The art of creating money

The report argues that Zimbabwe's economic decline is rooted in the conflation of the state with the ZANU-PF party, leading to state capture, patronage, and corruption. It highlights how government profligacy, excessive borrowing through Treasury Bills, and a protectionist import substitution strategy have fueled inflation and foreign exchange shortages. Despite President Emmerson Mnangagwa's 'open for business' rhetoric, the report finds that investment claims are often unsubstantiated and that the government continues to prioritize prestige projects and party loyalty over market-based principles. The author recommends a transition to a market-oriented, export-led economy with an independent central bank and secure property rights.

• Inflation is primarily driven by an increase in the money supply resulting from the issuance of Treasury Bills to fund budget deficits and state-owned enterprise debt. By August 2018, Treasury Bills issued totaled US$7.6 billion.
• The government's overdraft with the Reserve Bank of Zimbabwe (RBZ) reached US$2.3 billion by the end of August 2018, which is three times the statutory limit.
• Zimbabwe's protectionist import substitution policy, which uses tariffs and import bans to protect local industry, has actually worsened foreign exchange shortages because low local productivity maintains the demand for hard currency on the parallel market.
• Despite claims of attracting US$16 billion in investment, Zimbabwe has consistently received less than US$500 million in actual Foreign Direct Investment (FDI) between 2012 and 2016.
• The government's commitment to legal protections for investors is undermined by its failure to honor international court rulings, such as those from the ICSID regarding compensation for seized farms.
• Fiscal deficits are exacerbated by excessive spending on agricultural subsidies, such as the Command Agriculture programme, and a bloated public wage bill that consumes 90% of tax revenues.
• The trade gap for goods and services is widening and was expected to reach US$2.15 billion in 2018, contributing to severe foreign exchange shortages.
• Domestic debt surged from US$442 million in 2013 to US$10.5 billion by February 2018, and total debt could exceed 200% of GDP if compensation for seized farms is included.

APA

Doré, D. (2018). The art of creating money. Institute for Security Studies. https://issafrica.s3.amazonaws.com/site/uploads/SAR-18-2.pdf

Chicago

Doré, Dale. The art of creating money. Institute for Security Studies, 2018. https://issafrica.s3.amazonaws.com/site/uploads/SAR-18-2.pdf.

Wikipedia

{{cite report |last1=Doré |first1=Dale |title=The art of creating money |publisher=Institute for Security Studies |date=November 2018 |url=https://issafrica.s3.amazonaws.com/site/uploads/SAR-18-2.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{dor2018art, author = {Doré, Dale}, title = {{The art of creating money}}, institution = {Institute for Security Studies}, year = {2018}, month = nov, url = {https://issafrica.s3.amazonaws.com/site/uploads/SAR-18-2.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }