It’s been four years since hyperinflation forced Zimbabweans to carry their Zimbabwean dollars in bags just to go buy a loaf of bread.
Compared with the bad old days, the dollar in Zimbabwe is better now, although it, like the economy, is in need of a cleanup.
Dirty, almost disintegrating US$1 notes are the lifeblood of the economy, although it hardly buys much. In Harare, a Nando’s chicken burger costs $5 (R50) compared with the just under R30 back home.
Because of little foreign investment, and because Zimbabwe cannot print US dollars, few fresh dollar bills make their way into the economy and battered notes can’t leave.
“You cannot use these dollars when you go to the States. They won’t accept them,” a US embassy official told City Press.
Interestingly, the $2 bills in circulation in Zimbabwe weren’t bought from the US Federal Reserve, but were introduced by embassy staff. “In the US it is no longer in use, but here you see a lot of them,” he says.
The country’s justice minister and leading Zanu-PF member, Patrick Chinamasa, is painfully aware of the absurdity of the situation.
He blames sanctions for the hyperinflation following the country’s violent 2008 elections, which has forced the introduction of the current multicurrency system.
Speaking this week as the results from Wednesday’s elections trickled in, Chinamasa said: “I am the one who introduced (the multicurrency) when I was acting minister of finance in January 2009. Don’t listen to the lies of the MDC.”
The MDC-T is widely credited for stabilising the economy.
“We became the laughing stock of the world when we endured inflation that was in the quadrillions,” Chinamasa joked.
“We thought we should kill this animal called hyperinflation.”
The country is operating on a multicurrency system, which includes the euro, as well as the currencies of neighbouring states, with the rand being the most widely accepted.
Prices are quoted in US dollars and all change is given in US dollar notes, South African coins or credit notes when the coins run short.
Chinamasa appreciates the irony of having to use a Western currency.
“When you are a revolutionary party you must learn to retreat, but the retreat must be strategic and not haphazard. The adoption of the enemy’s currency was a strategic retreat.”
He says discussions will continue on how to return to the Zimbabwean dollar.
“We will see what is best that can be done. Whatever, we must be clever.”
Zanu-PF leader President Robert Mugabe has promised to “liberate” Zimbabwe from the US dollar and reintroduce the Zimbabwean dollar after his party’s most likely election victory.
This is ostensibly because the US dollar is losing its power as a world reserve currency. Bulawayo-based economist Eric Bloch says: “He said the Zim dollar must be backed up by sufficient gold reserves. This means the Reserve Bank must have enough US dollars to buy gold instead of gold leaving the country.”
This can only be done if private shareholders are given the opportunity to buy shares in the bank, rather than it being fully government-owned, as is currently the case.
Bloch says there are some in Zanu-PF who are aware that a turnaround in the economy is needed, but they would blame any U-turn in policy on extraneous circumstances to save face.
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