Zimbabwe’s economy coming to standstill

A woman walks past empty supermarket shelves in Harare July 2.
A woman walks past empty supermarket shelves in Harare July 2.AP file
/ Source: The Associated Press

Cars no longer line up at gas stations because there’s no fuel for sale. Gone are the meat, bread and cornmeal that Zimbabweans count on for their meals. Two weeks after the government ordered price cuts in response to the country’s rampant inflation, the economy is coming to a standstill.

More than 30 company executives have been arrested for hoarding goods and flouting the price cuts, and several have been fined up to $6,600, court officials said Monday. Among those rounded up were executives of a leading clothing retailer, two directors of Zimbabwe’s main food distributor and fast-food chain, and the chief executive of the largest producer of pork products.

The sudden drop in prices had led to panic buying, stampedes and near-riots, leaving shelves bare of staple foods. Witnesses said many shops and suppliers were cleaned out by convoys of ruling party supporters who came in after police and inspectors enforcing the price cuts.

Factories, stores and gas stations have been unable to replace goods sold at below cost.

'Shot ourselves in the foot'
Gas stations have run dry, putting an end to the long lines of cars. On Monday, the government ordered private commuter buses to cut fares by three-fourths, promising bus owners they would be able to buy subsidized fuel from the state oil procurement agency.

But many ignored the directive and simply abandoned their routes. Businesses reported higher numbers of workers failing to arrive at their jobs.

“We are incurring huge losses. We can’t go on like this for much longer,” said one industrialist. “We’ll have to lay off quite a number of our people very soon,” he said. “We’ve shot ourselves in the foot this time.”

He asked not to be identified for fear of retaliation. President Robert Mugabe warned Friday that the government would target uncooperative managers and seize factories that scaled down their operations. His government accuses business leaders of being part of a campaign to bring him down.

More than 1,300 businesses have been charged and fined over the past two weeks, police said.

'Run out of options'
Economist John Robertson warned shortages would worsen.

People wait in a queue to buy sugar in Harare, Saturday, July 7, 2007. Almost two weeks after ordering sweeping price cuts, the Zimbabwean government announced a new law Saturday enabling it to enforce the reductions. Stores shelves remained empty of corn meal, bread, meat and other basic foods after police and government inspectors raided shops and businesses to force them to slash prices of basic commodities by around 50 percent. (AP Photo)AP

“The crunch can’t be far off,” he said. “Retailers who can’t recover the money they spent on their goods are not going to carry them anymore, and manufacturers who are not allowed to charge more than their production costs are going to stop making them.”

By the end of next week, as gas stations go out of business, “we won’t have much mobility anywhere and we will have run out of options,” he added.

Last week, the government announced it was reviving the long-defunct State Trading Corp. to run businesses that had collapsed or were seized. The corporation itself collapsed in the 1980s through mismanagement.

Police spokesman Oliver Mandipaka said the crackdown was “not a gimmick and will be sustained at all costs to stop consumers being ripped off,” state radio said.

He appealed to rural villagers and farmers “to complement government efforts by reducing prices of cattle so butcheries can operate viably,” radio said.

Beef, a favorite in the diet of Zimbabweans, disappeared from shops more than a week ago.

Highest inflation in world
Cattle herds already have shrunk drastically since the seizures of thousands of white-owned farms disrupted Zimbabwe’s agriculture-based economy in 2000.

Cattle are a status symbol in rural communities and often are used as a dowry. It was unlikely villagers who have resettled on former white-owned land would heed Mandipaka’s appeal.

Live goats were being sold in Harare, but goat meat has not appeared in slaughterhouses or supermarkets. Women snapped up cabbages at one open air market.

“It’s something to put on the table anyway,” said one woman who only gave her name as Olivia. She said two large cabbages could be made to last about a week.

Official inflation is running at 4,500 percent — the highest in the world — though independent financial institutions estimate real inflation is closer to 9,000 percent.

'Unleash the impatience'
The government has admitted to printing extra money — seen as a main cause of inflation and an obstacle to South Africa’s reported offer to shore up Zimbabwe’s collapsing dollar by pegging it to the South African currency.

As the crisis worsens, Zimbabweans may resort to looting, Robertson said.

“I think the government will finally unleash the impatience and the anger of our normally agreeable and passive population,” he said.