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Zimdollar crashes

by Staff reporter
24 May 2020 at 16:50hrs | Views
LONG suffering Zimbabweans will have to dig deeper into their pockets to survive, after prices of basic goods went up sharply again at the weekend - on the back of the collapsing Zim dollar.

At the same time, ordinary citizens, business leaders and politicians warned in interviews with the Daily News On Sunday yesterday that the ever rising prices of goods and services could soon ignite massive social unrest unless authorities acted quickly to mitigate the situation.

The Zim dollar was prematurely and ill-advisedly brought back last year by at-sea Finance minister Mthuli Ncube - against the advice of economists and many people in government.

The fresh price hikes come as Zimbabwe is fighting the triple whammy of a deepening local economic crisis, the deadly effects of the global coronavirus pandemic, and the regional drought that has left millions of people in the country facing starvation.

A survey by Daily News On Sunday news crews yesterday showed that there have been further steep adjustments to the prices of basic goods - which were already beyond the reach of many before the weekend's fresh round of increases.

To make matters worse, some of the basic goods that include flour, subsidised roller meal and sugar are still in very short supply.

This has resulted in many shops limiting the number of such items that people can buy, in a bid to allow as many consumers as possible access to the limited supplies.

Among the products whose prices have gone up steeply include eggs, cooking oil, washing powder, bath soap, kapenta fish, fresh milk, Mazoe orange crush and meat.

The weekend's price madness follows the ongoing collapse of the local currency on the parallel market against the much coveted United States dollar - which has seen the ill-fated unit trading at up to 75 against the greenback.

Shoppers who spoke to the Daily News On Sunday yesterday expressed deep shock and sadness at the worsening prices situation in the country.

"There is no hope for us. Feeding our families has become a major problem because prices of basic commodities are skyrocketing, while incomes have remained low.
"We are now substituting many things and letting go of our usual foods and lifestyles.
"The government should consider dollarising the economy now since almost every product is now charged in US dollars," Sandra Mukamo said.

A self-employed Godfrey Nyangono said prices would only come down if the government sorted out the country's policies and exchange rate.

"The solution is surely to either go back to using the US dollar or to join the Rand Union. That will bring some stability to the prices. Nothing else will work," Nyangono told the Daily News On Sunday.

On his part, veteran economist John Robertson attributed the new wave of price increases to the rampaging foreign currency black market.

"It is the exchange rate and the government has to find a way to stop it … There is also the scarcity element, which is driving up prices.

"The more there is demand for scarce products, the more the prices are increased. But the black market is the biggest culprit," he said.

"All this means that ordinary people will buy less with their money, because their income is not going up as fast as the prices.

"This means that there will be less to eat, less suitable places for them to stay. People will go hungry and will have nowhere to stay because the persons from whom they are renting also need to eat.
"Factories may also close if things do not change. It's a very serious downturn in economic activity. Many people are going to struggle," the respected Robertson added.

All this comes as Zimbabwe is in the middle of a gigantic economic crisis which is stoking anger against the government.

Despite showing early signs of efforts to turn around the economy, which had suffered from years of corruption and mismanagement under the previous administration of the late former president Robert Mugabe, President Emmerson Mnangagwa and his lieutenants are now finding the going very tough.

Yesterday, former Finance minister in the short-lived but stability-inducing government of national unity (GNU), Tendai Biti, savaged the government  for "authoring Zimbabwe's current desperate situation".

"As always, we have argued that without the right economic fundamentals it is a disaster. There is high inflation and price increases.

"Right now, the poverty datum line stands at $7 000, but who is getting that? There is going to be increased poverty and suffering of the ordinary people.

"It's a total collapse. The most painful thing is that this is self-induced as all this was clearly avoidable," Biti told the Daily News On Sunday.

"The political crisis in the country has to be resolved. Economics is very easy. You eat what you kill … deal with the madness in the currency issues, scrap controls and restrictions, re-dollarise and stop corruption," Biti added.

The spokesperson of the National Consumer Rights' Association (Nacora), Effie Ncube, said the current economic situation was having a devastating effect on people.

"A large number of Zimbabweans are not employed. This has reduced the amount of food people are taking.
"This has impacted negatively on communities and it would be difficult for people to save school fees for their children.

"This will particularly affect children and older people. In some communities, we are already witnessing malnourished children," Ncube said.

The skyrocketing prices come at a time most supermarkets and companies are battling to stay afloat.
Analysts have said that the recent moratorium on prices has worsened the country's deepening economic woes - adding that this would "fast-track" Zimbabwe's current slide towards the extreme hardships that were experienced by citizens a decade ago, when basic goods disappeared from local supermarket shelves.

The surprise announcement, which was similar to the disastrous policies of the late Mugabe, also came as shops were already beginning to empty due to the negative effects of the current economic chaos and the coronavirus pandemic.


Source - dailynews

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