Fumnanya Agbugah - Ezeana

Fumnanya Agbugah - Ezeana

Fumnanya Agbugah- Ezeana is a graduate of Economics with Computing from Regent University College of Science and Technology Accra Ghana. She is a Business and Research Writer with The Nerve Africa. She loves getting details about things happening around the World, with a bias for Africa. She is a Business and Economics enthusiasts. You can follow her on Twitter @RoyalNanya

Economic crisis unfolds in Zimbabwe as petrol price become costliest in the world

Zimbabwe has been hit by its worst economic crisis in a decade. This comes almost a year after its former president, Robert Mugabe was ousted after more than three decades of being in power. His Vice President, Emmerson Mnangagwa, who became president after an election is yet to perform better despite appointing a former lecturer at the London School of Economics Mthuli Ncube, as the country’s finance and Economic Development minister. In an effort to revive Zimbabwe’s economy, the new finance minister has announced a “stabilisation programme”. The current situation dampens the hope of many Zimbabweans that the country would emerge from turmoil and return to prosperity.

There is an ongoing protest in the country over the hike in fuel price which has turned deadly. According to the Zimbabwe Association of Doctors for Human Rights, five people were killed when security forces opened fire on crowds demonstrating against fuel hikes in Harare. It is also reported that 26 people suffered gunshot wounds and that some were afraid to go to hospitals for fear of arrest or assault.

The unrest which started on Monday came after the president on Sunday, January 13 announced an increase in the price of Petrol (Gasoline) by almost three times its current price of $1.24 to $3.31 per litre. According to the government, this increase which made the country’s Fuel price become the most expensive in the world  is expected to tackle a shortfall caused by increased fuel usage and illegal trading. The price of diesel also more than doubled to  $4.32 per litre.

Social media platforms which include Facebook, Twitter and WhatsApp have also been reportedly disabled in the country as people no longer have access to internet. Businesses and school activities, and public transport vehicles have been grounded in most areas of the country despite the government’s assurances to provide security for the people.

All these are happening as the president jetted away on a multi-nation trip to try to attract international investment before going for the World Economic Forum in Davos, Switzerland.

Price hikes have been recorded in almost all the stores and supermarkets in the country. Water and beer are now being rationed even as the county’s capital is faced with a cholera outbreak that has killed more than 40 people and spread into the countryside. It is also worrisome to know that drugs are in short supply in the country as the health system has long been on the brink of collapse.

Before the increment, Zimbabwe’s apex organisation for industries, the Confederation of Zimbabwe Industries (CZI)  warned that most of the country’s manufacturers could shut down by the end of January if the government does not adopt urgent measures to solve the country’s currency crisis. Manufacturers say they owe payments of over $480m as at the end of 2018.

According to Bloomberg, the issues started as a result of shortage in foreign currency.  This was caused by Zimbabwe’s decision to scrap its own currency a decade ago, following an unprecedented hyperinflation, and adopt a basket of foreign units, with the U.S. dollar being the most widely used. The central bank then printed quasi-greenbacks to fund rampant government spending. All these resulted in a very confusing exchange rate system. Ncube also said recently that  he would introduce a new currency within a year, but he didn’t disclose much. Beyond that, the central bank was building reserves, which currently covers barely two weeks of imports.

If care is not taken, the current crises could lead to social unrest in the country, except actions are taken fast to assuage the pains of Zimbabweans.