Zimbabwe after Mugabe: The country where pensions have disappeared

Must Read

I’ll expose you if you don’t stop talking “rubbish” about Rawlings – Koku Anyidoho warns Kwesi Pratt

A former Deputy General Secretary of the opposition National Democratic Congress (NDC), Koku Anyidoho has warned the Managing Editor...

I didn’t intend to be a difficult guest to Serwaa Amihere – Oppong Nkrumah responds

Following what has been described as a gaffe on the part of GH One's presenter, Serwaa Amihere during an...

Social media users damn Anas’ recent work as “mediocre, distorting and malicious”

Ghanaians on social media have reacted to the exposé by undercover journalist, Anas Aremeyaw Anas which seeks to unravel...

Retired couple Teddie and Vesta always imagined they would live out their golden years with dignity.

He is 85, and served one company for 46 years as a cleaner, eventually rising to become a receptionist. Vesta says that rising inflation has robbed them both of a comfortable retirement.

A year ago Teddie’s monthly pension was worth $80 (£66), it’s now worth $10.

“I am saddened when I see my beloved sitting in that corner from morning to night,” Vesta tells the BBC.

“I would love to give him a banana, an orange or a cool drink. But we can’t afford it. A banana costs $0.40.”

The signs of a failing economy are everywhere. Supermarket trolleys are hardly ever full these days and shoppers linger, contemplating their purchases.

The prices of basics like sugar and cooking oil have jumped by 200% in June, according to official statistics. So has healthcare.

Meanwhile the cost of bread has gone up fivefold in four months.

As of June 2019, inflation had already hit 98%. In July, local currency the Zimbabwe dollar was reintroduced after a decade of using international currency. Inflation then soared to 176%.

The local currency’s value has continued to drop but the government has now suspended the publication of inflation statistics, citing the change of currency.

The latest economic crisis comes as Zimbabwe’s President Emmerson Mnangagwa marks his first anniversary as an elected leader.

Robert Mugabe was ousted when his long-time ally-turned-rival swept to power with the military’s help in November 2017. Elections were held on 30 July the following year.

President Mnangagwa has dubbed this era the “second republic” – one based on recovery, entrenching democracy and reversing decades of ruinous policies under his predecessor.

Initially many Zimbabweans believed him.

Zimbabweans were initially hopeful that the ousting of Robert Mugabe would persuade investors to return, bringing much-needed cash injections to local businesses.

But hope has faded and old ghosts have returned.

Fuel is in short supply. The government says it doesn’t have enough foreign currency to buy it. Rolling power blackouts are also back.

Authorities blame ageing power plants, low electricity tariffs as well as the worst drought in 40 years which threatens to shut down the main hydro-electric plant at Kariba.

A constant hum has returned to the city – the sound of generators – as boutiques, restaurants, supermarkets try to stay in business. With a sevenfold increase in fuel costs since January, this too will force prices of goods up and further fuel inflation.

‘No quick fix’

Business representatives say power cuts, sometimes lasting up to 18 hours a day, have cost the country $200m (£165m) in lost revenue.

Newly appointed Energy Minister Fortune Chasi believes there is no quick fix.

Despite a recent 300% tariff hike, electricity is still heavily subsidised by the state. Zesa, the state power firm, is virtually broke.

“The anger and frustration is understandable and should translate into creating a viable entity,” Mr Chasi tells the BBC.

“Our tariff is still below cost-effectiveness and we have a delicate commodity. That is why I keep saying people should pay their bills: Zesa is owed $1.2bn.

“Everyone from every sector owes money.”

Economists say inflation is likely to continue to surge. Local production remains low, causing an over-reliance on imports and a shortage of foreign currency.

Government spending, meanwhile, remains excessive and investor confidence low.

Zimbabwe's President Emmerson Mnangagwa lights the Eternal Flame of Freedom during Zimbabwe Independence Day celebrations at the National Sports Stadium on April 18, 2018 in Harare.
President Mnangagwa, seen here lighting a torch on independence day, says he wants to deepen democracy in Zimbabwe

The authorities have introduced austerity measures – these lowered subsidies on fuel, power and healthcare and drove up prices for Zimbabweans. President Mnangagwa believes this is essential to boost production.

“It hasn’t been easy. Good ground worth celebrating has been covered with your help,” the president said in a televised address to the nation, marking a year since his election victory.

“A solid foundation has been laid for more and greater gains in the future,” he continued, “and while the beginning may be painful, the middle- to long-run will deliver more jobs, economic stability, growth and development.”

Austerity bites

Critics of President Mnangagwa say he is flying blind, and rashly implementing ill-considered policies without consultation. They believe he is leading Zimbabwe back to 2008.

That was the year Zimbabwe hit the record books. Inflation peaked at 500bn%. Bank notes from that time, including one for 100 trillion, are now collectors’ items.

Economist Godfrey Kanyenze says the country could be on the brink of hyperinflation.

“Hyperinflation is when month-on-month inflation rises above 50%,” he explains. “In June it was at 39%. We are currently 11% short of hyperinflation, so this is chronic high inflation.”

He doesn’t believe Zimbabwe’s government has a workable, long-term plan for recovery.

“Most developed countries undertake social impact analysis. Before you implement a policy, you project its likely social impact, then you prepare for it,” Mr Kanyenze says.

“But there wasn’t that preparation, especially in the area of salaries.”

One new measure however has succeeded in cushioning Zimbabweans against rising costs. Public transport subsidies now mean commuters pay about a quarter of what private sector operators charge for the same journeys.

Mr Mnangagwa’s supporters argue that it was always unrealistic to expect a quick fix to dampen a crisis that has been decades in the making.

There is some light, though. Zimbabwe says it has paid some its debt to South Africa’s state-owned power utility, Eskom, paving the way for some imported power.

Meanwhile the government has warned that the economy will contract this year. This is hardly good news for pensioners like Teddie and Vesta.

They don’t want to hear that before things get better for Zimbabweans, they are likely to get worse.

 

Source: bbc.com

Submit your stories or articles to newsroom@abcnewsgh.com or Whatsapp them to +233 553620623

- Advertisement -

Comments

Latest News

Police scan La Tawala Beach following grenade explosion

The Ghana Police Service has begun scanning the La Tawala Beach in Accra following an explosion at the beach,...

Film Producers Association suspends Tracey Boakye

Film Producers Association of Ghana (FIPAG) has indefinitely suspended Ghanaian actress and film producer, Tracey Boakye. This comes after, Tracey Boakye clashed with musician MzBel...

Aggrieved parents confront Morning Star School authorities over fees

Angry parents of pupils of The Morning Star School in Accra Monday, descended on the school, requesting an immediate negotiation of fees for “online...

Disregard rumors of reopening of school for continuing students – Education Minister

Education Minister, Dr Matthew Opoku Prempeh has urged the general public to disregard statements making the rounds that some Universities are going to be...

Impacts of COVID-19: Ghanaian economist proposes 3 debt management strategies for African economies

The COVID-19 global pandemic has greatly hit African economies and has threatened the debt sustainability of levels of some of these teething economies on...

More Articles Like This

%d bloggers like this: