Home News Zimbabwe gov’t deadlocked on power sharing, inflation soaring

Zimbabwe gov’t deadlocked on power sharing, inflation soaring

By Archives September 23, 2008

With the official Zimbabwe inflation rate surpassing 11 million per cent, a new power-sharing agreement signed Monday between current President Robert Mugabe and opposition leader Morgan Tsvangirai offers hope to a country facing economic ruin.
Despite Tsvangirai’s assertion that the agreement has an “eight out of 10” chance of being successful, the deal does not outline which parties will control specific ministries. Tsvangirai’s Movement for Democratic Change (MDC) hopes to gain control of the ministry of finance in order to stabilize the economy and attract foreign investment.
Political science professor Ian Spears from the University of Guelph said power-sharing agreements rarely work long term, and the deep-seated problems between the two leaders make it unlikely that this one will. “I’m not optimistic,” he said.
The inflation rate has jumped from 165,000 per cent in April 2008 to a current rate of 11.2 million per cent, a trend that saw the printing of a $100-billion bill in July-a bill not even large enough to buy a loaf of bread a week after its release. The country has since resorted to scientific notation, dropping ten zeros from its newly printed currency.
The skyrocketing hyperinflation rate has outpaced wage increases, putting necessities out of reach for Zimbabweans. The country’s economy has been in decline for the last 10 years, a trend that has been largely blamed on President Mugabe’s leadership, including land reform policies and political violence.
“Zimbabwe needs foreign investment in order to move forward,” said economics professor Walid Hejazi from the University of Toronto. “Without foreign investment, they’re not going to get back to where they were.”
The International Monetary Fund (IMF) cut off funds to Zimbabwe nine years ago, and severed contact with Mugabe’s regime in 2006. The Southern African country has also been enduring economic sanctions from the United States and the United Kingdom.
Hejazi asserts that it will take more than a power-sharing agreement to reassure foreign investors. “It’s going to take a new government. As long as [Mugabe] is there, the threat is always very real that whatever investment goes into Zimbabwe could be expropriated.”
The unemployment rate has reached 80 per cent, while the average life expectancy in the country has plummeted to 34 years for women and 37 years for men, the lowest in the world according to a report released by the UN in 2005.
Despite the desperate need for foreign aid in his country, Mugabe has continued to criticize Western powers, saying at the power-sharing agreement’s signing, “The problem we have now is a problem that has been created by a former colonial power wanting to continue to interfere in our domestic affairs.”
On top of being extremely wary of investing in Zimbabwe as long as Mugabe remains in power, the private sector is now so squeezed by the American credit crunch that any foreign investment is currently a challenge, asserts Hejazi. He therefore believes that Zimbabwe will have to rely more on NGOs to repair its current economic situation.
With ministry positions still undecided, it seems the main achievement of the agreement is peace. The first round of elections in March saw an explosion of violence from Zanu-PF against supporters of the MDC. An estimated 70 MDC supporters were murdered, and 25,000 people displaced in the post-election violence.
Hejazi warns this short-term bid for peace could be detrimental to prosperity in the long run. “Countries that become rich and prosperous have good institutions,” he explains. “One dimension of that is democracy. Democracy requires that the person who wins becomes the leader, and the person who loses has to willingly give up power.”