Corruption has killed Zimbabwe's economy

Ongoing media exposures of the massive salaries drawn by parastatal bosses may have been welcomed by the public, but expectations that the government would act on corruption are fast fading – instead, the matter has fizzled out and become part of Zanu-PF's divisive battle on who will succeed President Robert Mugabe.

Vice-President Joice Mujuru, who leads one of the two factions in Zanu-PF that are battling to take over after Mugabe, this week suggested that the exposures that have become known as "salary-gate" could be the work of detractors bent on destroying the party from within.

Only the gullible will believe that what we are being shown in the State media is meant to clean the act. In reality, it only goes as far as confirming the fact that corruption killed Zimbabwe. And that at the centre of it all, sits Zanu PF, and its insatiable bigwigs who take and take without any shame and yet lie and lie with a straight face.

The corruption which has been confirmed today dates back to the early 90s when the economy slowly gave in to a huge government and unbridled expenditure.

It’s a fact that at independence in 1980, Zimbabwe spent a lot of money on health, education and various other sectors to bridge gaps created by an unfair and unjust system.

Spending on education rose from Z$227,6 million in 1979 to Z$628m in 1990 while health expenditure went up from Z$66,4m to Z$188,6m.

A huge public service sector, subsidies, the 10-year involvement in the Mozambican civil war from 1982 to 1992 and then subsequent drought years further debilitated the economy such that by the mid-90s prices had become unstable.

The budget operated on a deficit and taxes became high. This drove public debt higher. To recover lost economic growth, the government accepted the Enhanced Economic Structural Adjustment Programme (Esap) in 1991.

The programme that ended in 1995 meant that all subsidies had to go; public enterprises either be nationalised or privatised to enhance growth; streamline government by cutting down on expenditure.

Esap was supposed to be a short-term programme that would first snuff out some jobs in order to create more. But it did not work. The privatisation or nationalisation of public enterprises without better management led to further decline in productivity. Government did not reduce expenditure.

No jobs were created. And the deficit went further up. Instability chipped in. A few black businesspeople operating as advocates for black empowerment demanded their entitlements and government acknowledged them by giving contracts and concessional loans.

This further put pressure on government forcing it to borrow domestically thereby causing even more instability. Consumer prices skyrocketed.

Under Esap, government was also forced to fall into heavy debt and international donors refused to write off the debts because the Zimbabwean government had failed to honour its part of the deal.

After the failure of Esap, government cooked up the Zimbabwe Programme for Economic and Social Transformation (Zimprest) in 1996. Zimprest was supposed to be implemented by government, business, labour and civil society through the National Economic Consultative Just like now when Zanu PF is trying to make people believe that it’s bent on cleaning up, the party used the targeted sanctions as a reason for the death of the economy. And we believed them.

What killed our economy and country is corruption. Sanctions were a diversionary tactic just like the stage-managed exposures are a diversionary tactic.

Zimbabwe introduces new currency

The Reserve Bank of Zimbabwe (RBZ) introduced four new currency denominations in a bid to heal the ailing economy and set a maximum of 8 percent interest rate per annum on bank loans as part of measures to ignite economy growth. These four introduced currencies include the Australian dollar (AU$), Chinese yuan (CYN), Indian rupee (INR) and Japanese yen JPY).

 Presenting the monetary policy, the acting RBZ governor Dr Charity Dhliwayo said the recently recapitalised central bank was geared to resuscitate the economy in a manner that creates jobs.“Trade and investment ties between Zimbabwe, China, India, Japan and Australia have grown appreciably. It is against this back ground of growth in trade and investment ties that in the 2014 National Budget, the Minister of Finance and Economic Development underscored the importance of including other currencies in the basket of already circulating currencies,” Dhliwayo said.

 She added that individuals and corporate bodies could now open foreign currency accounts in nine denominations which include the new four introduced and the five being used at the moment, which are the Botswana pula, Euro, British pound sterling, South African rand and the United States dollar. For the moment, people were advised to open bank accounts in these currencies but the hard cash is not yet in circulation. People were not impressed with the new development as they were heard in the city centres complaining that they were hoping for the resurrection of the Zimbabwean dollar. “Personally, as a Zimbabwean doing business l am not comfortable with using these currencies,” said one of the students at NUST. “What l want to see is how the banks themselves will respond to the use of these currencies.”Another complaint was that the people were saying even though the RBZ introduced other currencies the US dollar will still be in their favour. “I definitely think there is going to be confusion being caused by so many currencies- for a cashier to be handling so many currencies at the same time,” said Denford Matashu, general manager of Food World, a nationwide supermarket chain.

 However, there are some people who think that the introduction of the new currency will be an added advantage to them. A second hand car businessman says the multi-currency system is an advantage for him. “We have the option of using many currencies given different clients we deal with,” said a Zimbabwean businessman based in Japan. For economists like Christopher Mugaga, the introduction of the new currencies was nothing but just heading for doom. He said the system is not the solution to Zimbabwe’s economic woes, with its chronic unemployment and shrinking manufacturing sector. Analysts even added that the addition of several currencies to those already in use, though welcome, will not do much to alleviate the economic crisis the country is facing. The former finance minister, Tendai Biti said the addition of currencies alone would not revive the fragile economy. “It doesn’t make a difference even if you add a hundred more currencies,” Biti said. “The problem is the crisis of production and the collapse of aggregate demand.” The problems the country faces are not monetary but fiscal. Biti warned the country’s spiral into deflation would significantly reduce economic activity regardless of the additional currencies injected into the economy.

WE WAIT TO SEE HOW THIS WILL SHAPE UP!!!!!!