In an unvarnished letter to the international financial community, Finance Minister Mthuli Ncube says that the Zimbabwean economy is in dire straits and there is a very real chance it will collapse. In a very uncharacteristic fashion, he says that the Zimbabwean economy will shrink by as much as 20% this year.
The Zimbabwean economy contracted sharply in 2019, amplified by climate shocks that crippled agriculture and electricity generation.
Growth is projected to contract further in 2020, with domestic demand expected to be significantly depressed from the lockdown put in place as a preventive measure to stop the spread of the virus.
Cumulatively, Zimbabwe’s economy could contract by between 15 to 20 per cent during 2019 and 2020 – this is a massive contraction with very serious social consequences.
Already, 8.5 million Zimbabweans (half of the population) are food insecure, from Cyclone Idai and successive droughts, health services are inadequate, and poverty levels are rising. These indicators are expected to worsen.
Taking the blame
That’s not all that is surprising, in the letter he clearly admits to the government’s policy missteps which have led us down this part. The current government has shown a disturbing habit of being mercurial when it comes to economic policy, treating the wider public and businesses as enemies instead of partners.
They love springing surprises upon the unsuspecting public with such terrible ideas as bond notes, printing RTGS dollars and scrapping the multi-currency on a whim. Often such traps reversed within hours, days or at most months leaving people guessing as what’s coming next.
The Minister also rightly blames climate change which has wreaked havoc on the agricultural sector and resulted in depressed power generation. Strangely the government’s favourite excuse, sanctions, does not make an appearance. Probably because it would be unhelpful for their cause.