The sick poor pay dearly for Zimbabwe's ailing economy

Tuesday October 30 2018

Zimbabwean President Emmerson Mnangagwa.

Zimbabwean President Emmerson Mnangagwa. FILE | NATION MEDIA GROUP 

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Zimbabwe is in the throes of yet another devastating economic crisis and the sick are paying the biggest price.

Almost a month ago, the country’s central bank announced a battery of austerity measures to shore-up an economy weighed down by mounting government debt and plummeting production, pushing prices of basic commodities and medicines beyond the reach of many.

The Reserve Bank of Zimbabwe (RBZ) ordered banks to separate foreign currency accounts and those dominated in a local currency pegged against the US dollar.

Overnight, the rate of the surrogate currency known as the bond notes was sent crashing to a low of 1:6 against the $1.

The introduction of a 2 per cent tax on electronic transactions to raise revenue from the informal sector worsened the situation.

Prices of basic commodities soared, sugar and cooking oil disappeared from supermarket shelves and motorists started spending nights in fuel queues.


Pharmacies, like most businesses that rely on foreign currency to restock, started rejecting payment in local currency as they struggled to import basic medicines.

A number of pharmacies closed shop as they could no longer restock.

Zimbabwean President Robert Mugabe

Zimbabwean ex-President Robert Mugabe. FILE| NATION MEDIA GROUP

Mrs Jackie Boshoff, a breast cancer patient from Harare, was told that she now needed to pay $2,500 in cash to continue her treatment that was previously covered by medical aid.

The 43-year-old is now stranded as she cannot secure the foreign currency to pay for a Herceptin injection needed to complete the first phase of her cancer treatment.

“I was diagnosed with breast cancer in March and I underwent surgery in April,” she said.

“As you might know, cancer treatment is expensive but I was lucky that I am on medical aid and it assisted me to cover the costs.

“Even though the medical aid covered 75 per cent of the cost, I was able to pay the rest through electronic money transfers, but now, I cannot.”

Pharmacies and other health services’ providers say they need payment in foreign currency because most of the medicines are imported while foreign currency allocations from the central bank are unpredictable.

This has left patients with terminal illness such as Ms Boshoff unable to access the services or lifesaving drugs.

The disease

She said she needed a Herceptin injection to complete the first phase of her treatment and fears that if she does not raise the money in the next few days her condition would worsen.

“If I don’t get the medication, which assists in eliminating growth of the disease, I will have to restart the entire process. It is painful, but I remain hopeful,” Ms Boshoff said.

“I thank God I have a medical aid and my husband has a job. We have been able to assist each other. But now we have reached a point we are unable to do anything.

“With my little salary, I can’t go and buy the US dollar on the parallel market. “For me to raise $2,500, I will need something like $7,000, and I need this every three weeks, who can afford that?

“I have engaged the bank for assistance but they have made it clear that they won’t help. I don’t know how I will go through. I am hopeful though.”

The Pharmaceutical Society of Zimbabwe President Portifa Mwendera said the country’s drug manufacturing industry needed $45 million in foreign currency to revive operations.

Worst cholera

“The local drug manufacturing segment of the industry currently operates below capacity and needs approximately $45 million to retool,” she said.

RBZ last week said it had released $3.3 million for private and public health pharmacies for restocking. According to the Health and Child Care ministry, the disbursement will help normalise the supply of medicines in the country.

Ms Mwendera said more than 90 percent of drugs in Zimbabwean public hospitals were supplied by donors, while private pharmacies mostly relied on imports.

“Retail pharmacies were allocated $1 million for importation of medicines and we are going to prioritise medicines for chronic illnesses such as diabetes and high blood pressure,” she said.
Opposition leader Nelson Chamisa said the economic crisis was taking a toll on Zimbabwe’s poor.

"The situation in the hospitals is so shocking,” said Mr Chamisa, as he called for dialogue between President Emmerson Mnangagwa and the opposition.

"Our hospitals are sick. Sick hospitals can't attend to sick people. Our people are dying from preventable diseases such as cholera,” he added.

Zimbabwe was last month hit by the worst cholera outbreak since 2008, which has claimed the lives of at least 50 people and left over 6 000 hospitalised.

"There is an absence of leadership. The nation is orphaned, the nation is parentless,” Mr Chamisa said.

President Mnangagwa, who took over from long time ruler Robert Mugabe, following a military coup in November last year, had promised to return Zimbabwe to prosperity in the shortest time possible.

However, a controversial election last July and the shooting to death of six protestors in August affected investor interest in what used to be one of southern Africa’s most thriving economies.

Zimbabwe’s economy has also been hampered by a staggering government debt estimated at over $16 billion.

Finance minister Mthuli Ncube, a respected Oxford professor and former African Development Bank vice-president, has rolled out austerity measures to rescue the economy including the 2 percent tax on electronic transactions and currency reforms.

He also wants to cut down on government expenditure by retrenching civil servants and reducing Zimbabwe’s foreign missions.

Hyperinflation levels

The government last week scrapped a ban on the importation of basic commodities, saying it wanted to address worsening shortages that have seen a number of supermarkets closing down.

Mr Eddie Cross, a former opposition MP and a leading economist said Zimbabweans were paying the price for the excesses of Mr Mugabe’s previous governments and unresolved currency problems.

“Zimbabweans have to understand that one way or another, they will pay for this delinquency,” he said.

“We have been paying for it in the form of inflation – my own estimate is that we are either at or beyond hyperinflation levels already (50 percent plus per annum) and this is reducing our disposable incomes by the same amount unless our employers have increased salaries.”

Mr Cross added: “In addition, we pay for the fiscal deficit when our cash disappears into the vaults of the government or when they reach into our accounts and take our surplus funds and issue Treasury Bills or debentures.”

Local currency

He said the decision by the Prof Ncube to recognise the existence of a local currency in the form of the bond notes was long overdue.

“It is now formal – there is no link between our bank balances and the hard currencies that are circulating,” Mr Cross added.

Zimbabwe has been grappling with currency problems for over a decade and in 2009 adopted a multicurrency system after scrapping the inflation ravaged local one.

In 2016, the government introduced the bond notes that it said were par with the US dollar to solve cash shortages, but the local currency has been devalued on the parallel market.