The Crisis in Zimbabwe Deepens
7 December 2015
In recent weeks I have highlighted the various problems facing Zimbabwe at this time. We clearly have an economy that is contracting – not expanding, to make that clear to non-economists. We have serious deflation driven by a massive decline in the South African Rand which now threatens to break through the 15 to 1 barrier with the USD. In addition the planting rains have now almost completely failed in South Africa with the main impact being on basic foods like maize and it looks as if similar problems are developing here.
Then after sleeping at the wheel for two years while Zambia used their newly installed power generation capacity at Kariba, which is over 80 per cent above sustainable water flows in the River system, the authorities suddenly woke up and realized that if this went on any longer, they would soon be sucking air. Well, too late and now on top of all our other problems we are going to see Kariba down to 275 megawatts and Hwange drunkenly staggering along at 500 megawatts in a country where full demand is 2 200 megawatts. This is going to be a dark Christmas for everyone.
Given the signs of regional drought, if water levels in Kariba do not recover this season, then we are in for a protracted period of totally inadequate power supplies. This is going to further reduce economic output across the country and create mini crisis points in thousands of homes as people try to wash and cook and make enough light to read at night. For the poor this is just another pressure point that will reduce their spending power, already down by up to a third in the past two and half years, even further.
In 2008 the extent of the crisis was masked by inflation and our ability to print or “burn” money (a phrase used to describe trading in the local currency). It was also masked by a massive effort by the international community, led by the USA, to feed (physically) over 70 per cent of the national population. At that time there was also some hope that the political situation would change after MDC won the 2008 elections and Mugabe was forced by regional leaders to go into a GNU with their hated opposition. Had South Africa stepped into the ring in 2008 and insisted on a real transfer of power to the MDC, I have no doubt at all that today we would be in the throes of a rapidly developing economy with rising incomes.