Zimbabweans have not forgotten when their hyper-inflationary economy turned them into wretched millionaires. It has only been a decade, from a period during which the country’s central bank issued notes that lost value almost as soon as they were printed.
With few international friends, except for China, the Zimbabwean economy has suffered from lack of investment, a steep decline in the manufacturing sector, rising unemployment and cash shortages. In short, the economy that is proving to be president Robert Mugabe’s Achilles heel.
The Zimbabwe government’s introduction of the Moveable Property Security Interests Bill tabled in parliament last month has sparked controversy. Under this legislation the Reserve Bank of Zimbabwe will be compelled to create a collateral security register. But bankers are concerned about the definition of moveable assets.
Patrick Chinamasa, finance minister, has indicated that the assets would ‘include any type such as machinery, motor vehicles, livestock, and accounts receivable.’
Many are skeptical of this move, however, since local farmers who benefited from the land reform are still facing challenges in using their land as collateral because the title deeds remain with original owners most of whom are the white farmers who were chased away.
The government says the bill reflects prevailing economic realities in a predominantly informal economy. Unemployment in Zimbabwe is estimated to top 90 %.
As a consequence of these pronouncements, the minister of education, Lazarus Dokora, also in favor of the new policy has urged parents who cannot afford to raise tuition to offer livestock in lieu of payment or do chores at their children’s schools.
Though Zimbabwe had adopted the US dollar, it is quickly disappearing from circulation due to private hoarding and externalization. In response, local banks limit cash withdrawals, sometimes, to as little as $20 a day per person. This has led to hundreds of desperate Zimbabweans sleeping in queues outside banks.
Last year, the Mugabe-led government introduced bond notes, a parallel currency, in an attempt to restore liquidity. About $110 million worth of bond notes are currently in circulation. The authorities insist that the bond notes are identical in value to US dollars. No one is fooled.
Business owners have since discovered that they are not, in fact, convertible into real dollars. The bond notes cannot be used to pay for imports—a real problem in a country that imports a great deal of what’s for sale in local markets. The bond notes are proving to be exactly what many Zimbabweans feared they might be: the resurrected Zimbabwe dollar. Unless the country changes tack, more economic misery looms.
Even with elections expected in early 2018, the country faces political uncertainty over who will succeed Mugabe, 93. Despite almost four decades in power, Mugabe and his wife, have indicated he is going nowhere and intends to contest in next year’s presidential election even as a corpse.