Eddie Cross: Painful process of ‘price discovery’ taking place in Zimbabwe
By Eddie Cross
Listening to the uproar over the fires in the Amazon basin we all need to remind ourselves that what is happening on the other side of the Atlantic actually happens here every year.
If you look at the fire website and compare our region to South America, you will be shocked at the similarity – and it is a process that recurs every year.
This week I flew to South Africa for a day’s business and as we took off in Harare I pointed out the window at the dense smoke haze that blocked out the land below us.
Last night I saw a video of the Victoria Falls where the Falls is almost dry. Talk on the social media blame the loss of ground cover in the catchment – pointing out that the devastating evaporation effect of the loss of the vegetation due to veld fires is one possible cause.
I have previously raised the issue of the killing of the hippo population in the vast flood plains resulting in the blockage of the drainage channels that feed the flood waters of the Zambezi back into the main river in winter, leaving the water stagnant, evaporating under the tropical sun.
Whatever the reason we all need to be reminded that the earth’s atmosphere is paper thin. If space travel did anything for humanity at large it reminded us that this is all we have – mess it up and there is no place to go. All the talk of human settlements on the Moon or even Mars is just plain expensive nonsense. We had better get our act together here, or else.
In Zimbabwe the situation is made worse by the fact the what was once private land held under freehold title is now ‘State Land’ that no one owns and cares about. Fire breaks are no longer maintained, neighbours no longer turn out to fight fires together.
Fires just burn until they run out of material to burn or hit a road. Where there are no fires, there is no ground cover because of overcrowding and unmanaged livestock populations. Parts of Zimbabwe where I grew up are rapidly becoming desert with fences covered in low sand dunes.
This country once had perhaps the best managed conservation movement in the world and was far ahead of other countries. Now that is all gone and in the free for all situation that has taken its place we are rapidly destroying our natural environment and in the process contributing to the global problem of climate change. Denial does not make it go away.
But this is Zimbabwe, an amazing and always surprising place. Great climate and even greater people to live amongst. Also this is Africa and inevitably the spring follows our long dry winters.
Unlike the tropics we have four seasons and our winter mornings, clear, cold and with a heavy dew, are just magical and anyone who does not get up early, make a cup of coffee and then sit and watch the sun come up, misses a magic moment.
Then comes another amazing time when out of the dry barren veld and with no warning, the trees come out in new leaf. Each leaf covered with a thin covering of a water dissolvable wax that limits the loss of water and gives the leaves a special almost translucent colour.
Just yesterday I saw one Msasa that was bright red – almost indescribable, I thought, I have to come back and photo that when the light is right. If you painted that tree, people would say it was not real.
In the lowveld the Knob Thorns – great giants of the river basins, dig deep into the water that lies under the hot sand and suddenly burst into flower. The big animals of the region – Elephant and Giraffe are able to feed on the flowers and then the seed pods when nothing else looks alive.
In our towns the famous flowering trees of the region – many from the Amazon originally and brought here and planted by our forefathers start to come out and sometimes the colours are so bright they almost defy reality.
Any African living far away in a foreign land, will know exactly what I am writing about and feel homesick. Those of us who have the special privilege of living in this place, should always take time to savour our changing landscapes.
What is also encouraging – if difficult to see, are subtle hints in the past few weeks that at last we may have turned a corner in our long march back to economic and political sanity. I think there are signs that there is more political stability, mainly within the groups that hold power here.
The challenges to our new leadership seem to be receding and our leadership has more confidence to tackle the delinquency in our elite that is impeding our recovery from the problems inherited from the Mugabe era.
The massive distortions in prices and in our macro-economic fundamentals have been dealt with and there is little doubt that our markets are working better.
The mountain of RTGS dollars accumulated in the last four years of the Mugabe Government has been dealt with by devaluation and our currency seems to be settling down and the painful process of price discovery is taking place across the economy.
Incomes have been devalued in the process and the distortions introduced by the artificial macro and micro economic factors at play under the dollarization process from 2009 to 2019, are being corrected.
For ordinary Zimbabweans this process has been extremely painful. Living standards have plummeted and even the most basic elements of survival are now beyond reach for many.
But Zimbabweans are resilient and innovative and somehow people are getting by. A major element in this situation, in the absence of any real national safety net, is our culture based on our extended families and the huge contribution of the Zimbabwean Diaspora living abroad.
My own view is that Diaspora remittances are much bigger than the official estimates reflect – one electronic transfer company in 2018 with 3 million clients in SA registered an average of US$78 per month in transfers to Zimbabwe. That is US$2,3 billion a year.
Gold production is estimated at over 80 tonnes per annum and that is another US$4 billion a year, most of it generated by small scale informal miners. It is these inflows of hard currency that are sustaining our people in these tough times.
If the combined income in hard currency from both these sources is now about US$6 billion per annum that translates at current exchange rates to RTGS$60 billion. That is RTGS$500 per capita per annum.
Although this is modest – when combined with other sources of income, it all helps alleviate the hardship experienced as a result of the reform process that is underway.
For me three main issues remain to be tackled before we can really say we are on our way back to the road to recovery:
1. We need to get the interbank market working properly as a formal market for foreign exchange with clear rules and transparency and to insist that all foreign earnings are fed through that market.
2. We need to continue with our reform program and to never allow the pressures on the system to deflect us off the track we are on. Let’s continue to maintained discipline in our fiscal and monetary system, strengthen the market economy and the role of the private sector.
3. We need to tackle corruption – recover stolen funds and confiscate property obtained with corruptly obtained funds. We need to make corruption in all its many forms punishable severely and quickly.
Is this spring? In the natural world yes, of course it happens every year. In our economic and political world, maybe. The signs are there but it can easily turn out to be false dawn, the choice is ours.
Harare, 31st August 2019