Here is a fact, anyone in Zimbabwe ill ell you that the Zimbabwean economy is not doing well by any measure. We have inflation that is one of the highest in the world according to ZIMSTAT the official government agency and the government has been printing billions of RTGS dollars according to the Reserve Bank of Zimbabwe. The rate has been on a slide but it seems that news has reached our leader. The latest Sunday Mail has him on record saying the economy (yes, the Zimbabwean economy) is in good health.

It’s not clear what he meant because he does indeed seem to be aware of the problems plaguing our economy as evidenced by parts of the same speech. Here is what he had to say:

As already indiated, a raft of measures will be announced shortly, including measures to increase confidence in the local unit. De-dollarsation will be managd carefully to avert disruptions.
In the wake of last week’s exchange rate turbulences and resutant upward movement in prices, I met with my team of experts to analyse and review the current situation. To assist the process, we benchmarked our economy against several economies in our region and on our continent. Economies bother larger and smaller tan ours. The results are quite baffling.
Economies which earn far less than us by way of exports; import more than us; have lager GDPs requireing more imports, and with bigger populations, are enjoying more stable national currency than we do. Kenya is a case in point.
Part of the president’s speech

Bald-faced lies

It’s easy to see why the president is baffled here. He is not an economist by training and he has to rely on his advisors on such issues and it seems they are pretending to be baffled because the truth would see them admitting they have not been doing a good job. First off, they have somehow managed to convince the president that the Zimbabwean economy is not doing well at all. More people live in poverty than in 2017 according to government statistics. Prices go up on a daily basis driven by various factors, arrogance and rash laws in the form of Statutory Instruments have wrecked whatever confidence people had in the country’s banks and financial sector.

You cannot legislate confidence back into the financial sector using shock tactics and tough financial laws to basically seize people’s money. The government started on a bad note. Back in 2018 they essentially admitted they pilfered people’s money when they declared that FCA accounts are called FCA accounts and we open new “Nostro” accounts. Such terminology and tactics do not exist in other economies. These governments consult stakeholders before making far-reaching bans like banning the multi-currency overnight, foisting a rate based on nothing on businesses and calling it official and charging a fortune tax on fuel for no good reason in the face of devastating international shocks like the war in Ukraine.

The way the Zimbabwean economy has been managed by the Finance and Monetary authorities has been a master-class in ineptitude, hubris and arrogance. They adopted the daddy knows what’s best policy we see which resulted in many stakeholders feeling like they were under siege. The result has been that more and more people and businesses are finding a way to cushion themselves against government policies. The informal sector has done that over the years as the government has either ignored it or treated it like the enemy over the course of the president’s reign.

The informal sector is much larger than the formal in Zimbabwe and yet all policies by the Finance Minister and his monetary counterpart have been aimed at boosting the formal sector and taxing the informal sector out of existence. The result has been an economic war with the informal sector simply ignoring any rules and regulations that threaten its very existence. Take SI 127 of 2021 for example. If informal businesses that obtain foreign currency from the black market followed it they would go out of business. Why the government would introduce such a law then is baffling.

Bad laws degrade the ability to enforce

In the beginning laws like SI 127 of 2021 were feared especially by the formal sector and even the informal sector would quake in their boots whenever laws like SI 212 of 2019 were widely followed. The thing about passing one bad law after another is that eventually the police and Zimbabwe Anti Corruption Commission get so overwhelmed they can barely function as everyone is literary made into a criminal. You cannot arrest everyone and when there is a law turning everyone into a criminal it means you are making bad laws.

So bad are our economic policies that even the Zimbabwean government doesn’t like them. They don’t like their own currency and so they made exceptions for themselves to get paid in foreign currency and to use other rates. Even their friends who run oil companies no longer bother with the official rate. Government agencies no longer even bother to apply for approval to use other rates they simply do that anyway. Thanks to diminishing incomes some of those meant to enforce laws simply ask or accept bribes and look the other way. Even the formal sector doesn’t bother with the “official rate” anymore.

The president is right though. There is economic anarchy in Zimbabwe. He is wrong about who to blame. His minions the ones dong bogus “benchmarking” and claiming the Zimbabwean economy is doing well are lying to him. The economy is in the ICU and citizens are suffering. Any claim that doesn’t recognise that is not grounded in reality. Any prescriptions preferred on the basis that the economic fundamentals of this country are sound is bound to create more chaos and suffering because it is a prescription based on delusions.