BY KENNETH MUFUKA
The movers and shakers of Zimbabwe’s economy are converging with a message of alarm. President Emerson Mnangagwa, by suspending all lending by financial institutions, has exacerbated the situation.
Rulers are advised to employ historians before taking precipitate actions such as those mentioned above. I have lived three distinct lives. During my second life, in Jamaica, prime minister Michael Manley, a brilliant London School of Economics graduate, partially grabbed the assets of five US bauxite mining companies and came to a very bad end.
The script Brother ED is using has been used before, and it ended in what we call the dance of the Valkyrie. In Nordic mythology, warriors were promised virgin brides after victory. But the brides were called behind a fire wall. As the Vakyrie warriors danced around the fire, as fatigue and exhaustion set in one by one, they dropped before meeting their brides.
In brief, from a base of US$50 million a year, Manley raised the mining royalties to US$250 million a year. The British removed their postal support and their support of the Jamaican dollar, based on the Great Britain Pound. The Royal Post Office provided a crucial service by guaranteeing British postal orders for settlements of debts in the world. Without that service, my life insurance payments abroad, collapsed. Today, as I speak, US$1 equals J$155.
Remember the Jamaican dollar had the strength of the British pound, or J$1 was equal to U$2.
University of Zimbabwe economist, professor Gift Mugamu describes the economic situation in Zimbabwe today as a perfect whirlwind. Since coming to power, Supreme Brother ED adopted Cambridge economics.
Mugamu says that according to Cambridge Economics (called Voodoo economics in the US) government tries to control even things it does not own. With dark humour, Mugamu says one cannot determine the price of tomatoes if one does not own a farm. Since 2019, the Reserve Bank has issued 600 statutory instruments (SI) to the financial organisations. This means that banking institutions receive on average 200 instructions a year, or about 18 per month. I do not need to argue about the stupidity of such instruments. The latest SI of May 9, suspended all lending activities. Obviously, the banks were not consulted nor was their input required.
The fact that banks are in the business of collecting deposits and lending the proceeds as a matter of survival did not concern the three musketeers at the Reserve Bank.
The previous SI raised the prime rate to 80%. To give you a comparative example. I have a US$15 000 house remodelling loan, payable in two years, free of interest.
The foreign exchange auction is all abracadabra, says the professor. There are three rates of exchange, Z$150 for U$1 at auction, Z$240 on the Interbank market and another Z$500 on the parallel market.
“There are teachers who were earning US$30 per month.” In Zee dollars, a $30 000 per month salary for teachers with bread prices at $350 per loaf, takes one third ($10 500) of his income.
Whereas in 2019, one third of the population was under the poverty line, today, 49%, or half the population is. “It is manufactured poverty,” the professor says.
Government takes 40% of an exporter’s foreign receipts and even at that, takes 10 weeks to pay him. When the exporter wants some money, he must apply, and the bank takes its sweet time, another 10 weeks. “I have it on good authority that some exporters have closed shop,” said the learned professor.
But government says that it has a budget surplus. Mugamu said that was all make-believe.
I have taken time to show a different view which relates to the reality of Zimbabwe economics on the ground. Mugame is not alone among economists. Professor Tony Hawkins, in his book on Zimbabwe economics agrees with Mugamu. Hawkins is a white man, and we can dismiss him as a colonial remnant.
The perpetrators of this witchcraft are the three Musketeers at the treasury led by Professor Mthuli Ncube.
In summary, if you depreciate your money, say by the value of 10, it means that if you owed one goat, you must now pay 10 goats. You don’t have to acquire fancy econometric theories to understand that simple natural law.
Natural law
But all this is to miss the point. In sponsoring the Second Republic, the British government made two stipulations. White farmers were to be compensated. Mthuli said some big words about a fund leveraged by Kuvimba Mining. These professors know all the words. The second condition was that the brother would prepare Zimbabwe for political and economic reforms.
None of these conditions have been met.
If these conditions remain moot, you can dance all you like, exhaustion will eventually overcome the warriors.
Painful as it, all the great farms namely Kintyre Estates, Border Estates, Fresh Market, Macadamia Nut Farms have been allowed to return to bushland. A compromise road map was written by Tanzania minister Muhammad Babu, April 1980.
Wrong tree
Brother ED believes that the manipulation of the exchange rate, which drives prices, inflation and raises poverty levels is the creation of imperialist and regime change blacks working within government.
Life is not that simple.
Take Henrietta Rushwaya. Obviously, she is a patriot, a principled cadre and a stalwart. It is a fact that she was caught with six bars of gold at the airport. It is also a fact that her driver, one month later, was apprehended at Johannesburg Airport with a consignment of gold. Take another example. Rosemary Dunga is alleged to have colluded with a businessman to by-pass exchange regulations at the airport by letting five bags of US dollars estimated at U$10 million. My information is that it was an Asian businessman.
Taxes are ignored but more important is the fact that stalwarts like her feel that their wealth is safer abroad than in the land of their forefathers.
That is what needs to be fixed. Further financial house Goldman Sachs, believe that the Z$ may balloon way beyond Z$500 mark.
If these facts remain, Brother ED can issue a thousand SI’s, he will continue to be doing the dance of Valkyrie.
- Professor Ken Mufuka will be on a lecture tour in July 1-30, beginning in Kenya. He will share a message: “Suffering under grace, the African American experience” hosted by Archbishop Manasseh Mankuleyo of Faith Evangelical Church, at Ngong. Arrangements are underway for him to give public lectures on “Dangerous ideas in the US intellectual world.” Contact: Zimbabwe: 77-694-167. In Masvingo contact Fabian Mabaya.