Zimbabwe’s Economic Implosion

Posted on 28 September 2007. Filed under: Economy |

Zimbabwe's Economic ImplosionChildren gather eggs at a trash dump in Zimbabwe. (AP Images/Tsvangirayi Mukwazh)

When inflation gets really bad, it becomes “hyper-inflation.” Yet even that word seems insufficient to describe what’s happening in Zimbabwe. In May 2006, when inflation rates surpassed 1,000 percent, people quipped that the country’s smallest bill, a $500 note, was more cost effective as toilet paper, given that toilet paper was selling for $417—not per roll, but per square (NYT). In the time since, Zimbabwe’s economy has further unraveled at a startling rate. Official estimates put inflation at 7,600 percent in July, though the Economist says real rates may in fact be over 10,000 percent—numbers practically unheard of outside war zones. A country once known as Africa’s breadbasket now finds itself teetering on the brink of outright meltdown.

Some Zimbabwean officials blame Western sanctions for these problems, yet many experts blame the country’s own economic policy. President Robert Mugabe is currently mulling an “Indigenization and Economic Empowerment Bill,” the latest step in a land-seizure program Harare launched in 1999. In the words of the minister heading the program, the reforms constitute a “corrective policy” aimed at making goods “affordable.” But others say the bill, which requires foreign companies to cede the majority of their investments in Zimbabwe and calls for the seizure (Reuters) of white-owned farms, will further strip the country’s economy, exacerbating food and fuel shortages and leading to more suffering. CFR’s Michael Gerson, writing recently in the Washington Post, notes life expectancy in the country is already among the lowest in the world.

In any case, economists generally agree that Zimbabwe’s problems are more complicated than Harare’s economic reform agenda implies. The Economist’s “World in Figures” 2007 edition estimates that from 1994 to 2004, Zimbabwe experienced the lowest economic growth of any country in the world, with -1.9 percent GDP growth per year. A new report from the International Crisis Group says the country is “closer than ever to complete collapse.” With inflation through the roof and Harare becoming more protectionist, the BBC reports Zimbabweans turn increasingly to barter and foreign remittances for basic survival. Zimbabwe’s economic problems are also leading to population flight; CFR’s Michelle Gavin writes in World Today that over three million of the country’s 12 million people have already fled.

At the eye of the storm sits Mugabe. The UN’s high commissioner for human rights, Louise Arbour, and other leading rights watchdog groups have repeatedly spoken out against repression by his government. But the 83-year-old Mugabe recently announced he will run (Mail & Guardian) in Zimbabwe’s 2008 presidential elections. One of Mugabe’s main critics, Archbishop Pius Ncube, resigned in early September following a flurry of government allegations (AllAfrica) of an adulterous affair. Another main opposition leader was savagely beaten (BBC) earlier this year. Still, Mugabe retains broad appeal in some parts of Africa, the Christian Science Monitor notes, because of his legacy as an anti-imperialist fighter who helped Zimbabwe secure its independence.

Author: Lee Hudson Teslik

From CFR.org. Reprinted with permission. For more analysis and backgrounders on Africa, go to http://www.cfr.org.

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    A blog created to cover environmental and political information in Kenya with a view to promoting POVERTY ALLEVIATION through creating awareness of the Millennium Development Goals

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