For decades, Robert Mugabe ruled Zimbabwe in a ruthless, even recklessmanner. Over nearly 40 years, he turned the “jewel of Africa” into an economic basket case that’s seen inflation of up to 800 percent.

Then, late in the night of Nov. 14, the country’s security services detained and put Zimbabwe’s 93-year-old president under house arrest in what appeared to be a military coup. The whereabouts of his powerful wife, Grace, are unconfirmed.

 

Much remains unclear at this early stage. Will violence erupt? Is this really the end of the Mugabe era?

I don’t know the answers to those questions yet. I’m not sure even Vice President Emerson Mnangagwa, who appears to have orchestrated Mugabe’s overthrow, knows how his gambit will turn out.

But with each passing hour, it is increasingly evident that Zimbabwe – a country whose politics I spent uncountable hours grappling with as a State Department official – is poised to see its first real leadership transition since 1980.

Setting the stage for Zimbabwe’s coup

For decades, Mugabe’s grip on Zimbabwe was iron-clad. Even when challenged by an invigorated opposition in 2008, he kept the presidency by entering into a nominal power-sharing agreement. After a decisive electoral victory in 2013, though, he cast the coalition aside.

But as the elderly president grew increasingly frail this year, the power struggle to succeed him became frenzied. Two major camps were vying for power.

Vice President Emerson Mnangagwa, who as a soldier fighting for Zimbabwe’s liberation earned the nickname “the crocodile,” represented the old guard. The 75-year-old enjoyed strong military backing, particularly from the veterans’ association, a powerful coalition of former combatants from Zimbabwe’s independence struggle which began in 1964 and ended in 1979.

The crocodile who snapped back. Philimon Bulawayo/Reuters

Last year, the group broke with Mugabe in a public letter, declaring that he had “presided over unbridled corruption and downright mismanagement of the economy, leading to national economic ruin.” Many believed that Vice President Mnangagwa orchestrated the group’s letter as a shot across the bow to warn would-be rivals.

The second camp jockeying to control Zimbabwe before the coup was led by Mugabe’s current wife, Grace Mugabe. At a relatively spry 53, she represented the younger generation, drawing significant support from the ruling party’s loyalist Youth League and from an informal grouping of emerging leaders known as “Generation 40.”

But Grace Mugabe was deeply unpopular among ordinary Zimbabweans, who called her “Gucci Grace” because of her extravagant spending. Plus, she had a reputation for cruelty. Earlier this year, the president’s wife faced accusations of beating a 20-year old South African model with an electric cable.

In September, after Vice President Mnangagwa was emergency airlifted to South Africa due to a strange illness, Grace Mugabe had to publicly deny, on state TV, that she had poisoned her rival.

As recently as early November, it appeared that Grace’s camp had prevailed. President Mugabe sacked Mnangagwa, who fled to South Africa. Mnangagwa, it seems, had a different plan. While in exile, he stayed in touch with his military allies.

On Nov. 14, Mnangagwa’s camp struck back. By the next morning, Mugabe was under house arrest, his wife had reportedly fled to Namibiaseeking asylum and Mnangagwa’s cohort appeared to control the country.

Democracy or dictatorship?

At least, that’s the picture right now. Events have moved swiftly in the last 24 hours, and some big questions remain unanswered.

If Mnangagwa officially takes power, the first unknown is whether he will rule by fiat or cobble together a transitional government. It’s unclear whether Mnanangwa and his allies have any real interest in introducing democracy to Zimbabwe. To do so, they would need to hold an election within a reasonable period of time, say six months.

Military coups don’t have a promising track record of ushering in democracy. Recent scholarship finds that while “democratization coups” have become more frequent worldwide, their most common outcome is to replace an incumbent dictatorship with a “different group of autocrats.”

Soldiers patrol the strees of Harare, Zimbabwe’s capital, after a military coup d'etat against president Robert Mugabe. AP Photo

Signals in Zimbabwe are mixed so far. Experts generally describe the latest developments as “an internecine fight” among inner-circle elites and ask two key questions: Which side will prevail, and will violence break out?

In my assessment, the answers hinge on Mnangagwa, a hard-nosed realist and survivor who was critical in securing Mugabe’s four-decade rule. Mnangagwa has an appalling human rights record. Many consider him responsible for overseeing a series of massacres between 1982 and 1986 known as the “Gukurahundi,” in which an estimated 20,000 civilians from the Ndebele ethnic group perished.

More recently, in 2008, civil society groups accused Mnangagwa of orchestrating electoral violence against the political opposition and rigging polls in Mugabe’s favor.

It is also true that Mnangagwa is massively invested in ensuring his continued and unfettered access to power, which has proven highly lucrative for him. The vice president is “reputed” to be one of Zimbabwe’s richest people. All of this suggests he might become yet another dictator.

‘Unity’ for Zimbabwe?

Nonetheless, reports indicate that Mnangagwa is currently talking to several opposition parties about potentially forming a transitional government. A key stakeholder in any such arrangement would be Morgan Tsvangirai of the Movement for Democratic Change, who served as prime minister to Mugabe as part of the 2009 power-sharing agreement.

That coalition achieved some success on economic matters, but Mugabe’s party never relinquished any real authority. Mnangagwa was among those who clung to power back then, but I believe he might play things differently now. Mnangagwa is no reformer, but he does need to find ways to bolster his legitimacy. Not to mention he will quickly need to confront Zimbabwe’s massive economic woes.

The choices that Zimbabwe’s political leadership makes in the coming weeks will have immense consequences for the future of a country whose development has stagnated under 40 years of authoritarian rule.

Real transitions in Zimbabwe are all too rare. Mugabe led the country to independence in March 1980, assumed the presidency and never left. His demise represents a chance for a political reset.

 

Steven Feldstein, Frank and Bethine Church Chair of Public Affairs & Associate Professor, School of Public Service, Boise State University

This article was originally published on The Conversation. Read the original article.

The armed forces seized power in Zimbabwe after a week of confrontation with President Robert Mugabe’s government and said the action was needed to stave off violent conflict in the southern African nation that he’s ruled since 1980.

The Zimbabwe Defense Forces will guarantee the safety of Mugabe, 93, and his family and is only “targeting criminals around him who are committing crimes that are causing social and economic suffering in the country in order to bring them to justice,” Major-General Sibusiso Moyo said in a televised address in Harare, the capital. All military leave has been canceled, he said. Mugabe is preparing to step down, Johannesburg-based News24 reported, citing unidentified people familiar with the situation.

Denying that the action was a military coup, Moyo said “as soon as we have accomplished our mission we expect the situation to return to normalcy.” He urged the other security services to cooperate and warned that “any provocation will be met with an appropriate response.”

The action came a day after armed forces commander Constantine Chiwenga announced that the military would stop “those bent on hijacking the revolution.”

As several armored vehicles appeared in the capital on Tuesday, Mugabe’s Zimbabwe African National Union-Patriotic Front described Chiwenga’s statements as “treasonable” and intended to incite insurrection. Later in the day, several explosions were heard in the city.

Constantino ChiwengaPhotographer: Jekesai Njikizana/AFP via Getty Images

 

Political Crisis

The military intervention followed a week-long political crisis sparked by Mugabe’s decision to fire his long-time ally Emmerson Mnangagwa as vice president in a move that paved the way for his wife Grace, 52, and her supporters to gain effective control over the ruling party. Nicknamed “Gucci Grace” in Zimbabwe for her extravagant lifestyle, she said on Nov. 5 that she would be prepared to succeed her husband.

The events unfolded as Zimbabwe is in deep crisis. The economy has halved in size since 2000 and the nation has no currency of its own, using mainly the dollar as legal tender. Lines of people waiting to make bank withdrawals snake around city blocks in Harare. Some sleep in the streets to ensure they’re served. An estimated 95 percent of the workforce is jobless and as many as 3 million Zimbabweans have gone into exile.

The country is now under military rule, said Alex Magaisa, a Zimbabwean law lecturer who is based in the U.K. and helped design Zimbabwe’s 2013 constitution.

Man In Uniform

“When you see a man in uniform reading news on national television, you know it’s done,” he said in a text message. “There are no more questions. Authority is now in the hands of the military.”

Mnangagwa, who said he fled Zimbabwe because of threats against him and his family, had been a pillar of a military and security apparatus that helped Mugabe emerge as the nation’s leader after independence from the U.K. in 1980. He was Zimbabwe’s first national security minister.

Mnangagwa’s dismissal signaled Mugabe’s break with most of his allies who fought in the liberation war against the white-minority regime of Rhodesia, leaving his wife’s so-called Generation-40 faction of younger members of the ruling party in the ascendancy. While Zanu-PF named Mugabe as its presidential candidate in elections next year against a possible seven-party opposition coalition, he’s appeared frail in public, sparking concern among his supporters that he wouldn’t be able to complete another five-year term.

In this image made from video, Major Gen. S.B. Moyo addresses to the nation in Harare on Nov. 15.Photographer: ZBC via AP Photo

 

Moyo, in the statement, told members of parliament that the military’s “desire is that a dispensation is created that allows you to serve your respective constituencies according to democratic tenants.”

Elections probably won’t be held as scheduled, Rashweat Mukundu, an analyst with the Harare-based Zimbabwe Democracy Institute, said by phone.

“The military is going to determine the shape of Zimbabwean politics, although they’ve tried to say this is not a coup,” he said. “This may result in the creation of a new unity government which will involve the opposition.”

 

Source: Bloomberg

A U.S. citizen accused of attempting to subvert President Robert Mugabe’s government was released from Zimbabwe’s maximum security jail on Friday, a day after the High Court ordered her to be freed on bail, Reuters witnesses said.

Judge Clement Phiri ruled on Thursday that there was a “patent absence of facts” in the state’s case against 25-year-old Martha O‘Donovan, whose arrest last week centered on accusations she insulted 93-year-old Mugabe in a Twitter post.

She denies the accusation.

Reuters witnesses saw O‘Donovan leaving prison in a United States embassy vehicle. O‘Donovan and her lawyers did not speak to reporters waiting outside Chikurubi Maximum Prison on the outskirts of Harare.

State prosecutors accuse O‘Donovan of writing a Twitter post in October calling Mugabe a “selfish and sick man”.

The government has since last year been targeting activists and government critics who use social media to speak out against Mugabe, cash shortages in banks and a foreign currency crunch that has caused a sharp rise in prices.

Amnesty International said it feared O‘Donovan would not be the last to be arrested in the government’s “clamp down on social media platforms”. 

Activist pastor Evan Mawarire, whose #ThisFlag movement last year organized the biggest stay-at-home demonstration in a decade, is on trial on a charge of subversion. He faces a separate trial for a similar offence.

 

- Reuters

Zimbabwe will upgrade its main airport at a cost of $153 million in an effort to attract more visitors, state media reported on Thursday, as authorities renamed the airport in honour of 93-year-old PresidentRobert Mugabe International Airport Road Robert Mugabe.

State-owned Herald newspaper reported that China Export and Import Bank will provide a $153 million loan that will, among other things, be used to expand the runway to allow multiple planes to land at the same time.

Accepting the honour, Mugabe said renaming the airport was “a great gesture” to him and his family. In the last few months, Mugabe’s vocal ruling ZANU-PF youth wing has been pushing the government to honour Mugabe by giving public institutions his name.

The government has said from next year the veteran ruler’s Feb. 21 birthday will be known as Robert Mugabe National Youth Day, a public holiday. 

On August 9, the cash-strapped government announced plans to build a $1 billion university named after Mugabe, a move that was criticised by the opposition as a waste of resources.

Mugabe is the only leader that Zimbabwe has known since independence from Britain in 1980 and despite his advanced age, he remains the most influential political figure in the country.

 

 

(Reuters)

Zimbabwean President Robert Mugabe dismissed Emmerson Mnangagwa as his deputy, a day after first lady Grace Mugabe accused him of planning a coup and said she’s prepared to succeed her husband as leader of the southern African nation.

Mngangagwa, 75, was fired for “among other things, disloyalty,” Information Minister Simon Khaya Moyo told reporters Monday at Mugabe’s office in the capital, Harare. The announcement followed the president’s Emmerson Mnangagwacomments at a rally on Saturday in the southern African nation’s second-biggest city, Bulawayo, that he was prepared to dismiss Mnangagwa.

Tensions in the ruling Zimbabwe African National Union-Patriotic Front have grown as the nation gears up for elections next year when it may face a seven-party opposition alliance that’s capitalizing on public discord over cash shortages, crumbling infrastructure and a collapse in government services. While Zanu-PF named Mugabe, 93, as its presidential candidate, he’s appeared frail in public, sparking concern among his supporters that he may be unable to complete another five-year term.

“It’s clear Mugabe has his own succession in mind,” Brian Raftopoulos, the Cape Town-based director of research at the Solidarity Peace Trust, a church-backed human rights group, said by phone. “He’s been getting rid of potential successors he doesn’t like.”

On Sunday, Grace announced she’s prepared to succeed the president, who’s ruled Zimbabwe since 1980. She accused Mnangagwa of attempting to “carry out a coup” against the president and said at a rally in Harare, on Sunday, that she’d told her husband that he “should leave your position for me.”

Ruling Party Tensions

While Mnangagwa had been considered a leading candidate to succeed Mugabe, he’s suffered setbacks in recent weeks, including losing his position as justice minister in a cabinet reshuffle. His faction of supporters is known as Lacoste, taken from the French sportswear company’s Lacoste’s logo, a crocodile -- the nickname he earned during the liberation war against white-minority rule.

“If Emmerson Mnangagwa takes a lot of people with him, it means the party is weakened, even if the faction against him looks strengthened,” Derek Matyszak, an analyst at the Southern African Political Economic Series Trust, said by phone.

The current divisions are the worst since 2014 when Mugabe fired Joice Mujuru as vice president after Grace accused her of plotting against the president. She’s now part of the opposition alliance that includes former Finance Minister Tendai Biti and ex-Prime Minister Morgan Tsvangirai.

“There’s nothing to say or do,” Mnangagwa’s spokesman, Nharo Gwatidzo, said from Harare. “We’ve been fired.”

 

- Bloomberg

Zimbabwean police arrested a US citizen on Friday for allegedly tweeting that President Robert Mugabe is a "goblin whose wife and step-son bought a Rolls-Royce," lawyers said.

Zimbabwe Lawyers for Human Rights (ZLHR) said officers detained Martha O'Donovan in a dawn raid at her home just weeks after Mugabe appointed a cyber security minister charged with policing social media.

Police confiscated her laptop and transferred O'Donovan, who works for Harare-based Magamba TV, to the city's central police station, the group added in its statement.

"The reported offensive and insulting tweet does not make any mention of the president's name," ZLHR said.

EXPENSIVE CARS

However Mugabe's stepson with his wife and first-lady Grace, Russell Goreraza, is thought to have recently imported two Rolls-Royce vehicles into the country, local media reported.

The British-built cars — both Rolls-Royce Ghosts that sell for around $220,000 and have a top speed of 155 miles per hour — are marketed by the manufacturer as "more measured, more realistic" than the $300,000 Rolls-Royce Phantom.

Grace Mugabe's son is also reported to have purchased two Range Rover 4X4s, two Mercedes-Benz S-Class limousines and an Aston Martin, while Grace herself is also thought to have acquired a Rolls-Royce.

"The US embassy has been in contact with the American who has been arrested and her counsel," an embassy spokesman said. "We will continue to monitor the situation."

Police did not respond to calls for comment. There have been several arrests in recent years for actions deemed to undermine the president, although no one has been convicted. Two men were arrested separately on Friday after they allegedly said they would not vote for the ruling ZANU-PF party and comparing Mugabe to a dog.

The new cyber-security ministry is "an attempt to clamp down on social media movements that pose a big threat to his regime ahead of the election," Bulawayo-based analyst Dumisani Mpofu previously said.

Mugabe has already been named by ZANU-PF party as its presidential candidate for the 2018 poll. 

Zimbabwe has an unemployment of more than 90 per cent and rising levels of poverty.

 

 

Chinese telecoms giant ZTE says it intends to expand its footprint in Zimbabwe’s information technology and communication (ICT) sector with plans to invest in 4G and 5G technology.

ZTE chief operating officer Huang Dabin told journalists on Wednesday that the company was considering to set up base in Harare for its fibre business. “We see many opportunities here and we understand that there maybe challenges now but we think they are short-term issues…We believe with the effort of both sides we can find solutions going forward,” said Dabin.

“There are new opportunities in high power optical fibre and we think that the ICT industry has new opportunities in 4G and 5G technology. So in all these areas we think that it is a billion of dollars worth of opportunity.

ZTE is already working with state owned fixed line operator,Telone, to expand the country’s backbone fibre network. The company is also a key supplier to mobile network operators Telecel and Econet.

 

- (The Source)

Zimbabwe’s financial system increasingly resembles a house of cards. Were one card to give way – for instance, if South Africa’s power utility, Eskom, were to have the temerity to suggest that Zimbabwe actually pay for the electricity that it’s supplying the country – the entire edifice would collapse.

To put it another way, the government is bust. It is again printing money to cover its spiralling costs, and inflation is rising. And given that there’s an election looming in 2018, Zimbabwe’s ruling party, ZANU-PF doesn’t want to cut-back. Far from it, it wants to carry on spending, as fast as it can.

The rot goes back to the early 2000’s. ZANU-PF profligacy had been fuelled by acontinuous cycle of simply printing more money, and resultant runaway inflation. Mega-inflation meant that ordinary people lost their pensions and whatever savings they had, as the Zimbabwe dollar lost its value and people resorted to barter or the use of other currencies.

Ultimately, the government faced no choice but to accept reality. In 2008 it scrapped the Zimbabwe dollar in favour of a basket of other currencies, although within a short time, this meant in effect the reign of the US dollar.

“Dollarisation” allowed for the pursuit of more rational policies by the coalition Government of National Unity which followed the disputed 2008 election. However, its control of the electoral machinery ensured that ZANU-PF won a resounding victory in the 2013 election. Within a short space of time it returned to its familiar policy mix of profligacy, corruption and populist economics.

Yet ZANU-PF faced major problems. Above all, “dollarisation” meant that the cost of Zimbabwe’s exports on international markets was high. Worse, the dramatic collapse in agricultural production since the early 2000s (following the appropriation of white farms) alongside the decimation of the country’s manufacturing industries meant that there was relatively little to export anyway. Tobacco production has recovered a little, but the quality is less than it used to be, so returns are relatively less.

Meanwhile government insistence that mines should be 51% Zimbabwean owned has done nothing to entice inward investment or boost exports.

In short, the capacity of the economy to earn US dollars by selling goods externally has fallen dramatically, and the supply of money circulating within the country has dried up. Unemployment stands at around 90%.

President Robert Mugabe’s latest response has been to replace finance minister Patrick Chinamasa, who had been warning of the structure’s fragility in ever more urgent tones. The new finance minister is Ignatius Chombo, a party loyalist, who will brook no talk of any need for structural reform.

The bond notes

Faced by a looming crisis, the ZANU-PF government has resorted to three key strategies.

One has been the issue of “bond notes” (of different denominations) by the Reserve Bank of Zimbabwe. Officially, they’re designed to swell the amount of money in circulation within the country. The problem is that apart from having no value outside the country, nobody trusts them as they have been issued by a ZANU-PF government, and it was this government that presided over the hyperinflation.

ZANU-PF’s announcement that it was issuing bond notes was met with a run on the banks as depositors sought to withdraw dollars as fast as they could. Their assumption was that this was a government ploy to reintroduce the Zimbabwean dollar. The Reserve Bank of Zimbabwe responded by limiting the amount of dollars individuals could withdraw.

People are reluctant to use the bond notes. But they’re still sometimes forced to accept them because of the sheer shortage of “real” money. As a result when they can, they rush off to the local bus station where they can sell them for dollars to currency traders – albeit illegally. The second strategy has been the rapid expansion of country’s ability to manage electronic transactions. Its aim has been to expand the amount of money in circulation without using up “real” dollars.

Accordingly, government employees are now largely paid electronically Similarly, government employees (and everyone else) now pay nearly all their bills within the country electronically.

And Zimbabweans are rarely able to convert the notional sums of dollars they hold in the bank into real cash – unless they make use of the currency traders in illegal transactions.

Meanwhile, with the rate of inflation continuing to rise combined with the widespread lack of faith in the banks, many Zimbabweans spend their bank balances on consumer goods as quickly as possible rather than attempting to “save”. After all, if times get hard, you won’t be able to get rid of your bond notes, but you may be able to sell your fridge.

Fanciful financial system

But it’s the third strategy which the government has pursued which is really fuelling a fanciful financial system.

Since 2013, government expenditure has steadily increased year by year, despite the country earning very little internationally. The ZANU-PF government may have hoped to fund this by its old trick of literally printing money, that is, by expanding the supply of bond notes.

But such was the negative popular sentiment that the Reserve Bank of Zimbabwe seems to have restricted their issue. Supposedly the issue of bond notes is backed by a USD$200 loan by the Afreximbank, but no-one really knows how many have been issued because the central bank provides no information.

What the government has done instead is to fund its rising costs by issuing treasury bills (whereby the government touts for loans on the capital market against promises of later redemption). No-one in their right mind would want to buy them, but Zimbabwe’s banks today have little option. As inward investment into the country has dried up to a trickle, there is little else for them to spend their money on, and the interest rates that the government promises to pay are, at face value, attractively high.

The coalition government of national unity recorded budget surpluses for three of the four full years in which the opposition controlled the Treasury. For its part, the ZANU-PF government recorded deficits of USD$186 million and USD$125 million in 2014 and 2015. Recently, the then finance minister Chinamasa projected a deficit of USD$1.41 billion for 2017. As of June 30, 2017, there were USD$2.5 billion worth of Treasury bills on issue.

In other words, the spending will continue. Zimbabwe’s financial system is living on borrowed time and borrowed money. It will again end in financial ruin, as it did in 2008. But all ZANU-PF cares about is ensuring that it wins the next election and allowing its political elite to “eat”.

 

Roger Southall, Professor of Sociology, University of the Witwatersrand

This article was originally published on The Conversation. Read the original article.

Econet has released its results for the half year ended August, 31, 2017 showing significant growth in both revenue and profits. Revenue for the period was up by 17 percent to $353 million while profit was up 228 percent to $49 million from $14,9 million prior year comparative.

The company's Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) rose by 31 percent to $139 million from $106 million recorded in the same period last year.

The results also reflects the reduction in the group's finance costs following its $130 million capital raise which was used to pay off its foreign debts. Econet managed to reduce its finance costs during the reported period by $ 10,7 million after repaying its US dollar debt with the funds raised from its Rights Offer, which was concluded earlier in the year. In the first half of 2016, the company paid $15,2 million in finance costs. Chief Executive Officer, Douglas Mboweni attributed the strong performance to continued innovation within the business with non-voice products increasing their contribution.

"Our focus is to use technology to transform, in a deep, meaningful and fundamental way, how our customers transact and do business, and to provide convenience through technology," said Mr Mboweni.

"In line with our TMT strategy, we recently launched Kwesé TV in Zimbabwe, in partnership with Econet Media Limited. We are encouraged by the employment opportunities and new skills that have been created in our country as a result," Mr Mboweni said. Data, Ecocash and other non-voice products now constitute 63 percent of the company's total revenues. Consistent with the rapid growth in data usage and increased smartphone penetration, data revenue grew by 9 percent, from $52,8 million to $63,4 million during the period under review. Mobile financial transacting service EcoCash's revenues rose by 45 percent, from $39,2 million to $57,1 million. Commenting on the results, Econet Wireless Zimbabwe's Finance Director Roy Chimanikire said the company continued to grow shareholder value in a difficult operating environment.

"Our results demonstrate diligent execution of our strategy. Our key message has been that we are growing the non-voice elements of our business. The trends that we are seeing are very encouraging. As we continue to evolve into a fully converged TMT business, we see our business changing in the depth and quality of its revenue streams and its return potential. We are well positioned to take advantage of the opportunities that are available to us in this market," said Mr Chimanikire.

"Our Rights Offer, which raised $130 million to settle all our United States Dollar debt, enabled us to avert a potentially disastrous situation for the business, had we defaulted on our debt obligations," he said. Commenting on the business outlook, Mr Mboweni said the future looked bright.

"Going into the future, we will continue to strive to deliver more value to our customers through tailor made product offers, as well as market segmentation and product bundling across all the three pillars of our TMT model. In view of the current cash shortages, and the growing use of digital financial transactions, our solutions are now a preferred mode of transacting, and we are working on further scaling up our mobile transacting and banking systems to accommodate increased demand," said Mr Mboweni.

 

- The Herald Zimbabwe

Less than a decade after hyperinflation obliterated Zimbabwe's dollar along with its pensions and savings, the southern African nation is suffering a return to precipitous price rises.

Zimbabwe adopted the U.S. dollar in 2009, along with Britain's pound and the South African rand, to tame inflation that topped out at 500 billion percent. But the relative financial stability of the last eight years has unravelled in the last two months as acute foreign exchange shortages have led to sharp price increases. Meanwhile money in banks is losing value fast.

The situation is still a far cry from 2008 when the central bank printed a Zimbabwe $100 trillion note.

But Steve Hanke, an economics professor at Johns Hopkins University in the United States, said in paper published this week that hyperinflation - defined as monthly inflation above 50 percent for at least 30 consecutive days - had returned. 

Zimbabwe's real inflation rate, measured by purchasing power parity and taking into account its de facto exchange rate, was 313 percent a year and 112 percent on a monthly basis, said Hanke, who has written a book about the country's 2008 crisis. He dismissed official statistics that put year-on-year inflation at just 0.78 percent in September as a "truly fantastical piece of artwork".

"Zimbabwe, welcome back to the record books! You have once again entered the inglorious world of hyperinflation. It is a world of economic chaos, wrenching poverty and death," he said. "Its purveyors should be incarcerated and the keys should be thrown away," he concluded, taking a swipe at the government of 93-year-old President Robert Mugabe.

Other economists said Hanke's figures might be a bit steep but also dismissed the official numbers as fantasy.

University of Zimbabwe economist Tony Hawkins said an increase in money supply through massive treasury bill issuance this year and depreciation of the domestic currency pointed to inflation as high as 40 percent or more in the next two years. Locally-based Econometer Global Capital put the September inflation figure at 65 percent.

However, Mutasa Dzinotizei, who heads the Zimstats statistics agency, dismissed the alternative calculations. His organisation's methodology, based on domestic dollars taken at face value, was sound, he told Reuters.

"Inflation is reflected at the retail end of the market. We don't go to the stock exchange or look at the exchange rate. I have never seen it done anywhere in this world," he said.

Aside from locally-produced staples such as maize meal and bread, prices of imported goods on Harare supermarket shelves have shot up 30-150 percent in the last two months. Importers attribute the increases to the price of foreign exchange, which they have to buy on the black market at a premium.

WHAT PRICE A DOLLAR?

Assessing the true value of U.S. dollar balances in Harare banks, known locally as "zollars", is difficult but on the black market they were trading at a 65 percent discount to cash this week. Economists including Hanke have used another gauge of value from the old hyperinflation days - the Old Mutual Implied Rate - to try to measure the extent and pace of Zimbabwe's financial collapse.

The Old Mutual rate, based on the relative values of shares in insurance firm Old Mutual in Harare and London, suggested a discount of as much as 80 percent this week after the Harare shares hit $14.29 compared with $2.44 in London.

In effect, this means $100 in a bank in Harare is actually worth less than $20. With Zimbabweans piling into any asset they think might retain value, virtual currencies such as Bitcoin have soared. On the local bitcoin exchange, Golix (golix.io), bitcoins were at $9,800 compared with a spot rate of $5,820.

"There is far greater demand for bitcoin in Zimbabwe than supply because people see bitcoin as a store of value for their money in the bank," one Harare Bitcoin trader said.

 

Credit: Reuters

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