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The libertarian head of the Coalition for Market and Liberal Solutions (Zimbabwe) opines about Zimbabwe's economy: "The first learning point I have encountered is that adopting the use of ‘foreign’ currency as legal tender in one’s country has very little impact on a country’s failed state or HIPC [Heavily Indebted Poor Countries] status. Viewed through the prism of political judgement, almost two years after Zimbabwean authorities outlawed the discredited Zimbabwe Dollar [ZimDollar] in favour of the Greenback, the South African Rand and to a limited extent, the Botswana Pula; we are yet to emerge from our rogue state category. Conversely – at least with my experience as a student in Kenya in the Kenyatta-Moi era of governance – a dysfunctional political system has no bearing on a country’s economic performance. That is why Colombia, Egypt, China and Saudi Arabia still attract more Foreign Direct Investment [FDI] than my country, when in fact those countries are ‘less democratic’ than Zimbabwe."
He continues his commentary: "The prevailing situation is much better than when the truant Gono and his arrogant boss Mugabe drove our inflation figures to billions, supermarket shelves emptied by price distortions, long caravans of migrants streaming out of Zimbabwe, creaky factory machines and empty hotel beds. Latest reports are that we are on single digit inflation rates [4%], productive capacity is edging upwards 40%, and industry is experiencing less power outages while Zimbabwe’s vaunted human capital is showing sides of home sickness. Corporate budgets are more predictable, however, public utilities still struggle with uneconomic tariffs [or is it inefficiency?], and while the large, obese coalition government that works on a cash budget gobbles the little revenue there is. Mugabe has not stopped praising ‘successful’ black tobacco farmers, but they have kept their money from the formal banking system because they no longer trust banks. On the opposite income scale, villagers have no viable economy to access US dollars, except when they sell cattle. However, they still have access to farm inputs and groceries whenever their liquidity improves. Ironically, even when they make it to the nearest grocery shop, they encounter stone-faced shop assistants who cannot offer change in coins!"
Discuss "The Vices And Virtues Of A Multi-Currency Economy" post here.
