – both under former President Robert Mugabe and Mnangagwa – Southern African Development Community has affirmed its support for a selective anti-imperialist narrative by an authoritarian nationalist regime that conflates the fight for democratic rights with outside intervention.

The response from the EU couldn’t have been more different. A resolution of the European Parliament in mid-February strongly condemned the violence and excessive force used in January. It reminded the government of Zimbabwe that long term support for it is dependent on “comprehensive reforms rather than mere promises”.

The resolution also called on the European Parliament to:

(review restrictive measures against) individuals and entities in Zimbabwe, including those measures currently suspended, in the light of accountability for recent state violence.

This position in effect put on hold any new restrictive measures against the Zanu-PF government. It also left open the option for renewed dialogue.

Going forward

The debate on sanctions on Zimbabwe has been lost in the region and on the continent. And this solidarity with the Mnangagwa regime is likely to persist for the foreseeable future.

Change, if any, might come from the EU and US. It’s possible that they could change their positions again if the Mnangagwa government made another attempt at minimalist reforms.

The current US policy in Africa is targeted against what it considers to be the “rapidly expanding” financial and political influence of China and Russia on the continent. Trump is also looking to make the US the major player in the new battle for metal resources in Africa. This new struggle for technology metals is taking place in countries such as Zimbabwe, the Democratic Republic of Congo, South Sudan, Tanzania and Sierra Leone.

The White House announced this week that it has extended sanctions against Zimbabwe for another year. Nevertheless, at some stage the politics of US strategic interests in Africa could lead to a more accommodating relationship with an authoritarian regime such as the Mnangagwa administration. This has happened on many occasions in its foreign policy interventions.

The EU is in a “wait and see” mode. It will need evidence of some notable movement by the Zimbabwean state on the political and economic reform front before it pushes the re-engagement process forward.

Mnangagwa’s regime has yet to show that it is any different from Mugabe’s. Given the continuing factional battles in the ruling party – and its inability to imagine itself out of power – it is difficult to view the current government as anything other than a continuation of the authoritarian Zanu-PF’s legacy.The Conversation

 

Brian Raftopoulos, Research Fellow, International Studies Group, University of the Free State

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Almost two decades of profligate monetary policy has destroyed Zimbabwe's economy and fueled rampant inflation, decimating the savings of its people twice.

Hyperinflation of as much as 500 billion percent in 2008 made savings worthless and led to the abolition of the local currency in favor of the dollar the following year. In 2016, former President Robert Mugabe's cash-strapped government introduced securities known as bond notes that it insisted traded at par with the dollar. In 2018, it separated cash from electronic deposits in banks without reserves to back them, causing the black-market rate to plunge.

Last week, it threw in the towel and allowed bond notes to trade at a market-determined level, once again slashing the value of savings. The decision came after the southern African nation faced shortages of bread and fuel, was hit by strikes and protests, and President Emmerson Mnangagwa's drive to attract new investment floundered.

"At the root of this is the currency crisis," said Derek Matyszak, a Zimbabwe-based research consultant for South Africa's Institute for Security Studies. "This is analogous to them creating a giant Ponzi scheme that originated under Mugabe. What we are seeing now is that Ponzi scheme collapsing."

The latest step, while welcomed by what's left of the country's business sector, is unlikely to solve Zimbabwe's problems because all it does is reflect exchange rates on the black market, according to Steve H. Hanke, a professor of applied economics at Johns Hopkins University in Baltimore.

"The 1-to-1 is a fiction," Hanke said. "They are saying officially we are going to condone what has been happening anyway. It officially says, 'we robbed you.'"

The interbank rate for the new currency is about 2.5 to the dollar, data published on the central bank's website shows. That figure is meaningless because the authorities are failing to divulge the volume of trade, according to marketwatch.co.zw, a website run by financial analysts. It estimates the black-market rate for the bond notes is 3.31 per dollar.

The origins of Zimbabwe's currency crisis stretch back to a violent land-reform program initiated by Mugabe in 2000, which slashed export income and devastated government finances.

In response, then-Reserve Bank of Zimbabwe Governor Gideon Gono, known as 'God's banker' because of his close ties to Mugabe, increased printing of Zimbabwe dollars exponentially to pay government workers, stoking inflation and eventually making the currency valueless.

"It was a Ponzi scheme in the past," said Ashok Chakravarti, an economist and lecturer at the University of Zimbabwe. "Especially in the Gono era, where that chap just kept printing money." Gono didn't answer a call to a mobile phone number he has used in the past.

The currency's collapse led to the predicament Zimbabwe now finds itself in -- chronic cash shortages and rampant inflation.

By late 2008, some Zimbabweans had reverted to barter trade as illicit dealings in foreign currencies flourished. In February 2009, the answer the government came up with was to switch to the use of foreign currencies, mainly the U.S. dollar.

"Dollarization puts a hard budget constraint on the system," said Hanke. "You can't go to the central bank or any other government institution to get credit for the government."

The pressure on government finances led to history repeating itself, with a loophole being found: the introduction of bond notes and locally denominated electronic money. That contributed to money in circulation growing to more than $10 billion, according to George Guvamatanga, the permanent secretary in the Finance Ministry. The figure was $6.2 billion in 2013, said Tendai Biti, a senior opposition leader and former finance minister.

"If you continue to print money you are destroying what you are creating," Guvamatanga said. Under a stabilization program introduced by Finance Minister Mthuli Ncube in October, the government is now repaying domestic debt, has stopped issuing Treasury bills and has no overdraft with the central bank.

That's helped the economy move toward "walking on two legs, there is an effort to go in a different direction. It's an inevitable adjustment." Chakravarti said. "It's very unfortunate that this is the second time in 10 years people have lost the value of their savings. In 2009 we all went down to zero including me."

For some observers the latest development isn't a sudden discovery of fiscal discipline. It's another admission of failure and the victims are Zimbabwe's people.

To Biti, who says the new currency will fail because it isn't backed by reserves, it shows the country has come full circle.

"They have through the back door reintroduced the Zimbabwe dollar," he said. "It's theft because people had regrouped and rebuilt their lives from zero based on the U.S. dollar."

The country's best hope is to join southern Africa's Common Monetary Area, which is dominated by South Africa and its rand, Biti said. That would give certainty to business and impose fiscal discipline on the government, as opposed to the current arrangements that are unsustainable, he said.

"It's a Ponzi economy," he said.

 

- Bloomberg

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