Zimbabwe: economic woes deepen

Rampant inflation, a collapsing exchange rate and a shortage of goods are killing both the Zimbabwe economy and the Zimbabwe people. According to a recent UN report, the southern African state is the only country in the world where life expectancy is falling due to dismal hygiene, healthcare and nutrition problems.

But the economy is in ever deeper trouble. Two years ago, the country ran out of banknotes: it passed a law making it illegal to hold currency worth more than a few pounds. But people have had to break the law because the amount they could hold was not enough to buy food for a family. The central bank could not simply make more notes because it had run out of paper and ink to make them, and because of sanctions it could not buy any more.

Not that there was any food to buy - people were queuing for hours for a loaf of bread or a small bag of rice. There was a stark choice: go to work or queue for food.

Things have not improved much.

How bad is it? Mugabe's management of the economy will, this year, result in hyper-inflation that the IMF says could reach - and this is not a misprint -100,000%. Last year even the Zimbabwe government's figures said it was around 7,500%.

The currency has collapsed - even against the globally weak USD, its former purchasing power of 250 to the USD has now been officially revalued to 30,000. But even that rate is hopelessly adrift of the parallel rate which is running at about 250,000, reports say.

Forced price freezes imposed in June have had little effect on inflation, and with some 80% of Zimbabweans unemployed, the country is in a desperate mess.

At the root of the food shortage and labour problems are under-performing farms. Many that were in the hands of white farmers were forcibly taken from them and handed to inexperienced blacks, many of them connected to Mugabe. But they have not been able to produce maize and other basic foods in anything like the quantities that were previously normal.

In 2004, a paper at Harvard university said that some 4,000 white farmers had been chased off their farms and those taking over had built mansions and expatriated vast sums of money. The EU blockaded Mugabe and his government but Mugabe famously laughed off the sanctions saying "I have no sheep in the EU."

In June this year, The Times quoted figures showing that a teacher received six times her local currency salary in May as in April - but at less than GBP3.50 per month, it was not even enough to cover her bus fares to work. She had, the report said, resorted to prostitution to feed her family.

The favoured few have access to USD at the official exchange rate - which they then sell at the street rate producing fantastic profits for themselves. Ministers, Government and Zanu-PF party leaders cash in and live in luxury in large houses, drinking in expensive bars and paying prostitutes far more than a teacher's month's salary.

Zimbabwe's power is in jeopardy: much of it comes from South Africa but in the wake of massive unpaid bills, the suppler threatened to pull the plug and the Reserve Bank of Zimbabwe had to use a large part of its reserves just to keep the lights burning. And another part to keep the national airline flying.

But The Times reports that at the same time, it paid USD2 million for equipment to monitor email and telephones, and USD39 million in debt repayment to the US Treasury which has, after a period of inactivity, begun to ramp up action against the Mugabe regime.

In the towns and cities, people eat whatever they can. One local newspaper reported that a man killed his ten year old son with an axe because he ate four mice that would have provided the entire food for his family for a day.

Mugabe's plans for improving the economy often seem woefully removed from reality: for example in 2004, ZWnews.com says, he planned to improve the foreign exchange position and to reduce labour costs by offering unpaid working holidays to fat Americans - "pay to come to Zimbabwe and work off those excess pounds on the farms confiscated from white farmers," was the gist of his message. It didn't work.