Economic Collapse and Inflation

Zimbabwe’s economic decline drew attention from media houses. (2008) summarises the reasons for such media as: “The catastrophic nature of the country's economic decline in recent years that has led to an inflation rate of 100,000%, an unemployment rate estimated to be 80%, and millions of people leaving the country in search of work, the story merits coverage.” Before delving on the media attention and the images that were broadcasted in relation to Zimbabwe’s economic crisis, it is important to give a background of how the economic crisis in question unfolded.

Zimbabwe’s economic woes began to mount in the late in the early 1990s. Bratton &

Masunungure (2011:18) note that by 1990, Zimbabwe was facing economic challenges: the government’s fiscal deficit was over 10%, there was lack of foreign investment, over 100,000

graduates were leaving secondary school each year and the economy generated little employment. Consequently, the Zimbabwean government was forced to abandon its Marxist-Leninist-Maoist approach of economic management and adopted the World Bank’s and IMF’s Economic Structural Adjustment Programme (ESAP) in 1991.⁹ Among other scholars, Dibbie (2000) and Bratton & Masunungure (2011) acknowledge the negative impact of ESAP`s austerity measures on Zimbabwe’s economy. ESAP’s economic impact was worsened by government corruption.

In addition, the Mugabe administration committed two economic policy blunders: the involvement of Zimbabwe in the Democratic Republic of Congo war in 1998 and the compensation of war veterans the previous year.¹⁰ Bratton & Masunungure (2011:26) note that:

“In 1998, the President deployed the Zimbabwe National Army to prop up the fragile regime of Laurent Kabila in the Democratic Republic of Congo, an ill-advised move partly motivated by a search for new sources of national income.” The DRC military intervention drained Zimbabwe’s fiscus. Correspondingly, Magaisa (2015) observes that:

In the end, Zimbabwe became a key actor in the DRC war, which caused serious problems back home. The war was costly – in human and financial terms. In November 1999, the BBC quoted a report in the Financial Gazette, a Zimbabwean weekly, stating that equipment worth $200 million had been lost during the war. The British Financial Times had also reported a leaked Zimbabwe Government internal memo showing that $166 million had been spent on the war over a 6-month period between January and June 1999, an average of $25 million per month.

These costs were not in the budget and seriously drained the fiscus.

In 1997, the Zimbabwean government agreed to compensate war veterans who fought the war of independence from British colonial rule. Makumbe (2009:11) posits that: “In 1997 the war veterans had successfully coerced the Mugabe regime to grant them monthly pensions and a Zw$50 000 compensation for each of them.” The pay-outs in question damaged Zimbabwe’s economy. In addition, the land reform programme of 2000 seriously hurt the economy of Zimbabwe. The violent land reform programme coupled with political violence led to the sanctioning of the country by the US, EU and their allies. Government corruption made matters worse.

9 ESAP refers to World Bank and IMF inspired and prescribed austerity programme that was adopted by the government of Zimbabwe in 1991.

10 The Congo War (1998-2003) was a war in the DRC which involved nine African countries (including Zimbabwe) and 25 armed groups. Zimbabwe’s economic decline is heavily linked the Congo War.

Bratton and Masunungure (2011:8) give an overview of the country’s economic woes from 2000 to 2008:

As for development outcomes, the period 2000-2008 ended in a full-blown economic crisis. At a time when real per capita incomes were beginning to rise in the rest of Africa and inflation was dropping in neighbouring countries, Zimbabwe was battered by the world’s lowest growth and highest inflation rates. The economy experienced negative growth in every year between 1998 and 2008, shrinking by half over the whole period; by the latter year it was close to collapse. The last official report on inflation in mid-2008 pegged the rate at 231 million percent, though private economists estimated far higher numbers.

In light of the astronomical levels of inflation, the international media was awash with images of the Zimbabwean worthless currency. The biggest note was one hundred trillion dollars.

Images of people carrying stakes of money in Zimbabwe like the one shown below became a common sight especially on international media news stations such as the BBC, CNN, France 24 and Aljazeera.

Picture D

A man stands behind piles of worthless Zimbabwean dollar notes as he makes a deposit at a bank in Zimbabwe in 2008 (The Economist, 2016).

France 24 English (2017, January 20) pegged the inflation at 80 billion percent in Zimbabwe in 2008. The period of hyperinflation under Mugabe was known as “Mugabenomics” in many circles.¹¹ However, during the period of inclusive government in Zimbabwe (2009-2013), the

11 “Mugabenomics” refers to the unorthodox and ruinous economic policies that were characterized by corruption, nepotism, and overprinting of money under the leadership of Zimbabwe’s former President, Robert Mugabe. A key hallmark of Mugabenomics was galloping inflation.

economy became relatively stable. However, the situation changed with the end of the GNU after another controversial election in 2013 which was won by the ruling party ZANU PF through unorthodox means according to MDC Zimbabwe (2017).

After the 2013 elections, the economic situation declined drastically and as of 2016, Zimbabwe was plagued by astronomical levels of unemployment, food shortages, soaring prices, protests and acute cash shortages. CNN (2016, May 6) carried a report where the levels of economic decline in Zimbabwe were discussed. A flash back on inflation and currencies that were used was made. Furthermore, in November 2016, in its programme called Africa Business Report, the BBC (2016, November 12) carried a grim report about cash shortages triggered by the anticipated introduction of bond notes as a currency in Zimbabwe. What is important about the above-mentioned reports and many others that were broadcasted by international news stations are pictures that depict economic decay in Zimbabwe: pictures of people queuing for fuel, cash, and bread; as well as pictures of hyperinflation riddled notes, among others.