Rigging the Zimbabwe Economy

With inflation rates already at 40, 000 percent per year during the 1990’s, today the Zimbabwean economy is faced with rates that are somewhere in the region of 32 million percent, according to Harare-based Financial Gazette. And with the economy’s strength decreasing on a daily basis, most citizens have to find alternative ways to overcome the daily cash withdrawal limit of $25billion: buying foreign currency that is worth more today than it will be tomorrow. Such was the case with Zimbabwean economist John Robertson when faced with a dentist’s bill.

A drop in commercial agriculture

But the problem is of course more far reaching than that. With the nationalization of farms owned by those remnants of the supposed former ‘colonialist regime’, commercial agriculture has collapsed and took with it a staggering 40 percent of the economy. Subsequently the estimated harvests only reached a mere 10 percent of this year’s target output due to a lack of expertise on the matter and nature’s own irony, drought. As a result it is estimated that more than 4.9 million people will have to rely on (international) food aid before the end of the year. Another industry equally affected is the mining industry with goldmines producing barely a third of their previous monthly average. In addition the Zimbabwean government has instated policy that requires all miners, both corporate and individual, to sell the fruits of their labor to the government below international prices with the aim of converting the gold into jeweler to sell it for hard cash – something which the government needs now more than ever due to international pressure on German printing firm, Giesecke and Devrient, to stop printing Zimbabwean dollars.

Heavy Taxes

It doesn’t stop there, however. As a part of the strategy employed by the Zimbabwean government to fund the lifestyles of President Robert Mugabe and those who dwell in his inner circle, citizens are taxed heavily on groceries and other items purchased, usually in bulk, in neighboring countries such as Botswana. Contrast this with the privilege given to Mugabe loyalists to import various items, including cars, duty-free as well as foreign currency at government rates, far below black-market rates. Fuel is also sold to preferred individuals at the Reserved Bank’s depot at subsidized rates.

The question that now remains unanswered is of course how long this will remain a plausible tactic for those in the higher ranks of the Zimbabwean government to keep the lower echelons happy. While it currently remains possible for the Zimbabwean government to harvest its much needed hard cash from those individuals determined to survive, the day might come where that option will also be exhausted.