Cris Chinaka CHINHOYI — According to the official figures, Zimbabwe’s economy is booming. The agony etched on the faces of those in the auction rooms in Chinhoyi, watching helplessly as prized possessions go for a song, tells a very different story. Zimbabweans from all walks of life are drowning in debt after the implosion of a three-year credit bubble. High-rollers are losing mansions and limousines; ordinary people chickens and pots and pans. The only ones doing well are the auctioneers holding the sales and the newspapers advertising them. As well as hammering some of the country’s biggest firms, the crisis is threatening the stability of its banks and piling more pain on a population of 13 million people traumatised by a decade of drastic economic decline up to 2008. “It has been a real nightmare,” said Milton, a victim of the burst bubble standing at the back of an auction in Chinhoyi. Instead of fulfilling his ambitions of owning and running a car workshop, he is watching nervously as his bed, a six-piece lounge suite, refrigerator and stove go under the hammer to try to repay a US$1 500 bank loan. “First, I lost my car over a loan that I used to start this business, and now this. I have to start afresh,” he said, with a sigh. When President Robert Mugabe formed a unity government with Morgan Tsvangirai after disputed elections in 2008, Milton and thousands of others hoped the country and its once-vibrant economy had turned the corner. That belief took root when the new administration quickly scrapped the worthless Zimbabwe dollar in favour of the US dollar and South African rand, ending the multi-billion percent hyperinflation at a stroke. Three years later, the court-auction advertisements filling newspapers suggest the hopes were premature. “It’s painful but I have to be here to see if the goods they have taken will be able to cover the debt,” said Milton, who would only give his first name. “Otherwise they come for more stuff.” With the relative political stability of a unity government and the monetary stability of US dollars and the rand, many banks went on a lending spree in 2009, taking title deeds on homes and ownership documents for cars as security. Interest rates ranged from 15% to 50% but businesses from second-hand clothes stalls in townships to village grocery stores lapped up loans to restock after the lean years. “There was a frenzy,” said Brains Muchemwa, a private economic consultant. “And it has been one huge disaster, both for the borrowers and the lenders, with big losses for individuals, families, banks and businesses.” Over the past year, two banks have collapsed and two others have slid into administration under a mountain of bad debts. Worse could be in store, with the central bank saying that loans to individuals for consumption more than doubled from 8,6% of all loans in June last year to 18% by June 2012 — against the backdrop of an economy in trouble. In his mid-year budget statement last month, Finance minister, Tendai Biti, slashed his 2012 growth forecast to 5,6% from 9,4%, a cut that took few Zimbabweans by surprise given the widespread belief the government had been over-egging the figures to lure outside investors. The tough times can be seen in the growing numbers of people eking out a living as street vendors, and in the boom of court-appointed auctions. Even the Reserve Bank of Zimbabwe has been clobbered with outstanding debts of US$1,4 billion to individuals, companies and government institutions. Overall, eight out of 10 adult Zimbabweans are jobless in an economy that shrank by almost half in a decade of recession blamed on the disastrous economic policies of Mugabe, who has been in charge since independence in 1980. — Reuters
Ordinary citizens unable to repay loans
In the countryside, the auctions are often held in the grounds of police stations and lots range from cows and black and white TV sets to crates of empty beer and Coca-Cola bottles. “At first, I tried hard and I was paying half the monthly instalment but after four months, I stopped completely and that’s how I ended up here,” said John Moyo, who borrowed US$10 000 two years ago to start up a furniture-making business. Unable to make the US$1 000 monthly repayments, he had to forfeit his trusty Mazda truck, which sold for US$2 000, a quarter of its value. “I am sunk,” he said. “Many other people are sinking too.”
