BY Brian Sedze ZIMBABWE has discovered 160 000 plus more war veterans who are set to get gratuities and monthly pensions.
Just like in 1997 this was not budgeted expenditure.
Without a magic increase in productivity and the tax base this will be financed by printing money.
On November 14, 1997, a day now commonly known as black Friday, the local currency lost 75% of its value in a day.
Then the war vets numbering about 50 000, led by the late Chenjerai Hunzvi, arm-twisted the late former President Robert Mugabe to pay lump sum gratuities even dancing kongonya at the National Heroes Acre and marching to Munhunutapa offices.
After that, war vets claimed wartime-inflicted disabilities of as much as 80%.
Incensed by MDC formation and referendum defeat, later, unofficially led by Joseph Chinotimba, they became the largest strata of population to get land after orchestrating audacious attacks on farmers and judges.
The debt created by the land reform is US$3,5 billion payable to White farmers and US$200 million awarded last week by an South African court.
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That black Friday pensions, savings, insurance and assurance policies and long-term investments from as far back as the 70s just died.
Regardless of age, everyone then started his/her working life at zero savings.
The economy will scream. This time, expect complete death of the currency, accelerated inflation and exchange rate because 160 000 war veterans is such a big leap in numbers compared to 50 000 in 1997.
Pensions, long-term investments, savings, insurance and medical aid will die a bigger death fast.
The economy will self-dollarise and sovereign debt will multiply beyond the US$19 billion curtailing future growth.
The little jobs in manufacturing will die, with erosion of income expect massive job actions and an increase in protest vote.
We now have a total of 200 000 war veterans which translates to a staggering 30% or so of all people above the age of 60. 60+ age group is estimated at 680 000.
The economy will scream as this money supply added to this building of infrastructure nyika inovakwa nevene vayo using short-term money is a disaster.
Are these war veterans going to be paid, I am not sure since the number is so staggering to be true.
The real challenge is that Zimbabwe is printing far too much money as compared to the size of the economy and its growth.
Inflation is induced by using short-term money for long term infrastructural projects, soon we have to import 400 000 metric tonnes of maize, pay 160 000 war veterans, budget a whopping US$3,5 billion to compensate ex-Rhodesian farmers and US$200 million to compensate some farmers whose case could not proceed after Zimbabwe arbitrarily withdrew from the Sadc Tribunal Court.
The economy will scream and with it the political goodwill for a clean contest.
- Brian Sedze is strategy consultant and president of Free Enterprise Initiative. He can be contacted on [email protected]
