Page last updated at 15:23 GMT, Wednesday, 16 July 2008 16:23 UK

Zimbabwe economy 'getting worse'

500m Zimbabwe dollar banknotes
Shops are increasing their prices several times a day

Zimbabwe's economic situation still seems to be worsening, according to an economist based in the country.

In an interview with the BBC, Rejoice Ngwenya said that without any source of foreign currency income, there was virtually no money to do business.

The local currency was "so worthless" that the only way businesses could survive was by trading in US dollars.

On Wednesday, official figures showed that inflation had soared to an annual rate of 2,200,000%.

The prices of basic goods like bread, milk and cooking oil have soared in recent weeks - but because of government price controls, they are still below profitability, leaving supermarkets 85% empty.

Many blame President Robert Mugabe's policies for disrupting commercial life and catapulting the economy into dire straits.


Speaking to the BBC on a trip to London, Mr Ngwenya - who acts as a go-between between Mr Mugabe's government and businesses - said ordinary business life in Zimbabwe was "now completely dead".

The only source of foreign income is money being sent home by Zimbabweans working in South Africa
Rejoice Ngwenya

"Traditionally Zimbabwe depended on its export and tourism industries to bring in foreign currencies," said Ngwenya.

"Both those industries have now come to a standstill, and the only source of foreign income for those inside the country is money being sent home by Zimbabweans working in South Africa."

But he added that accessing this currency from the banks was almost impossible, with the banking system "virtually ground to a halt".

With almost no cash in the system, many firms have been forced to shut down.

No sign of turnaround

He warned there was no sign that fortunes would turn around soon, with the country's leadership still unresolved, despite Mr Mugabe's election win in a widely-condemned one-man race last month.

In addition, the prospect of wider international sanctions that would have forced Mr Mugabe's Zanu-PF's government to deal with the opposition was derailed by Russia and China last week.

But Mr Ngwenya said he was refusing to lose hope that the situation in his country would improve.

"What we know is that this situation is not sustainable. There's going to be some sort of implosion - and we know that even the current president is not going to live forever.

"So it is prudent that we keep on planning about the future. And talking about solutions is one way of keeping our hope alive."

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