Monday, July 10, 2006

Where a beer costs Z150,000 sollars

.....Prices go up every day, and shoppers can be seen in supermarket aisles with pencils and paper, trying to add up all the zeroes on their bill before checkout time. Until June, the highest-denomination bill in print was the Z$50,000; my visit coincided with the introduction of the Z$100,000 note — but even this denomination is not large enough.

"Our money loses half its value every four months," explained Zimbabwean economist John Robertson. "The Z$100,000 note at the official rate is US$1, but really it's worth 25 cents. In four months, it'll be worth 12 cents. A million-dollar note is more realistic."

None of the new denominations are, in fact, real currency. The government does not have the money to pay for the paper on which real money is printed, so it mass prints notes on ordinary low-quality paper, with no security features. Known as "bearer cheques," these bills are blank on one side and resemble Monopoly money.

This doesn't mean the smaller denominations no longer exist. In fact, even the copper one-cent coin is still considered legal tender.....
nevitably, people innovate to survive. A friend who is a game ranger told me he no longer banks his money when he gets paid. "I go and buy furniture — chairs, couches, tables. At least a couch is worth something. We're slowly going back to a barter system," he said.

With unemployment at more than 70% and the average monthly salary at about 140 U.S. dollars — not enough to pay rent or school fees — a vast parallel market has sprung up. Pulling up at a supermarket in the eastern city of Mutare, my former hometown, I was approached by a dozen youths offering to sell me sugar, cooking oil and maize meal — essential foods that supermarkets must sell at low, state-controlled prices. Informal traders hoard these goods and, when the inevitable shortages come, sell them at inflated prices. Informal trading is illegal, but it is the only way many Zimbabweans earn a living.

How did Zimbabwe get to this point? It began in the late 1990s when, in order to pay for a costly military incursion into civil war-torn Congo, President Robert Mugabe ordered the printing of vast amounts of money, and inflation climbed steeply.

But it has reached today's levels only since the commercial farm invasions, in which 4,000 out of 4,500 white commercial farmers were kicked off their land, beginning in 2000. White farmers accounted for an estimated 60% of the country's foreign currency earnings through the export of tobacco and other crops. The invasions not only crippled domestic production, they scared away foreign investment. To dig itself out of debt and pay its bills, the government has simply printed more money.

Meanwhile, production by "new farmers" — landless peasants who moved in to occupy the white farms — is pitifully low. Part of the reason is that although the government offers fuel and maize-seed subsidies to new farmers, many have discovered that it's more profitable to sell the maize seed and fuel on the black market for inflated prices than to use them on the farm. Millions of acres of once-productive commercial farmland lie fallow. Of course, the government then blames drought, even though the rains have been good.

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