Mthuli Ncube’s Four Graphs To Show “Zimbabwe’s Economy Is Improving”

Tinashe Nyahasha Avatar
Mthuli Ncube National Venture Capital Fund NVCF startups Zimbabwe Ministry of Finance

Prof Mthuli Ncube, Zimbabwe’s Minister of Finance clearly believes in communicating and sharing ‘progress.’ Whether or not you believe what he calls progress is actually progress doesn’t matter, it is a good thing when those who hold public office have a sense of accountability enough to report back to the citizenry they serve.

The minister has shared four graphs that depict what he calls, “Zimbabwe Recent Economic Developments.” I am sharing the four graphs below together with the text that Ncube himself used to describe each graph including his emphasis (bold text). I then give my own personal comment to each of those graphs:

1.Government Spending

What the minister says about this

  • The central government deficit stabilized starting in September 2018, and turned into a surplus in the first 4 months of 2019

My comments

What Ncube’s graph shows above is that so far this year, the Zimbabwean government is living within its means. You would think this is the obvious thing for governments to do but they hardly ever do this. They spend more than they get and in Zimbabwe’s case this was more detrimental because there weren’t any (external) loans to cover the deficit.

This is highly unsustainable. Probably the best thing Mthuli Ncube has done is to shift the government from deficit budgeting to surplus. The last time the government spent within its means was during the inclusive government with Tendai Biti in Ncube’s chair. Of course this is not really about the government spending less but also getting more from all of us primarily through the 2% transaction tax Ncube introduced last October.

2.Government Domestic Debt

What the minister says about this

  • After increasing dramatically between 2015 and August 2018, Government domestic borrowing was brought under control and the stock of public domestic debt began to decline in early 2019

My comments

As I said above, the government of Zimbabwe was for many years spending beyond its means. This was without support of external loans which meant the government was borrowing from local banks including the Reserve Bank of Zimbabwe itself.

In simple terms, this is bad because the government then competes with productive industry for money. This limits the amount of money that actually goes towards production. More importantly, borrowing through the central bank is what led to you and I having money we deposited as USD becoming just useless numbers called RTGS. The banking sector gave real money to the government and was left holding on to a promise that the Zimbabwean government would pay them back. Our US dollars were forever gone!

Ncube’s graph above shows that the amount of money owed to banks by the government is starting to shrink. The change is still very small but the small change at least shows that the government is paying back more than it is borrowing afresh, in essence climbing out of the hole it had dug for itself. What’s not clear though is: what currency is the government using to pay back? When they borrowed some of that money it was definitely US dollars.

3.Money Supply

What the minister says about this

  • The monetary base has remained essentially unchanged since September 2018, in line with government’s efforts to target monetary aggregates. However, there remains a high level of liquidity in the system, which should be controlled through monetary operations (7-day savings bonds) and higher domestic interest rates. Excess liquidity is contributing to exchange rate depreciation

My comments

As the average Zimbabwean now knows, too much money in the market is not a good thing. Too much money chasing too few goods is called inflation and we observe it when prices increase. In lay terms: every time the government borrowed from the Reserve Bank of Zimbabwe, money was created out of thin air. In other countries when this happens, more notes are printed.

Zimbabwe was not using its own notes (RBZ couldn’t print) so the central bank essentially just invented numbers that they pushed into the accounts of whoever the government wanted to pay. This is why there was too little of the USD to satisfy everyone. Yes some of you had deposited real USD but there were others that were paid with imaginary money that was claiming to be USD too and the result was chaos.

The graph there shows that the total money in the market is not increasing as much as it was in the years prior due to some of what we discussed above. However, there is still too much money in the market which was accumulating all these years and this is still a problem.

Ncube wants to solve this by making it very expensive to borrow money while at the same time very rewarding to keep money in the bank. You will probably start seeing banks offering good interest to keep your money. This is a very simplified explanation but that’s the gist of it.

Bank Deposits

What the minister says about this

  • Bank deposits (a proxy for money supply) have continued to increase in 2019. However, this is due almost exclusively to valuation effects, as the $RTGS value of Nostro FCA accounts increased rapidly due to a sharp depreciation of the $RTGS. Domestic currency bank deposits have remained stable since September 2018, in line with fiscal and monetary restraint.

My comments

This graph is basically the same as the one before it except that right now its showing the amount of money in the market that’s held in bank accounts. You can see from October, the separation of accounts into RTGS and nostro. The amount that’s getting into the formal economy as real foreign currency is very low compared to money we are just recycling.

Make no mistake, the biggest culprit that has brought us here is an undisciplined government that did not live within its means. However, we are here, what do we do? Ncube’s measures make sense on paper. The biggest challenge he faces is that we have been bitten more than once and we are 100 times more shy.

Ncube’s efforts are all but doomed because there just isn’t any confidence in the market. Added to that, there is no solid plan to increase productivity and exports while decreasing imports. The demand for forex will thus remain too high compared to supply.

I wish I had a definite answer to whether the re-introduction of the Zim dollar is a good thing. The best answer I can offer is: it’s complicated. When a girlfriend or boyfriend changes their Facebook relationship status to “It’s complicated,” you kinda know what that means right? BUT it may just be different in your case right? That’s the best answer I can give…


  1. Roger Zuva

    You seem to think he is making progress. No, he’s not! He managed to cut gvt expenditure by making sure that civil servants get paid a fraction of what they used to get. Cutting expenditure by paying people much less when their salaries were already low is like lowering noise by killing your noisy child. Ntuli and you are treating this whole thing as if numbers are more important than people. Zimbabwe is not a post-doc research paper. It’s a nation with people who actually hurt when certain things happen to them. I am restraining myself but you made me angry with your comments

    1. Tinashe Nyahasha

      I am failing to understand your anger against me. If you read carefully you will realise that I am explaining what the graphs and the notes there mean.

      My last paragraph clearly conveys how giving a verdict is complex. Please read again and you will see that there is no insult to any of the factors you raised there

      1. Taiti Kutamba

        The obvious and correct conclusion is that Mthuli Ncube is glossing over the real problems with numbers. It’s not complicated

      2. Roger Zuva

        The problem is not what you said, Tinashe. It’s what you did not. You did not mention that these are not all the indicators one needs for assessing the state of an economy. I even doubt if three of them are among the important ones. You did not mention that the surplus may not be real because it’s a result of playing around with currencies among other things. You say you expressed your doubts but from what I read, you seem to be doubting if he can succeed with his efforts given the odds against him. That makes it sound like he’s moving in the right direction but facing hardships. When you said “it’s complicated”, that was about the Zim bollar not the four graphs. I get that you were trying to be objective but you didn’t sound that way in the end. You could have added one or maybe at most two sentences to make it clear that you were explaining what he said and you don’t think the graphs tell the whole story about the state of the economy. I read Techzim because you guys look at things from an average, non-partisan person’s point of view but I think here you went to far in trying to be neutral. Being neutral about someone using stats (true or not) that mislead others is like trying to be neutral about the Holocaust. Try that

    2. Nhenhe

      I think he made it clear that the austerity measures are nothing to smile about

    3. Senator

      Your anger is gravely misplaced sir. He is just explaining the minister’s graphs in layman terms. Thank you for the great work Tinashe. Please keep the content coming!

  2. Roger Zuva

    In addition, gvt is no longer importing important items like some drugs for public hospitals. These surpluses are artificial and should not be celebrated

    1. Roger

      Gvt has stopped importing passport paper… I can go on for a day with the list of things this gvt is not doing. If you are writing this to please someone, we understand. But if you sincerely believe what you wrote, then there is a problem

      1. Tinashe Nyahasha

        What did I write that I need to believe?

        A lot of people find such graphs complex to process and my attempt has been to do just that.

        We do write for people, that’s you and all of our precious readers. Not always to please you but to stimulate a debate about important issues. When we engage that way, we quickly get rid of easy answers and begin to appreciate varied perspective without emotion. That’s when solutions come.

  3. Chalubva

    Thanks for simplifying the graphs , it helps a layman understand better . I appreciate what you re doing and even Mtuli is trying despite the challenges .

    1. Tinashe Nyahasha

      Thank you, am glad you found the graphs simpler to consume.

      I hope you are right that Mthuli Ncube is sincerely trying. He probably is and if so, hope he succeeds.

      Problems come when we are so angry that we wish the government failure just because we are angry with them. We may disagree with them and even think that they will not succeed BUT we must not wish that they don’t succeed just so we say “I said it”

      1. Anonymous

        Well let’s see if they can pull it up from here.

  4. Semere

    Perhaps it is important to point out that the objectives of these policies are not to create short term comfort for people but to right the wrongs done in the past decade handling the economy. These results are therefore frustrating to individuals seeking an answer to when the hardship will come to an end. In my opinion, a government willing to be unpopular in pursuit of corrective measures is worth watching closely.

  5. Semere

    Perhaps it is important to point out that the objectives of these policies are not to create short term comfort for people but to right the wrongs done in the past decade handling the economy. These results are therefore frustrating to individuals seeking an answer to when the hardship will come to an end. In my opinion, a government willing to be unpopular in persuit of corrective measures is worth watching closely.

  6. Sagitarr

    I doubt that people will celebrate if “govt fails”..heaven help us, they failed to celebrate when they “won the election”!! When you lose trust and respect due to your actions (which include murder, theft and civility) , even phrases like “happy birthday” become scarce.

    You might at that stage start “inviting mourners to a funeral” as if it is a wedding because you lost important qualities when it mattered.

    This govt of 39 years can try all it can, I will celebrate AT THE END when things start WORKING. I think it premature to celebrate a prototype because it can easily fail the “proof-of-concept” stage.
    My worry with some academics (like this fin prof) is that they enjoy “marking their own work” – shouldn’t those who pay tax be the ones to judge his or the govt’s performance?

    1. Tinashe Nyahasha

      Hahaha words like “Happy Birthday” become scarce!

      Well put, the burden of proof is on them. No one owes them an understanding attitude, we are way beyond that. If they do succeed we will celebrate though… Before then, no “happy birthday”

  7. Sagitarr

    I have two simple graphs to compare to the prof’s “great achievements”.

    1. Salary over time – straight line graph.
    2. COL basket cost over time – pointing south over time.

    Not much need to celebrate yet. I studied Engineering not Economics.

  8. Tatenda Madzingira

    Thanks for 1) posting the graphs and 2) explaining them in non economist terms. Give props where they are due, this article deserves applause. Though (respectfully) I think another note should be added to that first graph concerning the declining budget deficit; a big factor that has contributed to the decline of the deficit is an increase in taxation in the form of the 2% IMTT and the increased levy on fuel (at least before the most recent price hike where GOZ had to cut back a bit). It is not exclusively a result of the government living within its means.

    1. Tinashe Nyahasha

      Oh thanks a lot for pointing out the 2% tax. It was in my notes, I don’t know how I forgot to mention this. Let me add a line on this.

      Thanks also for the kind words

  9. Street observer

    I think the article tries to be balanced but fails dismally especially where the writer shies away from calling a spade a spade. I studied ethics not economics nor engineering. A govt which swaps citizens hard currency for fictious figures presented as domestic currency is not only cruel but inhuman and thuggery. Monetary policies are changed every few weeks like underwear just to produce beautiful graphs? People lost life time savings before 2009 and now your govt has repeated it again….not once…but twice….the latest being last Sunday. Please don’t write articles and comment as if you hired to brainwash us. I do give you credit for having a calm demeanour. Well done

    1. Tinashe Nyahasha

      Sorry if I came across as if I don’t appreciate how painful this has been and continues to be for all of us. I mentioned though that we have been abused more than once before and that’s why trust is the one commodity these guys can’t get easily from us. The way the new policy was introduced itself just confirms how much we should not trust anything in Zimbabwe, you just don’t know what will happen tomorrow….

      Nah, no brain washing from me.

      Enjoying the debate

  10. Gideon Gono

    Its not a ‘real money’ surplas. It is not real dollars it is RTGS dollars that are surplas and as you know, one cant buy drugs with RTGS, one cant import passport paper with RTGS. Its not a real surplas and to be honest with the pressing needs in government, Ncube should not actually have a surplas at all. Any surplas should be immediately applied to procuring medicines and passports and supplementing the salaries of civil servants month on month to match inflation and cost of living. It is an insult to talk of surplas. It is not something to shine about when there are no medicines in hospitals. You have cash in the bank but people are dying. That is why it is phantom surplas

    1. Tinashe Nyahasha

      Very good points there Gideon Gono. The surplus is not in real money. I agree that they should have spent excess funds on stuff like drugs (which they can’t do coz it’s not real money… catch 22).

  11. Anonymous

    It will not work, simple.

  12. Anonymous

    Thanks mate for explaining the graphs in layman terms. Now we can easily digest.
    But I have to point out, nobody is gonna trust these guys for a very long time. They just surprise people all the time. They seem to think everyone is crooked. They don’t seem to consider or accommodate the honest citizen like me. Why should I wake up and be told the USD doesn’t work anymore, “WITH IMMEDIATE EFFECT.” I’m not a criminal, and deserve notification from my government, about what they are going to do next week.

    1. Tinashe Nyahasha

      Truth there. Waking up to such news is not fair. Look now here we are all speculating and worried…. And yes you are right that overnight we have been turned into criminals…

  13. Awakhiwe Nxumalo

    Thank u for the interpretation of the graphs. l think Ncube is a good economist and unlike our president he is able to address and calm the masses down , but this move will simple not work , it was poorly implemented and will cause a lot of mistrust from here going forward, but banning the multicurrency system should have been the first thing that Ncube did when he got into power, Zimbabwe being a third world country simple would not have worked with the multicurrency system.

  14. Stanley

    Ummm,more confused ,yes on paper it looks good but on the ground scary

  15. Tich De Blak

    These graphs are worthless, they dont represent the reality.

    Graph 1 & 2: Yes, we may be reducing the deficit, but we are also reducing production in the process, which means one day we will still need to get loans again to increase our production. We are delaying, if not worsening our problem at the expense of people. Governments domestic dept is lower, but at the expense of people’s lives. Workers are not being paid enough to survive, we have no electricity for industry, commerce, schools and hospitals, people have no water, there is no fuel, no currency in the banks, no jobs, disappearing commodities and hyper inflation. They have basically just stopped the economy and said we are no longer borrowing, so we are “back to normal” in the words of ED.

    Graph 3 & 4: What these graph do not show is inflation! If money supply was at 500 in Dec 2012 (in RTGS) then money supply should be a minimum of 5000 today (in RTGS) because the rate came from 1 as to 1 to at least 1 as to 10, then only can they talk about all these other figures, whatever they mean. The bottom line is that there was money to withdraw from the bank in Dec 2012 and now, there is no money, so how can we claim to have a higher supply? Same goes for deposits. Since elections deposits have basically stopped increasing, while the rate has multiplied by 10, so in essence, this graph should show that we now have 1 tenth of the deposits we had this time last year. With regards to FCA deposits, after reintroducing the Zim dollar without proper consultation with the people, they have effectively killed all the confidence in the banking system and I for one will never deposit USD in the bank again because I have no idea what they will choose to do with our currency again. We have already had 1-1, RTGS $, Zim Dollar, Nostro accounts and all sorts of laws in between all in 1 year. Naming money RTGS and accounts as Nostro shows these decisions are not even being made by financial people, so we know what the outcome of all these graphs is, it will not work, we will not have work. SIMPLE!

  16. Anonymous

    Inini zvangu I dont like this gvt at all have never tried to like them but if there are trying to work this out plz lets try to support them. Lets not just critise all the effort to do good kunyange zvazvo tichiziva i government yehuwori inobhowa etc. as for Tinashe you did a very good job to make us understand this. Keep it up

    1. Tinashe Nyahasha

      Thank you

      You are right. As much as we expect the worst, we might as well hope for the best too and be willing to assist whenever we can. Making this a matter of public debate is a big part of it. Whenever we can let’s explain things in the simplestr language possible so there are no barriers to information. I will not be surprised if my grandmother in a village in Murehwa has some wisdom to share if only she understood the terms we are debating

  17. Anonymous

    Mthuli Ncube is too much Mathematics and little Economics.Economics is a social science but Ncube is detached from the Social side.He is improving the graphical figures but hits a rock when the people(society reacts).Society reacts to printing of money and plastic money in such a way that the bond note collapses.Society reacted when he threatened to remove the bond note in the process plunging the value of the bond note.Society will react to the ‘stealing’ of their Nostro accounts monies thru losing faith in his future endeavours.I think the man needs an Economist to balance his mathematics otherwise he will keep on coming up with excellent graphical but helpless data.

  18. Ndaba Zabantu

    I would like to agree with the former Governor of the reserve bank Gideon Gono. When Mthuli introduced the rate between the bond and the USD,he was supposed to multiply civil servants salaries by that rate because those were USD figures. He decide to maintain them as they were, which in essence meant, he reduced these salaries to below half. He therefore can not claim to be making a surplus when he is underpaying Government employees. Thus a phantom surplus.The bad about Mthuli Ncube is that he employs purely capitalist ways of tackling economic challenges, that seem to favour the rich at the expense of the poor. He is also addressing the wrong issues. He needs to deal with the productive side of the economy. Money is not a problem on its own but symptom of sometime that is not right in the economy.

2023 © Techzim All rights reserved. Hosted By Cloud Unboxed