Just how serious is the economic implosion?
Publish date: 15 October 2018
Issue Number: 795
Diary: IBA Legalbrief Africa
Category: Zimbabwe
An opposition lawmaker has called for the impeachment of President Emmerson Mnangagwa amid the worsening economic crisis facing the country. Legalbrief reports that while its unlikely that Mnangagwa will fall on his sword any time soon, the economic crisis in post-Mugabe Zimbabwe is bleak and there are very few indications that the situation is likely to improve. After all, the country has a history of economic turmoil and hyperinflation (a decade ago, it experienced the second highest hyperinflation rate in recorded history). The economy is spluttering and some retailers have closed shop in response to the pricing crisis that has seen the cost of goods shooting up daily. A local media channel has quoted a consumer as saying the same medication he purchased for a dollar a week ago now costs $13. And the shortage of medication has been described as ‘severe’ by the country's Retail Pharmacists Association. New Zimbabwe reports that Finance and Economic Minister Mthuli Ncube has attempted to reassure members of the public that their money would be safe in the banks as a legal instrument will be placed in order to ensure their accounts are not raided by the government which happened in 2008.
The Daily News reports that MP Godfrey Sithole last week urged Zanu-PF legislators to join hands with his party in impeaching Mnangagwa in order to ‘save the country from the brink of total collapse’. ‘I think this is a matter of national interest which has nothing to do with political affiliation. I call upon this house and fall legislators from across the political divide to unite as we did in November 2017 when we marched for the abdication of (former President Robert) Mugabe and consider impeaching the current president,’ Sithole said. Meanwhile, the MDC Alliance, has asked the government to consider immediately joining the rand monetary union as a way out of an economic implosion. At the heart of the economic crisis, notes a SowetanLIVE report, are an acute shortage of foreign currency. ‘The solution to our economic problems right now is to join the Rand Monetary Union and stop government borrowing and issuing treasury bills,’ said MDC Alliance legislator Tapiwa Mashakada who added that '60% of our imports come from SA'.
Meanwhile, Mnangagwa said a new tax on electronic payments was a painful but necessary part of the government's attempts to revive the Zimbabwe economy. A TimesLIVE report notes that Ncube announced the 2% tax on 1 October, saying the money raised would be used in the roads, health and education sectors. It will apply to mobile and card payments and bank transfers above $10 with exceptions for foreign payments and transfer of government funds. Analysts say the tax would raise nearly $2bn annually. However, oil companies temporarily stopped delivering fuel because of the impact of the tax while the price of some basic goods have shot up over the last few days. Mnangagwa has also promised compensation to white farmers who lost their land during the disastrous expropriation of land by his predecessor. A report on the News24 site notes that farmers are owed $9bn in compensation for improvements made on the farms before they were expropriated. However, Lands and Agriculture Minister Perrance Shiri, has said it is not the state that will be paying the compensation. Rather, individuals who received the expropriated farms, will be expected to do so. ‘It makes common sense that instead of labouring the tax payer, the person who is directly benefiting from those improvements contributes towards the compensation of the former farmers,’ he said.
In other developmenmts, trade union leaders and scores of activists detained ahead of planned marches over the country's worsening economic crisis, were released on bail Saturday. Cossam Ncube of Zimbabwe Lawyers for Human Rights told AFP that Peter Mutasa, president of the Zimbabwe Congress of Trade Unions was among those released by a Harare magistrate's court. A report on the News24 site notes that they were granted $50 bail each and ordered by the court to stay at their official addresses. At least 20 others were released Friday in Mutare.
