HomeOpinion & AnalysisShortages and financial crisis: Which is the witch?

Shortages and financial crisis: Which is the witch?

President Robert Mugabe is convinced that a recent wave of basic commodity shortages and steep price hikes are purely the work of his internal enemies seeking regime change. That is a simplistic and paranoid conspiracy theory.


The truth is, the crisis that we saw a couple of weeks ago is a manifestation of a complex and unravelling problem that cannot be pinned down on a successionist-factionalist plot in Zanu PF by individuals who, justifiably as it were, want him off the throne because he is now disused and must make way for others.

The problem was always coming. It may have been suppressed, but whatever was done to counter it is akin to administering Panadol on a patient. It won’t take away the ailment but just postpone the pain.

As the president was away on a week-long tour of New York which he disguised as a trip to the UN summit, prices of some basic commodities doubled. The bond note, which is supposed to be trading at par with the greenback, lost half its supposed value.

Traders and consumers alike started hoarding commodities. Fuel almost ran out of supply and retailers were declining plastic money transactions. Meanwhile, the forex black market went haywire. Mint bond notes were in ready supply as the activity on the parallel market hived up on the backdrop of the fall in the value of the bond.

A big sense of de javu came with that. We still have lively memories of what happened in the years up to 2008 when there was a similar trend. Those were the years of hyperinflation. Many felt that we were slipping down the slope fast, hence the widespread panic.

Upon his return from New York, Mugabe told a hungry and tired audience of bussed “supporters” that he knew that the crisis had been caused by influential people within his party who wanted to find a good excuse to remove him from power. He repeated that at the burial of former vice-president Joseph Msika’s wife. That showed how serious he is with his conspiracy theory.

But then, if he believes the shortages and price instability were exclusively because some people want to push him out of power by abusing their positions to cause mayhem, he is being badly advised by rival factionalists in Zanu PF.

It would seem that Mugabe was ultimately pointing a shaking finger at his deputy, Emmerson Mnangagwa, who was the acting president in his absence. And it would also seem that the conspiracy theory had its origins in Mnangagwa’s rivals.

If some people from Mnangagwa’s Lacoste faction played an active role in augmenting the crisis, it appears that they could do it only for personal gain. There is no way successionists, perceived or real, would mess the bed they are lying in too. It would always be difficult for them to convince the electorate that they are the good guys when they belong to the same regime with Mugabe.

The ad hoc price crisis and commodity shortages are a function of a complex set of factors. Bad policy is the root cause and the rest are secondary drivers and downstream symptoms of the crisis. The president and all those that seem to have swallowed his theory must know that the current financial crisis essentially stems from the introduction of bond notes late last year.

Bond notes, true to the fear that some of us expressed when government started talking about them in the first quarter of last year, have been driving out good money, the greenback. It is not a mere coincidence that the US dollar started disappearing fast the moment Patrick Chinamasa and John Mangudya, against all the odds, ratcheted the introduction of the bond note.

But then, even if the bond note was a good idea, government failed to put in place measures to stabilise the side effects of getting it onto the market. I warned early this year that the bond note, as it chased away the good money, would also generate opportunities for corruption, pretty the same way things are happening now.

And all this happened as Mugabe watched. In fact, the idea of bond notes was subjected to cabinet deliberations. Since the bond note is primarily responsible for the current financial instability, it doesn’t wash to claim that it is the work of political saboteurs.

It is also useful to appreciate that there is a swelling super-profits and extortionist culture in Zimbabwe now. This tendency gained prominence during the pre-2009 hyperinflationary era when dealers and the commercial sector developed an appetite for short-term profits. Do you remember those days when dealers would hoard goods, get out of the warehouse or shop and sell them at seven times its value?

Hoarding gave way to shortages. Shortages created high demand and, as is normally the case, prices go up when demand is high. That is why, upon mere social media rumour, traders rushed to stock up whatever they could for speculative reasons. This is skewed socio-economic behaviour that has little, if anything, to do with political agendas.

That brings me to my next and closely related point — greed. Greed entails selfishness. It is both the elite and grassroots. Zimbabweans have substantially become a greedy population. They don’t mind what will happen to the neighbour for as long as whatever they do will maximise their gains. Big manufacturers and suppliers are particularly to blame in this regard. They will divert goods to the black market so as to create artificial shortages and make a killing in the process.

And the small fish will do the same too. I witnessed this in my neighbourhood. As rumour of impending shortages swelled, one shop owner hiked the price of some basic commodities. There was no good reason for him to do that because he was selling old stock. This generated an amusing spiral. The other shops withdrew basic commodities into their warehouses and adopted a wait-and-see attitude. That betrayed speculative tendencies.

Tuckshop owners were among the hoarders too. And there was already a re-emergence of street hawkers who were buying in bulk and setting up shop on street corners. Not to mention the hundreds of “money-changers” who also tweaked their rates for a fast kill.

It may be useful to start raiding forex dealers and commodity hoarders as we saw happening late last week. But it is more useful to look at the festering financial crisis with magnified glasses. That is the only way to effectively address the re-merging problem.

l Tawanda Majoni is the national coordinator at Information for Development Trust (IDT) and can be contacted on majonitt@gmail.com.

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