Wednesday, July 30, 2008

Poor zillionaires

How do you make sense of money in a country with an unofficial inflation rate soaring past 15 million %?

Many Zimb
abweans seem to have given up trying.

"I just come here to keep my job," said the cashier at a TM supermarket in Harare, where a tin of baked beans cost - at least for the next few hours - a mere 256 billion Zimbabwe dollars (worth about US$1 at the current exchange rate).

"It's just ridiculous. We put the prices up several times a day. The salary I was paid at the start of this month cannot even pay for my bus fare here this morning. I am struggling."

It's becoming harder and harder to keep the army, police and civil service happy by paying them in Zimbabwe dollars.

The cashier shrugged and then - like many other people I have spoken to while working undercover here over the last two weeks - he smiled awkwardly at the absurdity of it all.

Harare is fast becoming a city of unemployed, impoverished zillionaires - struggling to spend thick wads of banknotes in empty supermarkets before the cash becomes worthless, and increasingly dependent on funds sent home by the millions of Zimbabweans who have already fled abroad.

In the subdued, seemingly half-empty capital, people wait in long queues outside banks to withdraw a maximum of a 100bn dollars a day.

In bars, the price of beer goes up between rounds.

Many people are reduced to eating one meal a day.

Adults leave hungry children at home and walk for hours to work because they cannot afford the bus fare, while the newspapers advertise lotto prizes of a quadrillion dollars.

As the country sinks deeper into a surreal economic twilight zone, many analysts believe it is hyperinflation that is now driving those in power towards the negotiating table.

"Something has to give before very much longer," said Tony Hawkins, a Harare-based economist. "Which is why some people, myself included, think that the economy will bring down the government sooner than sanctions or anything like that... I would have thought months at the most."

Others believe the ruling elite - backed by hard currency revenues from a few surviving export industries - could hold out for another year or more.

But worryingly for President Robert Mugabe, the police and armed forces are not immune to the economic chao

I watched soldiers push angrily to the front of a queue when a rare delivery of sugar arrived at a Harare shopping arcade last week.

‘It's becoming harder and harder to keep the army, police and civil service happy by paying them in Zimbabwe dollars, because the money becomes worthless very quickly," said Mr Hawkins.

Many observers remain optimistic about the country's long-term economic prospects.

"This situation can be healed," said a Western diplomatic source in Zimbabwe. "But not by this regime. Zanu-PF couldn't run a sweet-shop."

A prominent local businessman with links to Zanu-PF agreed with that assessment. "This thing has just spiralled totally out of control," he said.

But he also noted that "the ruling elite talk about the need for change more than we do".

"Mugabe is not stupid," he added. "However they acquired their wealth, these people now have a stake in the economy and they see what's happening and know it can't go on... If change comes, it won't take long before this [economy] is fixed - five years at most."

But in the meantime, malnutrition rates continue to rise alarmingly. Hyperinflation, combined with another disastrous harvest, are driving thousands more Zimbabweans to flee the country.

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