Inflation, which is associated with high growth rates of money supply, had accelerated to 144,2 percent by the year 2002. By 2003, it was 500 percent and the Zimbabwe dollar had lost more than 99 percent of its real value, writes Dr Felix Muchemwa in his book The Struggle for Land in Zimbabwe (1890-2010) that The Patriot is serialising
FROM 1997, the Zimbabwe dollar crashed against all major international currencies on the Zimbabwe Stock Exchange (ZSE) because of ‘loss of confidence in the Government, including the Government’s publicly-stated intention to acquire commercial farms for resettlement… At the end of 1998, the value of traded stocks on the ZSE had dropped by 88 percent’. (Richardson, p.549)
Inflation, which is associated with high growth rates of money supply, accelerated to 144,2 percent by the year 2002. (Zim Ind, Nov 2002, p.131)
By 2003, it was 500 percent and the Zimbabwe dollar had lost more than 99 percent of its real value. (Richardson, p.542)
Foreign currency earnings
At the end of 1999, the total foreign currency repayment arrears amounted to US$109 million, but increased to US$2,5 billion by the end of the year 2006. (Gono, p.3)
From 1999 to the year 2000, commercial farm revenue dropped from US$877 million dollars to US$247 million dollars.
In normal years, the net foreign currency earnings from the agricultural sector provided between 40 to 45 percent of the total foreign currency earnings of the country and about 80 percent of that figure originated from commercial farming.
The deliberate freezing of the agricultural sector by the European settler-farmers immediately, therefore, affected the agro-industrial sector causing production to decline by 10,5 percent in 2001 and by 17,5 percent in 2002.
Seven hundred agro-industry-based and related companies had shut down business by late 2001. (Richardson, pp.555-556)
That was why the European settler-farmers were convinced that the Zimbabwe Government could ill-afford to challenge them by compulsorily acquiring land for resettlement and regarded the whole ‘land issue’ as a ‘political gimmick’.
Over the three years between 1999 and 2002, overall industrial output declined by 19,3 percent. (Zim Ind, November 15 2002, pB1)
Foreign direct investment (FDI)
Between 1998 and 2001, FDI into Zimbabwe plunged by 99 percent. (Fin Gaz, September 19-25 2002, p.2)
This decline was a direct result of the financial sanctions imposed by International Financial Institutions which scared potential investors away from Zimbabwe. (Richardson, p.542)
The World Investment Report 2002, published by the United Nations Conference on Trade and Development (UNCTAD), (revealed) that FDI inflows into Zimbabwe declined from a peak of US$444 million in 1998 to US$59 million in 1999, to US$23 million in 2000 and to just US$5 million in 2001. (Fin Gaz, September 19-25 2002, p.2)
The shortage of foreign currency and the cancellation in 1999 and 2000 of lines of credit by foreign fuel suppliers resulted in an acute fuel crisis starting in December 1999. (Fin Gaz, August 15-21 2002, C1)
Both diesel and petrol stocks were critically low. (Stiff, 2000: p.323)
NOCZIM was the only local fuel importer and was directly affected by the prevailing foreign currency shortage in Government. At the same time, most garages were under the ownership of foreign companies, among them, Shell, BP, Caltex, Mobil Oil and Total.
Given NOCZIM’s predicament, the foreign companies virtually became the sole importers of all types of fuel and their complicity in the financial and economic sanctions saga could not be ruled out.
By the end of December 2002, the fuel shortage, especially that of petrol, had reached alarming levels, almost forcing the country to a grinding halt. (Fin Gaz, December 19-26 2002, p.6)
Small indigenous oil companies, among them COMOIL, emerged and another solution was found in fuel supply agreements with Libya.
Under the Libya-Zimbabwe Fuel Agreement, Zimbabwe was allowed to buy fuel in local currency in exchange for Libyan joint ventures with Zimbabwe in tourism and exports of Zimbabwean beef and soya beans. (Fin Gaz, December 19-26 2002, p.6)
By 2002, the Libyan fuel company, TAMOIL, was supplying 70 percent of Zimbabwe’s fuel needs, with the remaining 30 percent being supplied by SASOL of South Africa. (Zim Ind, August 30 2002, p.2)
In August 2002, another fuel crisis loomed despite the Libya-Zimbabwe fuel agreement. Complicity of foreign companies in the financial and economic sanctions saga was revealed when the Mozambican British Petroleum (BP) Company refused to allow a ship loaded with fuel destined for Zimbabwe to off-load its cargo into the Beira Harbour BP fuel tanks before being pumped to Harare Masasa Fuel Depot through the Beira Corridor Oil Pipeline. BP (Mozambique) claimed that NOCZIM owed about US$3 million that had to be fully paid before the ship was allowed to off-load its fuel cargo into BP fuel tanks. The ship had been docked at the Beira Harbour for over a week.(Fin Gaz)