Zimbabwe’s President Emmerson Mnangagwa met with business leaders Monday in an effort to assure the public his government can stabilize the sinking economy. But as one business leader explains, uncertainty about the cash supply and the currency in use makes it hard for the economy to function.
Zimbabwe President Emmerson Mnangagwa addresses business executives in Harare, Oct. 29, 2018.
Addressing business executives at the State House, President Emmerson Mnangagwa said his government was “working day and night to stabilize the economy.”
Zimbabweans are dealing with an acute shortage of most essentials, including fuel, medical drugs, cooking oil, and clean drinking water. Prices have been rising, though not at the same rate as in 2008, when the official annual inflation rate reached 231 million percent.
Zimbabweans buying bread are limited to just two loaves as part of efforts to ensure everyone gets some bread since supply is not meeting demand. Picture taken in Harare, Oct. 13, 2018.
Mnangagwa asked businesses to fix the shortages by bringing more products to market.
“I am advised that some manufacturers have been holding back products from retailers. This, if true, is regrettable," he said. "The fear to lose wealth and savings as happened during the 2008 economic meltdown is currently unnecessary. I greatly appreciate and understand all your concerns and anxieties.”
A worker protective clothing factory in Harare at one of the companies which have not closed, but they say President Emmerson Mnangagwa must address the issue of ever losing value bondnotes, Oct. 29, 2018.
The president of the Confederation of Zimbabwe Industries, Sifelani Jabangwe, told VOA if any companies are holding back goods, it is because they know getting resupplied will be impossible.
President of the Confederation of Zimbabwe Industries, Sifelani Jabangwe, says if any companies are holding back goods, it is because they know getting resupplied will be impossible, Harare, Oct. 29, 2018.
“The reality is the rates are moving and there is no [foreign] currency coming," he said. "The manufacturer or wholesaler knows that the stock they are holding is the last, if they sell that and lose out they are finished and we have lost that company. So if there is anyone holding any product it is probably because they are waiting to understand what direction [the rate of exchange is going], but I do not think there are many companies that are doing that. A lot of companies have actually run out of materials.”
The heart of the issue is a lack of useable cash. Since Zimbabwe abandoned its own dollar in 2009, the country has mostly used U.S. dollars, the British pound and South African rand to conduct transactions.
But in recent years all three currencies have been hard to find, paralyzing the economy and forcing the country to rely on bondnotes, a currency the government began printing two years ago to ease cash shortages.
Monday, President Mnangagwa said the "multi-currency system of exchange is here to stay." He said people's bank balances are safe and there is no reason for people to spend or move their savings.
But the value of the bondnote is unquestionably falling. The government insists its currency trades on par with the U.S. dollar. On the black market however, a dollar is now worth close to four bondnotes.