A currency in crisis
The news of the Zimbabwe election sham is common knowledge. The fact that the dictator and his clique are ruling the country by fear is also common knowledge.
What does not seem to be reaching the headlines properly is the rate of inflation in Zimbabwe.
There is total financial chaos in Zimbabwe.
There is a cash shortage crises in Zimbabwe.
There is an IT meltdown in Zimbabwe.
Companies have had no choice but to take matters into their own hands, and reduce figures by taking off zeros. Documents then carry a note of multiply by 1 000 or a 100 000. Scales, cash registers etc display the same notices.
I was told earlier today that most banks (with the exception of five, including RBZ, of course) have been forced to knock off six zeros on the amounts recorded in their systems because their IT systems just could not cope anymore. They hit crunch time.
gono, either in obvious total denial, or maybe blissfully unaware as he lives off the fruits of others labor, will not give the official directive for everyone in the country to do this. Not surprising when his campaign slogan at the time of removing three zeros in August 2006 was “From Zero to Hero”. What could he possibly call the next campaign and still save face?
The other area that gono will not acknowledge is the shortage of cash. Even though the German printing machines (were) working overtime and the denominations are getting bigger and bigger, there is still not enough cash in the country.
Inflation eats money. Notes that were introduced only a few months ago are now totally obsolete. Figures quoted in trillions of dollars are commonplace.
One of his solutions to this has been to control the amount of cash that both individuals and companies can withdraw from their accounts on a daily basis. Yesterday it was $25 billion dollars.
This morning that amount was increased to $100 billion dollars.
A taxi fare costs $10 billion dollars. A return trip to the bank, $20 billion or 20% of the money you have just withdrawn. A loaf a bread, $10 billion dollars. My point is made.
How are we supposed to live? Ooops sorry…mugabe would call that a stupid question!
And while the little fish are fighting for daily survival, the bigger fish are battling out yet another foreign currency crisis. A few weeks ago gono allowed banks to purchase forex and in doing so, opened up a legal trading system. The forex exchange rate was determined by supply and demand. Obviously, demand is higher and the rate soared and along with that, inflation has hit record figures.
Now in an effort to plug this bleeding wound, gono has put controls back on the banks. The immediate effect of this is a roaring black market trade in foreign currency. We are back where we started.
Historically, the next stage is to lash out at businesses for inflating prices. To introduce ridiculous price controls. To pump out propaganda saying this is the fault of the business community, and not of course, the innocent government. And then to harass, arrest, and fine companies for breaking these new price regulations.
We have done this all before.
The leaky faucet that is called Reserve Bank of Zimbabwe cannot hold another plug! It is high time that gono along with his counterpart mugabe, admits defeat, once and for all.
July 3rd, 2008 13:45
Add to that, newspapers in shambles.
http://www.herald.co.zw/inside.aspx?sectid=1018&cat=1
July 3rd, 2008 13:59
Can anyone split a twenty….You have to joke about it or you would cry.
Mugabe has all he will ever need in his palace in the country and so does his hentchmen.
What about the people, he must know that it the peope that make money for a country. Zimbabwe can’t be loaned anymore money from the world bank or ther countries ecuse they know it’s just too uch of a risk.
The country can’t last for ever it’s just a matter of time before it implodes, I just hope that when it does the casulties are not few.
Keep it peacefull
Andy K
July 3rd, 2008 15:35
A few weeks ago I worked out the going rate for an individual crumb of bread. That figure ($1000 or $1 million in old money) is already hopelessly out of date!
July 3rd, 2008 17:10
I have a question about sanctions, especially for those living in Zimbabwe.
For instance, some of us helped put pressure to stop the German bank-note paper being delivered. I feel really good that this campaign actually came through - but what will the consequences be for our Zimbabwean friends?
Many people are arguing (e.g. Toronto reporter Olivia Ward and a Canadian Zimbabwe expert called Professor Shackleton) that sanctions are either ineffective, or would hurt ordinary people more. I wrote to her to try to debate this, but what do ordinary Zimbabweans say?
Are there particular sanction measures that would be more effective against the junta? If it were possible - for instance - to prevent the importation of luxury vehicles and spare parts for trucks..
COSATU has called for a demo at Beit Bridge on Saturday and is going to attempt a blockade. They’ve also called on Trade Union members everywhere to refuse to serve Mugabe or his ruling elite. So are we in a position to tell e.g. Pick N Pay at Musina, who’s doing Uncle Bob’s shopping for him?
Smart sanctions, is the idea…but they would have to be not only smart but smartly applied, to be effective.
July 3rd, 2008 19:19
Mugabe takes another “World 1st”!! He’s produced the highest inflation rate known to man and now he’s crashed incredibly advanced technology with all his zero’s. It’s so far beyond our imaginations that we do have to laugh lest we just fall down in a heap and cry.
It’s always darkest before the dawn. We’re lifting our faces towards the East, waiting for the sunrise…
July 3rd, 2008 20:24
Very interesting article in the Gaurdian today:
http://www.guardian.co.uk/commentisfree/2008/jul/03/zimbabwe.africanunion
July 3rd, 2008 23:07
@ CN, 3/7, 20.24
Yes, you are right, a most interesting article. The comments are also interesting, and I liked one in particular from ‘Brazilian’
“GNU is the way the AU and Thabo Mbeki convinced themselves that they can give the world the impression that they disapprove of Robert Mugabe’s despotic rule and at the same time do nothing about it. They seem to believe that murder,rape,intimidation and torture are things one can get away with. Just stick with your rhetoric that says you are fighting imperialism and never mind the fact that that imperialism is non-existent. Never mind that the truth is that you are a tyrant who is imposing himself on a country that doesn’t want you.”
July 4th, 2008 13:19
Mbeki & Bob might be “thick like theives”, but they are not supported. Even the South African paper The Sowetan contains outspoken articles against them:-
http://www.sowetan.co.za/News/Article.aspx?id=796290
There is good sense in Africa - only trouble it appears to be only in civilian’s hands and not leaders heads. Quite a snag, really….