Zimbabwe After Mugabe, A look At The Economy

In November 2017, Emmerson Mnangagwa became the President of Zimbabwe. Many Zimbabweans had high hopes. Particularly, for better economic prospects but the reality has been sober, bordering on depression.

 

Robert Mugabe and Emmerson Mnangagwa
Source : france24.com

About 9 billion U.S. dollars in debt to creditors, workers strike, power outages, mixed currency policy and further mounting inflation has done little to impress the masses. Mnangagwa started tackling the issues by re-engaging with the international community after years of diplomatic isolation. He brought new policies such as inviting investors to the country for business under theme "open for business."

To prove this, the indigenization policy has been suspended. This was supposed to mandate foreign investors with businesses with a net asset value of 1 U.S. dollar to cede 51 percent equity stakes to indigenous. It didn’t work.

Mnangagwa even agreed compensation to white Zimbabweans whose land were seized under the late Mugade. All in the bid to ease off international sanctions. And he did pay them. 64 million U.S. dollars had been paid to those affected or their beneficiaries by the current Zimbabwean government.

Black outs had become the norm in Zimbabwe. This is linked to the huge debt the nation owes Eskom and other regional electric power utility firms. With initial four hours of electricity per day, little or no production occurred in the Southern African nation. The manufacturing and retail sectors have resolved to self-generate electricity with diesel generators. This is easing up somewhat with Chinese and Indian loans. China gave almost 66 million U.S. dollars and India releasing two loans of 23 million U.S. dollar and 19.5 million U.S. dollar to boost local distribution and Zimbabwe paying off some its debt and agree to pay the rest soon. Unemployment, strike seems to be unending and Inflation has literally shattered the roof. Lack of jobs, is leading to more industrial actions. While those employed want more earnings. Although, the government is offering some increase, but it is against the advice of lenders like the International Monetary Fund-IMF. Hyperinflation is the norm and the use of multiple currencies in the country had not help the situation. To address this, the country introduced two legal tenders. Bond notes and the Real-Time Gross Settlement or RTGS. This stop gap measure has been replaced with the reintroduction of the Zimbabwean dollar. The saving grace could still be agriculture. Despite the drought cause by the El Nino weather phenomenon that drastically affected farmers.  The Food and Agriculture Organisation states that almost half of Zimbabwe’s export is from agriculture and about 300,000 farmers are back to the farms. A good sign of positive things to come. Coffee seems to the leading the path of possible economic recovery. The output in Zimbabwe for 2018 was 43o tonnes. This was an increase of 10 percent from the previous year. Out for 2019 has been set at 500 tonnes.  Nespresso, a subsidiary of Nestle has already shown interest Zimbabwe’s coffee since 2018. And made purchases about international rates. Some improvement is on the horizon but the weather will determine how soon the sun shines on Zimbabwe’s economy and her citizens.