By Fungi Kwaramba
President Emmerson Mnangagwa returned from a five-day visit to China early yesterday morning to be confronted with soaring prices of mostly basic commodities and rising shortages.
Mnangagwa left the country for China a few days after his inauguration last week.
He returned home yesterday and was welcomed at the Robert Mugabe International Airport by hordes of his former ministers who are hoping to make it into his much-awaited Cabinet.
Since Saturday last week when he departed for Beijing on a charm offensive to secure at least $2 billion needed to jump-start Zimbabwe’s economy, prices of most basics have gone up by more than 50 percent.
It is being feared that the country could be heading towards another full blown crisis akin to the ugly 2008 hyperinflationary era, when supermarkets shelves were left empty because retailers could not keep up with inflation.
Due to foreign currency shortages, government has struggled to curb the wave of price increases and growing shortages of basic goods.
Yesterday, the Daily News reported that prices of basics such as bread could also go up after grain millers indicated that there was a shortage of wheat.
The country’s largest beverages maker, Delta Corporation, recently warned that foreign currency shortages were disrupting the production of most of its products, which required imported raw materials.
As the market awaits Mnangagwa’s reaction, his Zanu PF party alleged yesterday that some companies could be sabotaging his administration, which won the July 30 vote in contestable circumstances.
The party’s secretary for legal affairs Munyaradzi Paul Mangwana said there was more to the economic rot than meets the eye.
“It is nonsense to claim that Zanu PF has failed the economy. We won the elections fair and square. Right now we are coming up with programmes to turn around the economy,” he said in response to the main MDC’s claims that the ruling party was bereft of ideas on how to revive the country’s economy.
“Of course we are having challenges but, they could be a hidden hand behind the increases, we are looking into that, however, we have to address the fundamentals, that we will address first but we cannot rule out sabotage,” said Mangwana.
At the height of Zanu PF’s factional wars in 2016, former president Robert Mugabe also alleged that he was being sabotaged by comrades in his party who were growing impatient with his rule and thus causing price hikes.
Mugabe, swiftly forced shops to revise their prices.
His successor is lauded in business circles as pro-capital and it would be interesting to see how he would respond to the crisis.
The MDC led by Nelson Chamisa issued a stinging statement yesterday saying Zanu PF has no solutions to address the unfolding economic crisis, which it claimed was a direct consequence of “illegitimacy”.
Chamisa’s party said those who “rigged” the election must now realise that while they could manipulate the poll, it was impossible to rig the economy.
“As is evident, the economy is fast freezing, following the illegitimate inauguration, which resulted in a clear deficit and short supply in market confidence,” reads part of the statement.
“While it is possible to change electoral statistics, it is not possible to tamper with figures in economics. What the Zanu PF approach does not understand is that once one rapes the election (politics) they also rape the economy.
The party said Zimbabwe needs a government that is clear, clever and hardworking, adding that the current government suffers a terrible deficiency of a governing and economic philosophy.
“The government must understand that moving the economy forward requires legitimacy and the respect of what the people voted for. It also requires a government that respects the rights of the people, the rule of law and promote public peace and trust,” the MDC said in a statement.
A United Kingdom-based financial expert Brighton Musonza said Zimbabwe’s problems were primarily a result of the absence of a domestic currency, adding that without radical currency reforms there would be no end to the misery.
“The problem is that when you use other people’s currencies you are exposed to their problems or successes. The high-flying United States economy means the US dollar is retreating back home to earn a premium return.
“We adopted the US dollar in 2009 and went on to enjoy a decade of zero interest rates. That period is over and the Federal Bank rate increases mean the dollar is now an expensive currency,” said Musonza.
In 2009, the country abandoned its worthless currency, which had become bruised and battered by hyperinflation in favour of a basket of currencies dominated by the United States dollar.
To mitigate the liquidity crisis, the Reserve Bank of Zimbabwe introduced the bond note in 2016, but the surrogate currency is also losing ground.
Musonza said the fact that the US economy was growing at an average of four percent means the Federal Reserve will continue hiking interest rates to curb inflation.
He said Zimbabwe has reached a new phase of markets contagion crisis in the emerging markets, which is also affecting the South African rand.
“An expensive US dollar becomes illusive and Zimbabwe is not spared either. South African suppliers are not bloody stupid; they know Zimbabwe is facing what every emerging market is facing — exiting US dollar. And so they are not going to send their goods into a market facing its own squeaky bum time,” said Musonza. Daily News