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Zim Dollar Return Will Have A Cobra Effect On The Economy - NewsDay Columnist

4 years agoWed, 24 Jul 2019 06:52:09 GMT
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Zim Dollar Return Will Have A Cobra Effect On The Economy - NewsDay Columnist

A NewsDay columnist opines that the reintroduction of the Zimbabwe Dollar could have the cobra effect on Zimbabwe’s economy.

He says that a cobra effect occurs when the solution to a problem results in something much worse than the problem it was meant to solve.

Borrowing from an incident that happened in India during the colonial era, the writer explains the cobra effect:

The term is usually used to illustrate the effects of incorrect stimuli to economics or politics. The cobra effect philosophy is said to have its roots in when India was a British colony.

The Government of India was worried about the increasing number of deaths from venomous cobra snake bites in areas around the capital city, Delhi.

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After thousands had died of snake bites, the government offered a bounty to villagers who would bring cobra-heads to the authorities.

The strategy is said to have worked at first as people killed the snakes to make money. However, the people started to breed snakes so that they could sell the cobra heads and make even more money.

This resulted in a population explosion of snakes resulting in more deaths from snake bites than before.

In the Zimbabwean context, the reincarnated Zim dollar will most likely make it difficult for companies to restock.

The government’s failure to provide foreign currency will result in the rise in parallel market rates.

Basic commodities will disappear from shops as people stampede to buy products available in supermarkets obtainable in Zim dollars.

With inflation having lept from 97% to 175%, the 2008 scenario is slowly being replayed in Zimbabwe. The columnist concludes:

The country is back at square one. An attempted intervention or solution to Zimbabwe’s economic problem by Ncube company has made the situation even worse.

It is a fact that Zimbabweans are poorer than they were before the November 2017 coup that ousted President Robert Mugabe.

The not-so-new dispensations should be warned of the cobra effect syndrome whenever making political and economic policies.

More: NewsDay



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