The news that trickles in about Zimbabwe hardly makes for encouraging reading. Members of president Robert Mugabe’s inner circle were indicted in the Panama Papers recently, and back in February, Mugabe celebrated his 92nd birthday with an $800,000 party a few weeks after declaring a ‘state of disaster’ because of drought.
The oldest Head of State in the world has no plans of retirement, and despite his wife mysteriously managing to earn a PhD in three months, says that he has no intention of appointing her as his successor. The Zimbabwean political system is rotten to the core, and Mugabe’s divide and conquer tactics mean that there will almost certainly be a bitter power struggle once he dies.
Of course, people have been saying that for years. When Mugabe came to power in 1980, first as Prime Minister and later as President, the future looked bright. Bob Marley performed in the country’s capital, Harare, to celebrate independence and congratulate Zimbabweans, but things took a turn for the worse fairly quickly. Economic prosperity gave way to controversial land redistribution laws, as white farmers saw their property seized by the government and drought crippled the country. Mugabe blamed, and still blames, Zimbabwe’s ‘erstwhile masters’ (Britain) and other western powers for all of his woes. Corruption and greed prevented the socialist equality that Mugabe promised, and despite a small resurgence in the few years following 2010, Zimbabwe’s opposition party appears to be as weak as ever.
Zimbabwe’s infamous economic crash of 2008 resulted in the second-worst case of hyperinflation that the world has ever seen. Prices were doubling in just over 24 hours, and carrying around bags of monopoly money became so unpractical that the country abandoned its own currency in 2009 and adopted the US dollar. 100 trillion dollar notes are now sold on the streets to tourists as souvenirs, and the US dollar stabilised the economy.
What appears to be the case now, however, is that this was simply papering over the cracks. Using a different currency won’t fix an economy, and inflation was still a problem. Despite a combination of US dollars and South African Rand being used for small values, the smallest denomination of a $1 note was still a struggle for many of the poorest Zimbabweans.
This has recently been addressed with the introduction of bond notes and tokens, an idea that is a worrying throwback to the system of Zimbabwean dollars having an expiry date. The treasury has recently announced that it is going to begin printing its own special US dollar ‘bond notes’ in the hope that it will facilitate the transition back to its own suspended currency. These dollars will not be legal tender in the US, and as a result cannot be used to buy imports. This makes the idea of using a hard currency in the first place useless and could result in the favouring of “real” US dollars over the Zimbabwean equivalent.
Mugabe’s short-term plan of printing more money when there is a shortage doesn’t add up. If he isn’t careful, we could see a return to 2008’s farcical scenes where you would pay for a meal before you ate it because the price would have gone up by the time you were finished.