As I walked down Coventry Road, the highway that marks the northern tip of Workington industrial area in Harare on January 6, 2003 to begin my journalism career at The Daily Mirror, Zimbabwe was under the grip of relentless de-industrialisation.
Gross Domestic Product (GDP) contracted by 10,5% in 2003, before declining by a further 4% in 2004. The International Monetary Fund (IMF) estimated that Zimbabwe’s GDP fell by 7% in 2005, before declining by another 3,6% in 2006, and 5,5% in 2007.
The worst slowdown was reported in 2008, when GDP declined by about 14,8%.
Rundown factories were succumbing to the unfolding crisis as I made my way to The Daily Mirror, swathed in uncertainty.
A few months after entering the newsroom, hyperinflation soared and prices rocketed, as headwinds battered the Zimbabwe dollar at a terrifying scale.
Companies were struggling to secure foreign currency, fuel, imported raw materials and spares.
Coal-fired machines had been grounded by grinding shortages, and waves of factory scale downs were sweeping through the economy.
These circumstances activated a brain drain that ended with three million Zimbabweans fleeing. Five months into my job at The Daily Mirror, I showed up for work one Sunday to be confronted by shattering news. They were shutting down.
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I knew that I had made my mark, so I was not completely disturbed. But we were not the only victims of Zimbabwe’s decay. Banks were among the hardest hit.
The blue-chip Trust Banking Corporation Limited, Intermarket Holdings Limited, Time Bank Limited, Barbican Financial Holdings Limited, Royal Bank, Rapid Financial Holdings Limited, CFX Financial Holdings, Highveld Financial Services and Century Holdings Limited collapsed in the months that followed.
The vocabulary of a business reporter’s diary resembled that of a war reporter.
Food and fuel were in short supply and prices were rampaging. In the Midlands Province, there was Mutumwa Mawere’s fallout with government over SMM Holdings. Later, the Kingdom Meikles Africa Limited (KMAL) stalemate exploded when celebrated banker, Nigel Chanakira and Meikles tycoon John Moxon exchanged fire over the Zimbabwe Stock Exchange (ZSE)-listed blue-chip. Everything sounded like a movie script.
We were stunned by a stock market crash in November 2008, after a relentless charge of zeros on the currency made it impossible to feed data into the ZSE. On my first day in the newsroom, if someone had suggested that inflation would barrel to 500 billion percent, I would have laughed in their face.
But it did, in 2008.
The suffering and public outpouring of anger against the establishment forced the late strongman President Robert Mugabe to appoint Gideon Gono as central bank governor in December 2003. Gono had impressed the then President after executing a stagy turnaround of the State-run Bank of Credit, Commerce and Industry (BCCI), which later changed its name to Commercial Bank of Zimbabwe, and subsequently to CBZ Holdings Limited.
BCCI’s recovery earned him Mugabe’s respect. The late former President wanted to avoid the collapse of a major bank under his watch.
Mugabe’s record on the economic front was still solid during the period. It was not fashionable for banks to collapse until new players drifted onto the scene in the 1990s. Some of them had an appetite to amass huge fortunes within a short period. These bankers ran Ponzi schemes that intoxicated the entire financial system.
Everything spiralled out of control and billions were stolen. As Gono assumed the reins, the damage had already been inflicted on the economy through poor policies and Western-imposed sanctions.
The speed at which Zimbabwe swung from inflation to hyperinflation was astounding. Officially, the country’s year-on-year inflation rate rose to 622,8% in January 2004 after closing at 598,7% in December 2003. The rate had declined to 150% by December 2004, as RBZ governor Gono’s policies briefly prevailed over what he said was “Zimbabwe’s Enemy Number 1”.
Still, 150% was the world’s highest annual inflation rate during the period. These figures sent chilling effects in Zimbabwe as they were announced, but they also made appealing headlines.
However, Zimbabwe was yet to experience the real effects of pillage and meltdown. As Gono tapped the accelerator harder to defend the under fire currency from hyperinflation’s inexorable grip, the crisis spiralled with greater precision.
The Central Statistical Office, later rebranded to Zimbabwe National Statistics Agency (Zimstats), estimated the annual inflation rate at 364,5% in June 2004, after rising from 300% that May. The inflation rate dropped to 130% early 2005, before peaking to 164% that June. The rate further soured to 1 070% in October 2005 then dropped to 585% that December.
With the exchange rate overvalued during a period when government fought to restrict imports, basic commodity shortages became pervasive in Zimbabwe, where the black market premium hit 100% in July 2005. The IMF said it was worried that social indicators had worsened, and “Zimbabwe is off-track in meeting all but two Millennium Development Goals”. I am not speaking out of context.
It has been 22 years of financial journalism, but nothing seems to be changing. We have changed currencies about five times, and a new administration came through in 2018.
Still, there has been no change.
The truth is, we are under the stewardship of a system that cannot learn from its previous blunders.
