Is Zimbabwe doomed to repeat its past?

As recession bites, inflation rises and government’s currency reforms fail to find traction, Zimbabweans fear they are being dragged back into a past they would rather not revisit. It’s not just a fear of the hyperinflation that wrecked the value of the Zimbabwe dollar and rendered savings and pensions worthless; of as much concern is the echo of a more authoritarian period in the country’s recent history.

When Zimbabwe adopted the US dollar in 2009, it was inconceivable that the country would ever return to the hyperinflation that had preceded it. Under hyperinflation, prices often changed as much as five times a day, and a scarcity of goods meant people were forced to spend hours in different queues. But with the adoption of the US dollar and a host of other, stronger currencies, prices stabilised almost overnight.

Fast-forward a decade, and all signs are pointing to history repeating itself.

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The economy is officially in recession, and the International Monetary Fund sees it shrinking 5.4% this year. Inflation is rising fast, and was recorded at over 100% in May.

The country’s currency has been losing value against the US dollar at an unbelievable rate — a free fall that was briefly interrupted by the introduction of a new Zimbabwe dollar two weeks ago, and a liquidity exercise that mopped up Z$1.2bn from circulation. The move brought parallel market rates for electronic balances down from a peak of Z$12 to the dollar to Z$7.

But the rate is creeping up again: the local currency was trading at 10 to the dollar at the time of writing.

This means the fledgling currency — like its predecessors, the Zimbabwe dollar, bond notes and real-time gross settlement (RTGS) dollar — may struggle to hold value.

Basics such as bread are in short supply, and queues have started forming outside retail chain Baker’s Inn. The Grain Millers Association of Zimbabwe last week called on its members to stop manufacturing confectionery such as biscuits and focus instead on bread production.

The prices of goods are beyond the reach of many, whose incomes have been eroded by the continuous weakening of the local currency against the US dollar and resultant inflation.

The currency depreciation has meant those who were earning US dollars in December 2016, when the central bank introduced the bond notes on a 1:1 basis with the greenback, have seen their purchasing power wither 10 times — and counting.

And, though companies have made marginal wage increases since the most recent crisis started, these have tended to be below the rate of inflation.

Is history repeating itself?

Washington William, a book vendor in the capital city Harare, fears the country is taking a step backwards. "I believe we are headed towards hyperinflation — or we are already in hyperinflation," he said the day after the government outlawed the use of forex in transactions. "For instance, 5kg of rice was Z$40 two days ago; now it costs Z$90. This has happened in just two days."

Unlike the days of hyperinflation, however, shops are generally well stocked. In part, that’s because most shop owners raised their prices in local currency terms after finance minister Mthuli Ncube banned the use of foreign currency.

So while basics are in short supply, the price of other goods "is prohibitive and exorbitant", according to William.

Ncube is pulling out all the stops to turn the economy around. But failure is not something Zimbabwe can afford this time around, economists say — particularly on the currency front.

Kipson Gundani, an economist and executive director of the CEO Africa Roundtable, says the new currency was a big gamble for the country, given low levels of confidence in local exchange.

"The risk is that if [the new Zimbabwe dollar] fails, it is going to create a confidence crisis for banks — one they may never recover from. It’s a big gamble that we cannot afford to lose. We need to work extraordinarily hard as a country to succeed," Gundani says.

"Though the fundamentals are not yet right, the use of [multiple] currencies was not sustainable. We are not producing optimally; we are vulnerable on import cover; and our economy is in recession on a GDP level. But we are coming from a background where the RTGS was already in circulation along with other currencies, and was depreciating against the US dollar at an alarming rate."

In addition to the poor fundamentals, there is also a huge confidence gap in the market.

"I believe this is an opportunity to create that confidence by doing the right things and desisting from doing the things that killed the first Zimbabwe dollar, such as printing money to finance budget deficits," Gundani adds.

But ordinary Zimbabweans are fearful, despite Ncube’s economic reforms.

Converse Binton, a teacher, says: "If the currency fails, we will go back to hyperinflation. I see civil servants failing to raise money for basic things such as bus fare."

Just last month, university lecturers and staff demanded additional funds for transport on the grounds that they were incapacitated by rapid price increases of goods and services.

Problematically, the government’s response to its latest economic problems has a familiar ring to it.

Faced with the prospect that the country could descend into a deeper crisis, President Emmerson Mnangagwa last week issued threats to businesses he believes are profiteering from price increases, and a clampdown is expected in the coming weeks. Already, Mnangagwa’s industry & commerce minister, Nqobizitha Mangaliso Ndhlovu, has conducted spot price checks in various retail outlets.

This is all too familiar.

Mnangagwa’s predecessor, Robert Mugabe, resorted to similar tactics to cow business into submission. He once imposed price controls and arrested a number of leading business executives who he said fell foul of those.

Now, the level of discontent is rising among citizens. To prevent another wave of protests against the government for raising the price of fuel (again), antiriot police have been patrolling the capital’s CBD for weeks. When a shadowy militant group called Tajamuka circulated messages on social media calling on people to stay away last Monday, military helicopters hovered over Harare and smaller cities in what many considered to be a show of force.

Mnangagwa’s pledge to break with his predecessor’s past autocratic policies and tactics, and introduce far-reaching reforms in the realms of business and safeguarding fundamental rights, has so far been a pipe dream. Since the start of the year, there’s been an apparent clampdown on activists and opposition figures. And in the past few months, the government has seemingly targeted civil society activists and workers.

The government's response to its latest economic problems has a familiar ring to it

—  What it means:

State security agents arrested seven activists between May 20 and 27 at Harare’s Robert Gabriel Mugabe International Airport on their return from a workshop in the Maldives. The workshop, hosted by the Centre for Applied Nonviolent Action & Strategies, focused on peaceful resistance. The activists’ charge sheets suggest a crime of civil disobedience.

This is just one of many incidents.

Job Sikhala, deputy chair and lawmaker for the opposition Movement for Democratic Change (MDC), was arrested last week on charges of attempting to subvert Mnangagwa’s government. The basis of Sikhala’s arrest is a video circulating on social media in which he appears to be telling supporters at a weekend rally: "We are going to take the fight to the doorsteps of Emmerson Mnangagwa. We are going to overthrow him before 2023 — that is not a joke."

In a move seen as an attempt to distance itself from Sikhala, the MDC issued a statement saying it does not support the unconstitutional removal of elected leaders. It raised the ire of supporters and opposition sympathisers, who believe the MP was simply — and courageously — giving public voice to that which is often said in private. And while his supporters took to the streets of Harare, singing revolutionary songs, Sikhala himself appeared in court 400km away, where the alleged offence was committed.

Local journalist John Mokwetsi writes on Facebook: "The MDC disowned the only man who said what most suffering Zimbabweans hope for and want to hear — the removal of a leadership that also removed the former president using the AK-47. For a whole party to hide under their beds like a child running away from an angry parent shows that we have to take [up] this struggle as citizens. [There is] no need to apologise to a political party that has looted and killed protesters and 20,000 people in the 1980s. Why should they apologise for what Job Wiwa Sikhala courageously stated today, but is said in every beerhall in Zimbabwe?"

Critics say Sikhala’s arrest shows the government is muzzling the opposition, reverting to the stringent security laws invoked during the rule of Mugabe, who was removed in a 2017 coup after ruling with an iron fist for 37 years.

Another opposition youth leader, Gift Siziba, was also charged with incitement to commit public violence last week.

In a Facebook post, fellow MDC Youth member Stephen Chuma writes: "The state has become a threat to national peace and security. This illegal arrest of our leaders will trigger massive protests. Arrest the scourging economic meltdown, not our leaders."