Zimbabwe: Money
As Joyce Banda tries to bring stability through openness and discipline to Malawi, just across either Moçambique or Zambia, lies a country near financial chaos.
The history is long and complex. Robert Mugabe has been leading Zimbabwe since 1987, and is accountable for its current situation. For the past four years though, he has been tentatively sharing power Morgan Tsvangirai. Morgan is basically a minority leader, representing part of the Movement for Democratic Change party, as opposed to Mugabe's Zim African National Union Patriotic Front which helped win the country independence. In the 2008 elections, Tsvangirai was on track to win the Presidency and change the course of the country. Due to claimed assassination plots and evident bullying to him and his party members, he dropped out of the Presidential race and instead accepted to share power as a Prime Minister in a new "Unity Government." As this year's election draws closer, both Mugabe and Tsvangigai rally hard for votes, but few feel confident that this time around it will be a fairer election.
Between 2008 and 2009 Zim experienced hyperinflation that saw banks printing billion and trillion Zimbabwe dollar notes. Annual inflation at one point was 516 quintillion. How did it come to the second worst inflation spike in history? Most point to the Land Reform that began in 2000 which kicked white land owners and farmers out of the country so it could be redistributed to blacks. If you didn't leave, you officially faced imprisonment. Unofficially, harassment and death. Many Rhodesians, or Rhodies, fled to Botswana and South Africa. Once productive farms became impoverished with the new, unexperienced and untrained owners. Exports became imports, and income became deficit. The ruling party however blames sanctions from the US and EU for the instabilities. Unemployment was near 80%.
To stop the inflation, Zimbabwe adopted the US dollar in 2009. One US dollar had equalled 2.6 billion Zim dollars. You needed to bring paper bags full of money to buy your groceries. To make purchases practical, business owners and citizens illegally started using the US dollar and the South African Rand. Knowing this, the government simply decided to adopt a credible currency to replace their own. The US dollar is mostly used, but people trade Rand easily too with an 8:1 exchange.
Who the main sellers of US dollars to Zimbabwe are is uncertain. What is disgustingly obvious is how overused the dollars are. Here is a comparison of fresh dollars I had when I came to ZA, and ones that have been in Zim for a few years. Even funnier is that coins are too heavy to be cheaply shipped, so register trays are chronically empty. I brought US coins to a grocer and the cashier would not accept them. I pointed out the part where it said "United States of America" but she acted like she'd never seen them before, so I paid the same change in Rand (note, banks do not exchange Rand coins for equal dollar amounts). To avoid change altogether, most businesses round to the dollar. In a store, if your purchase is $4.80, they will have small items to choose from to round up to a dollar, like gum and candy, shaving razors, or bottle openers.
The history is long and complex. Robert Mugabe has been leading Zimbabwe since 1987, and is accountable for its current situation. For the past four years though, he has been tentatively sharing power Morgan Tsvangirai. Morgan is basically a minority leader, representing part of the Movement for Democratic Change party, as opposed to Mugabe's Zim African National Union Patriotic Front which helped win the country independence. In the 2008 elections, Tsvangirai was on track to win the Presidency and change the course of the country. Due to claimed assassination plots and evident bullying to him and his party members, he dropped out of the Presidential race and instead accepted to share power as a Prime Minister in a new "Unity Government." As this year's election draws closer, both Mugabe and Tsvangigai rally hard for votes, but few feel confident that this time around it will be a fairer election.
Between 2008 and 2009 Zim experienced hyperinflation that saw banks printing billion and trillion Zimbabwe dollar notes. Annual inflation at one point was 516 quintillion. How did it come to the second worst inflation spike in history? Most point to the Land Reform that began in 2000 which kicked white land owners and farmers out of the country so it could be redistributed to blacks. If you didn't leave, you officially faced imprisonment. Unofficially, harassment and death. Many Rhodesians, or Rhodies, fled to Botswana and South Africa. Once productive farms became impoverished with the new, unexperienced and untrained owners. Exports became imports, and income became deficit. The ruling party however blames sanctions from the US and EU for the instabilities. Unemployment was near 80%.
To stop the inflation, Zimbabwe adopted the US dollar in 2009. One US dollar had equalled 2.6 billion Zim dollars. You needed to bring paper bags full of money to buy your groceries. To make purchases practical, business owners and citizens illegally started using the US dollar and the South African Rand. Knowing this, the government simply decided to adopt a credible currency to replace their own. The US dollar is mostly used, but people trade Rand easily too with an 8:1 exchange.Who the main sellers of US dollars to Zimbabwe are is uncertain. What is disgustingly obvious is how overused the dollars are. Here is a comparison of fresh dollars I had when I came to ZA, and ones that have been in Zim for a few years. Even funnier is that coins are too heavy to be cheaply shipped, so register trays are chronically empty. I brought US coins to a grocer and the cashier would not accept them. I pointed out the part where it said "United States of America" but she acted like she'd never seen them before, so I paid the same change in Rand (note, banks do not exchange Rand coins for equal dollar amounts). To avoid change altogether, most businesses round to the dollar. In a store, if your purchase is $4.80, they will have small items to choose from to round up to a dollar, like gum and candy, shaving razors, or bottle openers.
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