Frustrated by food price increases of up to 42% in recent weeks, residents of Zimbabwe's impoverished black townships embarked on an orgy of looting, destruction of shops and general mayhem, which has cost the country millions of dollars. The riots left 10 people dead and the stock market plummeting.
They were triggered by an increase in maize meal prices ordered by the state-run Grain Marketing Board (GMB) as well as devaluation of the Zimdollar. Mr Mugabe unofficially declared a state of emergency, bringing out armoured cars and ruthless soldiers to quell the riots. This is the first time since 1973 that the military has been deployed to keep peace on suburban streets.
As the riots threatened to wreck the country, The World Bank, IMF and the European Investment Bank announced a joint US$270m package to rescue the beleaguered Zimdollar. "That is going to stabilise our Zimbabwe dollar," said Mr Eric Bloch, economist at H&E Bloch and Company. "We've been out in the cold for three years."
Prices of basic commodities started rising shortly after the drastic devaluation of the dollar last year. Manufacturers said they were trying to accommodate the dollar's collapse and subsequent increases in bank interest rates. The government and consumers watched helplessly as prices of maize meal, cooking oil and other basics rose out of control.
Mr Chen Chimtengwende, the Minister of Information, alleged that white industrialists were out to embarrass the government by raising prices unnecessarily, a charge denied by the business sector. Whatever the story, when the general public realised that prices of the staple maize meal were threatening to double in three weeks, pandemonium broke out.
Trouble started when the grain board announced that it would increase the price of maize-meal by 21%. The GMB had already increased maize prices to millers by 20% in December. The GMB has a monopoly on grain supplies in Zimbabwe but was apparently under pressure from commercial farmers who declined to sell maize from June last year, citing low prices. In December, the marketing board responded to farmers' pressure and raised the producer price of maize from Z$1,200 (401b) to Z$3,000. Millers passed the cost to consumers, who reacted with violence. In just two days of the riots, the leading stock market index lost a massive 234 points, the largest fall in recent months,
As the riots escalated, the government reversed its decision to raise maize prices. Minister for...