Emmerson Mnangagwa. Picture: GETTY IMAGES/DAN KITWOOD
It’s the latest in a series of economic missteps that’s seen Zimbabwe ride a roller coaster of hyperinflation and periodic shortages of food and fuel. At the heart of the economic malaise is a currency policy that’s retarded growth, gouged businesses and cost citizens their savings. Export earnings collapsed and the US and EU imposed sanctions, tipping the economy into a downward spiral that led to hyperinflation estimated by the International Monetary Fund at more than 500-billion percent in 2008. The Zimbabwe dollar was abandoned in favour of the US currency and was only restored in mid-2019 by finance minister Mthuli Ncube, an economics professor who has taught at Oxford University. It hasn’t been a success.
“Lending is required to import raw materials, pay salaries, fund working capital requirement and machinery,” Morgan & Co, an investment advisory firm based in the capital, Harare, said in a May 9 note to clients. “Tough policy measures anywhere in the world always attract criticism,” Ncube said in an interview on Thursday. The lending ban “is temporary in order to prick the bubble of speculative activities,” he said.
“That just talks to the confidence they have in their own currency,” she said. “We are working at ways to make sure we can spend those Zimbabwe dollars in a meaningful way before they obviously lose value.”