It’s been an ongoing issue that Zimbabwe’s economy is in one of its most difficult years yet – and it doesn’t seem to be getting any easier any time soon. With the increasing inflation rate, said to be above 4%, getting the country back on its feet definitely poses as a challenge to the country’s officials. After its historic election last July, where now president Emmerson Mnangagwa was elected after almost four decades of being under Robert Mugabe, the people of the nation are somehow optimistic that change will come – specifically, a change in the country’s current economic status.
While it has been years since Zimbabwe has seen any economic progress, the promise of a new government (though questionable, as most people see Emmerson Mnangagwa as a successor to Robert Mugabe) may help their country get back on solid, economic ground. This now poses the question on everyone’s minds: does fresh money in Zimbabwe change the economic situation very soon?
Establishing its own currency
Before taking a deep dive into that question, it’s best to see how the country has gotten to this point of economic paralysis. Zimbabwe has not had a currency of its own since its hyperinflation in 2009. One of things that could help their country’s economic status right now is developing their own hard currency, since they’ve been relying on the US dollar as the main currency for their transactions, along with the South African rand. In recent years, there has been a reported cash shortage that has been denting the economy, with it being half the size it was since the turn of the millenium.
Accumulating agricultural debt
It seems as though 2009 was the year of change for Zimbabwe, as in that year, then president Robert Mugabe signed the Indigenisation and Economic Empowerment Act (IEEA) into law, meaning that almost 51% of businesses would be turned over to Zimbabweans. Because of this law, foreign businesses had to close operations in the country.
This law also caused the slow plunge of the country’s agricultural production. The law required the government to do farm seizures, with foreign businesses closing shop and local farmers losing their land without compensation. As Zimbabwe was considered the breadwinner of Africa, it is now a country trying to make up for their past mistakes, with an international debt amounting to almost $9 billion.
Rising unemployment rate
Jobs are hard to find in Zimbabwe, especially formal ones. The unemployment rate of the country is running at almost 90%, with possibility that it could rise further. There are more Zimbabweans leaving the country than staying and working, estimated at around three million people, so that they can escape the economic crisis and live a better life outside of Zimbabwe.These people could have stayed and improved the economic status of the country if they were given the chance, though now that they have left, it would be unlikely for them to return unless Zimbabwe has proven to be stable and solid, both politically and economically.
Since the election last July, local citizens say that things have been getting worse. Prices for any basic supply are running high, making local businesses suffer and harder to maintain. Besides this, the unemployment rate is rising and infrastructure is crumbling. A cholera outbreak that has killed at least 30 people in Harare has spread in over 10 of the country’s provinces, making it one of the worst since their previous cholera outbreak back in 2008. Irregularities on the counting of votes during the election and the repression of their people has made major international countries stay away from Zimbabwe.
Rebuilding international ties
So, what is the next step for Zimbabwe? For them to progress in solving their economic crisis, their government should open cash injection to the country. While this is a good possibility to consider, a question arises from this solution: where would the money come from? An all Zanu-PF government has kept donors away, especially those who see Emmerson Mnangagwa simply as a replacement for Robert Mugabe.
But last August, a solution presented itself to the Zimbabwean government. Germany’s economic cooperation minister Dr. Gerd Muller met with President Emmerson Mnangagwa to discuss Germany opening its lines of credit to Zimbabwe, nearly 20 years after the regional bloc imposed sanctions on the country that led to the falling out between the two countries (as Germany sided with Britain about the dispute of land reforms in Zimbabwe).
While the topic is merely in talks for now, there have been discussions on forming a joint permanent commission for both sides to explore various fields of cooperation. As Muller said in an article on NewsDay, this partnership will lead to the development and progress of the situation in rural areas and will benefit the country’s agriculture, which has been on a decline since 2009.