Imagine if your government did this to you…

For years we have battled with cash shortages and inflation but the new level of highly organized money pilfering is crippling both individuals and companies alike, and its happening at a frightening pace.

Is this a last ditch effort to line certain pockets or is it just another symptom of the disease that is our economy?

Either way, its complete chaos for most people, and a pot at the end (we hope for an end!) of the ‘rainbow’ for a select few.

This morning I saw red when I was quoted two different rates for a job: a cash rate and a cheque rate.

Cheques are legal tender, and nowhere else in the world are they viewed as having a lower face value than the cash of the same currency. But in Zim things are not so simple. Our banking system is shot to pieces and cheques can take up to four days to clear, so during this delay you lose money. You lose money because the value of the spending power erodes with daily or rather, hourly, inflation. The maximum difference I have heard of is approximately 300%. Many companies opt to refuse cheques completely.

What was different about this morning? I was quoted a cash figure of $59,000 and a cheque figure of $845,000 (this being $8,450,000,000,000,000 “old value”) being a 1332% premium. How is this possible? How is it legal?

What’s happening is obvious to all. The legitimate currency, the Zimbabwe dollar is in very short supply and the cash crisis has only continued to worsen since Gono removed ten zeros from our currency (in addition to the three already removed in 2006…unlucky 13?) and re-introduced coins and new bank notes. Inflation continues to rocket with no end in sight.

The effect of this is that we have to have foreign currency to live in our own country. Without it we cannot survive, as the limited amount of Zim dollars that are in the banking system are restricted to a daily allowance of $500 per person – that being less than the cost of one loaf of bread at a minimum of $850.

The banks are allowed to purchase forex from individuals but the banks will not give us cash – remember the banks don’t have the cash. Instead they pay by crediting Zim dollars into our bank accounts or by transfer to a third party. The rate offered for these transactions (the RTGS rate) is very high, but there is the unattractive catch that the money is stuck in a bank account and we cannot withdraw it.

Most individuals opt to go to the streets.

So a market is created where foreign currency flows onto the black market and is purchased by those with knowing-fingers that seem to have endless access to the very scarce Zim dollars, often clean and crisp. Right off the press, by any chance?

Imagine if your government did this to you.

This is one aspect of how Zimbabwe, in its crumbling state with it’s high mortality rate and high poverty rate, manages to be known to have the highest numbers of Mercedes Benzs per capita in the world.

Sick, isn’t it?

This entry was posted by Chipo on Wednesday, September 10th, 2008 at 1:10 pm. You can follow any comments on this entry through the RSS 2.0 feed. Both comments and pings are currently closed.