The economy of Zimbabwe is close to collapse. The IMF believes that their economy will grow by 1.5% this year, but this number seems optimistic due to a drought halving the country's maize crop, leaving 1.5 million people in need of food aid, prompting businesses to lay of workers en masse, and leaving homes in the dark due to 18 hour power cuts in part of the capital. In addition to the drought, the slow down in South Africa is hurting Zimbabweans. About 3 million Zimbabweans work in South Africa, where they earn rands, which has fallen 15% against the dollar this past year. It is believed that remittances boost Zimbabwe's national output by more than 10%, a significant contribution to the economy.
Robert Mugabe has been president for 35 years and has run a corrupt regime, propping up those close to him, fiercely cutting down his enemies, and forcing his people into poverty. Rigged elections in 2000 prompted Western countries to place sanctions on Zimbabwe and development aid had been halted, however those sanctions were quickly lifted and aid now helps feed the citizens.
When economic crisis hit in the 1990s, President Mugabe defaulted. In the 2000s when he ran out of money, Mugabe simply printed more. When hit again with economic crisis in 2008 due to hyperinflation, Mugabe ditched Zimbabwe's currency in favor of the dollar. Now, there are no more viable options for Mugabe to take - he can't borrow money or print it. For the first time, there is no way around economic crisis and there is a real possibility for political change.
Zimbabwe imports much more than it exports. Every dollar used to pay for imported food is one that could be used to pay the salaries of the soldiers and policemen that keep Mugabe's party, ZANU-PF, in power. The shortage of cash is forcing deflationary internal devaluation on Zimbabwe's remaining private companies. Consumer prices have fallen 3% and companies have been forced to sack workers or cut pay. This economic crisis is challenging Mugabe's regime and forcing the government to make dangerous choices that could lose him the muscle that has kept him in power for 35 years
http://www.economist.com/news/middle-east-and-africa/21669966-drought-and-weak-rand-may-do-more-decade-sanctions-spur?fsrc=scn/tw/te/pe/ed/backstothewall
2 comments:
I believe we can begin using economic systems to explain that country's or state's that have corrupt political regimes, will have poor economic standards. Zimbabwe's currency has been going through hyperinflation for some time now. We have learned that with inflation wages should rise to compensate. This is not true according to Lizzy's article because Zimbabwe continues to "sack workers or cut pay." The only way this economic crisis will be solved is through revolution. In my opinion Zimbabwe is a failed state and needs to change the political system that has not worked for the last 35 years.
Seems like Zimbabwe needs a new ruler or a new political system; since Mr. Mugabe cannot scrape up enough money to pay his policemen. Maybe that will lead to a change in government, perhaps a coup d'état. Lord knows the Zimbabweans need a new leader, as well as some rain. I think some new economic policies would help the country out like increasing exports, but Mr. Mugabe doesn't seem to have in mind. Hopefully this economic crisis will push Mr. Mugabe out of rule.
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