Tale of two presidents: Zambia’s Hichilema outshines Mnangagwa
SINCE Zambian President Hakainde Hichilema came assumed power last year, he has achieved key performance indicators, especially on the exchange rate an indication of strong leadership and that people have faith in his leadership.
This is in stuck contrast to President Emmerson Mnangagwa, who has presided over the rapid loss of value of the local currency since he grabbed power in a military coup in 2017. The Kwacha has rallied against the United States dollar; it was US$1: K22.59 in July 2021, but it’s now US$1:K16.11.
“As the saying goes, when in doubt, observe the exchange rate. The lesson from history is that you cannot manage an economy with propaganda. In fact, you can engage in all the propaganda you want, but if the fundamentals are weak, the exchange rate will expose you,” Dr Mahamudu Bawumia, the Vice President of Ghana, who is also an economist said.
When Mnangagwa took over through a coup in Novenber 2017, the local quasi-currency bond note (now Zimdollar) was pegged 1:1 with the US dollar until February 2022. Now the exchange rate is officially US$1:ZW$546.8 although on the parallel at US$1:ZW$700.
In other words, as American applied economics professor Steve Hanke says, the Zimdollar is now on a death spiral, having lost 97.33% against the US dollar since January 2020, in the process becoming the second worst performing currency in the world after the Venezuelan Bolivar.
On the inflation front, Hichilema reduced inflation from 25.6% in August last year when he came in to 9.7% in July this year.
Meanwhile, Mnangagwa took Zimbabwe’s inflation from 2.97% in November 2017 to above 800% in 2019; now its 285% for August amid macro-economic instability
This is not the first time Zimbabwe has experienced high inflation, or hyperinflation. Official figures show Zimbabwe’s peak inflation rate was 79.6 billion percent month-on-month; or 89.7 sextillion percent year-on-year in mid-November 2009 – the second highest in history.-STAFF WRITER