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Let me tell you of Zimbabwe. A wonderful country, blessed with varied natural and mineral resources, friendly, well-educated people, and dogged by an evil, corrupt regime.
By and large, Zimbabwe depends very little on copper. Its main mining commodities are gold, platinum, iron and raw diamonds. Of these gold and platinum extraction and refining is generally done on site, whilst minerals like iron, copper, nickel and similar, are transported to ports in neighbouring states, for shipment onwards to China and other growth markets.
Until 2002, agriculture was the lynchpin of the economy, with almost all other sectors geared to support farming. Cereal crops were grown for local consumption, with surpluses sold to neighbouring countries. Similar for citrus, sugar, beans, nuts and vegetables. It is easy to look at the rich, red loam in the lands next to the Harare - Bindura road, and imagine juicy, bountiful produce, available to feed the population and earn export cash for their growers.
Tobacco was grown, cured and exported, but this industry was in something of a decline, due to the negativity associated with smoking. Zimbabwean beef was right up there with product from Argentina and Kyoto, and could really have taken off in the early 2000s, as the UK suffered a catastrophic foot and mouth outbreak, which ramped up the prices of beef and other proteins, tremendously.
Alas. Bob pulled the lynchpin by removing the commercial farmers from the farms, and allocating the land to his mates and the so-called war vets. As farming collapsed, so did everything else, barring a bit of mining. The subsequent meltdown of the economy, hyperinflation, and the slaughter of the Zim dollar is well known.
Until then, it is fait accompli that Bob and his mates used to skim off the top, everywhere. A bit of local currency for inland use, but for any bit of forex flowing in, they'd grab it, and stash it. With the economy in decline in the 2000s, and ZANU-PF and the Mugabe inner circle personae non grata in the west, overtures were made to the Chinese. They would "loan" the capital to Zim to build (say) an airport. The cash would be paid back to the Chinese companies doing the construction work, the president and relevant ZANU-PF officials would receive their facilitation fees, and the state would be left with the burden of the interest. Think on that, when next you land in Harare, and see the Chinese text everywhere, and passport control lane dedicated to the Chinese...
In 2009, the MDC won the election. Mugabe delayed and obfuscated, and eventually acceded to the Global Political Agreement government, without having to concede he had lost. But importantly, the MDC gripped the reins of the Treasury, and introduced the US dollar. This led to a drastic reduction in ZANU-PF skimming, and healthy growth. People lined up to invest in Zimbabwe again. Mugabe and co could only look on sadly, as capital flowed in, out of their grasp.
But time passed, and Mugabe used his contacts from Israel to rig the 2013 election, and "win it" with a majority. Power, and more importantly, the fiscus, was back in the hands of the Butcher of Borrowdale. And there was lost time to be made up. The plunder has been nothing short of spectacular.
But what does a 94-year old coot need with all that lovely US currency? Well, nothing really. Enter Grace Marufu. Secretary turned First Lady, she loves to shop, whether it's for clothing and accessories abroad, or dairy and citrus farms domestically. And to preserve her position, and to allow the old codger to pay off all the people needed to keep the ruse going, she is grabbing as much cash as she can, while she can.
Today, there is nothing. Although Harare and Bulawayo are bustling cities, with everybody looking to make a deal or score a buck, official employment is as low as 15%. It is hard to find real evidence of the "economic miracle" that Professor Moyo crows about on Twitter. Driving between Bulawayo and Vic Falls, the SUVs kick up corn kernels from the tar, previously scattered by passing maize trucks. Look in your rear-view mirror and watch the peasants dart into the road, to grab them...
The peak electricity demand is 1,500MW nationally. By comparison, South Africa's is 34,000MW. SA's GDP is $300b, or $6,000 per capita. Zimbabwe's numbers are $7b and $600. It is hard to get your head around how miserable the economy is, given the resources available.
At a micro level, there is a problem of scale. It's a southern African country, where goods and services are comparable to rand and pula prices next door. Yet the currency is US dollars. There is a constant adjustment of the R/$ cross, and because there's always some lag, a constant arbitrage at play. Vendors are seldom the winners.
At a global level, there just isn't money physically available. Order a sandwich and beer for $8 from the bar. There is no change for your $10 note, the barman says to hang about, and have another beer later in lieu of change. The ZRA toll gates all cost $2, regardless of distance between them. Hand over a $5 note, receive notes that are barely discernible in return. Simply hand them over at the next gate. What little hard cash there is, remains in circulation on the street. Previous little makes its way into banks, where the central bank can lay claim to it.
As it was noted the other day, Zimbabweans are not stupid. They are not happy living like this. They do not choose their circumstance. Zimbabwe experienced a debilitating bush war for independence, on home soil. Followed immediately by a localised civil war in Matabeleland. The good people of Zimbabwe are simply loathe to take up arms against the state. Hence they would rather flee to South Africa, just to survive, or hope like hell they can achieve regime change legitimately.
Right now, Zimbabwe is as close as it can get to rock bottom. It is already unable to pay civil servants, although it was able to pay the security forces (Liberation Movement 101 : always pay your enforcers). At the end of July, it is unlikely it will be able to even pay the army. Provided Chinamasa is unable to succeed in securing emergency funding from the (evil) west, there is every possibility that Zimbabweans, spurred on by the #ThisFlag movement, may achieve something that many have been waiting for, for many years.
