Zimbabwe Business Watch : Week 44
October 27th, 2008
The drama of the crisis intensifies as the consequences of meltdown that seem to be delayed forever, are now clearly evident. There is a free-for-all in the market place as businesses fight for survival whilst the economy struggles to find a way forward in the chaos.
Probably the single biggest obstacle to some form of immediate relief is the daily cash withdrawal of 50 000 which only buys 8 slices of bread. Entrepreneurs and shady dealers abound feeding off the crisis as they emerge as the only people making money within the collapsing system.
Very few businesses accept cheques now and demand massive protection against inflation within their Zim-dollar pricing mechanism, which places goods at up to ten times the cost of neighbouring countries. This forces the consumer to pay in forex and the irony is that those in formal employment cannot access forex whilst those supported by the diaspora can, and so the tables turn again amid the confusion and the implosion.
Businesses battle to observe acceptable accounting practices and stare total collapse in the face everyday. It is simply a matter of days now before major industries fall by the way-side and already some large gold mines have begun to close.
The US Dollar traded at as high as 70 billion, opening up a massive gap with the street rate (120 000) which is starved for Zim Dollar cash. The OMIR passed the 100 billion mark which sometimes can suggest those with Zimbabwe Dollars are seeking a haven within the stock market compounded by the JSE losing value in the global financial crisis.
October 27th, 2008 16:34
Local currency is becoming useless to the point that people may stop using it. What happens then? What happens in a dollar, rand, and barter economy?
On the other side, what happens to critical government functions when the outgoing wizards no longer get what they want by the wave of a wand? Government bodies are increasingly powerless to carry out orders given them.
October 28th, 2008 15:32
Just to prove what a corrupt regime we are dealing with –
The Reserve Bank of Zimbabwe has recently been offloading raw diamonds on the international market in large quantities. These carry false certificates of origin and are from Angola, the Congo, and the newly discovered Maranke diamond fields in Zimbabwe.
The proceeds of this trade are not being returned back to Zimbabwe, and are adding to the increasing flow of illicit funds being siphoned out of Zimbabwe by a now frightened oligarchy who now know that their days are numbered.