Harare — Zimbabwe is teetering on the edge of a severe economic downturn, evoking memories of the 2008 hyperinflation crisis that decimated savings, crippled industries, and left the majority of the population in abject poverty.
Experts have sounded the alarm over the country’s worsening financial instability, with inflationary pressures and foreign currency shortages continuing to batter an already fragile economy.
The government’s “command” exchange rate policy has come under intense scrutiny, with economists urging the administration to abandon the fixed rate system in favour of a liberalized exchange mechanism that would allow the market to determine the value of the Zimbabwean currency. Analysts warn that without decisive intervention, the economy is at risk of repeating the devastating economic collapse seen more than a decade ago.
In a bid to stabilize the local currency and curb reliance on the US dollar, the government introduced Zimbabwe Gold (ZiG) in April 2024, a digital currency backed by gold reserves and foreign exchange. However, the introduction of ZiG has not provided the economic relief that was anticipated. Instead, the system has exacerbated existing issues, with businesses and retailers expressing frustration over currency distortions, regulatory bottlenecks, and difficulties in accessing foreign exchange for critical imports.
“The introduction of ZiG has failed to ease the challenges we face in securing foreign currency. Stock shortages are becoming more frequent as businesses are forced to navigate a convoluted system of regulations,” said one retailer who wished to remain anonymous.
Economic observers argue that the root of the issue lies in the limited availability of foreign exchange and Zimbabwe’s heavy reliance on imports, which has created a precarious balance between supply and demand. Retailers and importers are finding it increasingly difficult to secure the foreign currency necessary to purchase essential goods, leading to mounting stockouts and price hikes.
On Monday, a consortium of Zimbabwean retailers issued a stark warning to the government, cautioning that if the situation does not improve, they may be forced to cease operations. This would have dire consequences for the economy, particularly in the retail and service sectors, which employ thousands of workers. The ripple effect could result in massive job losses, further exacerbating the already soaring unemployment rate.
“If things don’t change soon, many businesses will have no choice but to close their doors. The continued depreciation of the local currency and shortages of basic goods are unsustainable for business operations,” said an industry representative.
In recent months, retailers have been grappling with rising operational costs as suppliers increase their prices in response to the soaring costs of fuel and transportation. Many businesses are barely holding on, with some reducing their workforce or shortening working hours to cut costs.
The fuel sector has also been hit hard, with severe shortages disrupting supply chains and contributing to the growing cost of transportation and goods. Long fuel queues have once again become a common sight across the country, reminiscent of the 2008 crisis when Zimbabweans spent days in line for basic commodities. Fuel importers have been unable to meet demand due to limited access to foreign currency, further straining the economy.
The resurgence of fuel shortages has sparked fears that the country is headed for another hyperinflationary spiral. Prices for basic commodities such as bread, maize meal, and cooking oil have surged, with inflation now creeping back to levels not seen since the 2008 crisis. Many families are now struggling to afford even the most basic necessities, and informal markets are beginning to flourish as citizens seek alternatives to overpriced goods in formal shops.
In response to the escalating crisis, many Zimbabweans have turned to the informal economy for survival, engaging in cross-border trading, street vending, and other makeshift forms of employment. The rise in informal activity, while providing short-term relief for some, risks undermining the country’s formal economic structures.
As the economic crisis deepens, a growing chorus of economists and business leaders have called on the government to enact urgent reforms. Among the most pressing recommendations is the need for a shift away from command-driven economic policies toward more market-oriented approaches. Economists argue that allowing the exchange rate to float freely and reducing state intervention in key sectors such as fuel and agriculture could help restore investor confidence and stabilize the currency.
“Zimbabwe needs a clear and credible economic plan that prioritizes macroeconomic stability, encourages investment, and promotes the efficient use of resources,” said economic analyst Tapiwa Marufu. “The continuation of command policies will only drive us deeper into crisis.”
There are also calls to reform the country’s taxation and import policies, which many businesses claim are stifling growth and discouraging foreign investment. Streamlining import regulations and creating a more transparent system for accessing foreign exchange could ease some of the pressure on businesses and help stabilize the market.
With Zimbabwe’s economic future hanging in the balance, the government faces an urgent decision: stay the course with command policies that many believe are exacerbating the crisis or embrace market-driven reforms that could restore stability. The echoes of 2008 are loud, but there remains a window of opportunity to change course and prevent another full-blown economic disaster.
Citizens, businesses, and policymakers alike are watching closely, hoping that the lessons of the past will guide Zimbabwe toward a more sustainable and prosperous future.