Posted on 06/10/2016 3:12:01 PM PDT by Lorianne
Guess what Zimbabwe’s most important import is: Guns? Food? Medicines? Fuel?
It’s US dollars. The Reserve Bank of Zimbabwe’s lists it as the country’s number one import priority. There are no details of how much, how it is brought into the country, or how much it costs (or what the sense would be in paying for them, presumably in US dollars which will have to be sent back to the source of the consignment of banknotes).
Zimbabwe has experienced every manner of national crisis in the 36 years of its existence, all under President Robert Mugabe, but none as bizarre or damaging as the present case – running out of money.
About a month ago queues began stretch outside ATMs. Most people put it down to usual payday business, but then reports came in that the machines were running out of money, well after payday. The queues doubled in size and people were having to wait up to three hours to be able to draw cash. Surprisingly, reports of unruly shoving and pushing have been few - so far - even when the cash ran out and the banks would not tell if they were refilling the machines.
Now the better-off foreign-based banks allow withdrawals of US$300 per day, the local banks around US$150. It means that every day companies have to send someone to queue to collect enough for weekly wages and other expenses. It’s not clear how large companies manage, or for how long they can manage paying out that much.
“On Monday I queued for two hours inside the bank, I needed US$6,000 to pay wages,” said a publishing executive with 30 employees. “I asked the teller how much they were letting corporate customers have. A hundred dollars, he said. I’m panicking now. I can’t pay my workers, and they aren’t going to work without pay.”
The disruption is causing serious stress, anxiety, confusion and anger. Security guards struggling to keep order in the queues – they now have been instructed to demand ID from people wanting to draw from ATMs – and bank tellers being verbally abused when they can issue only US$35 at a time; truckers who have to park their trucks because they can’t get cash to pay for border fees and fuel, and tenants under threat of eviction for not paying their rent in time.
And probably worst of all, Zimbabwe’s voracious police, most of whom seem to spend their duties in roadblocks all over cities and towns and on the open road – 16 counted last week on the 440 km road between Bulawayo and Victoria Falls – taking cash off motorists in fines because their fire extinguisher may not have been recently serviced or whose vehicle licence disk may be partly obscured by the darkened edge of the windscreen.
Some cash is being imported. Much of the money being issued by the banks is in crisp new notes, instead of the old, grimy, sweat-softened notes that have been kept next to people’s skin (usually in bras or socks) and which form a large proportion of the cash in circulation. But it’s not enough.
Zimbabwe underwent the world’s second worst inflation – 500 billion percent – in 2008 and 2009, after Mugabe ordered mass printing of the country’s enfeebled currency, the Zimbabwe dollar. It eventually disappeared in a vortex of digits and the US dollar, up until then the black market currency of choice, was made the national currency, without a hint of embarrassment from the America-loathing president.
Several countries, led by Sweden, are virtually cashless and rely on “plastic” bank cards but the process was carefully managed. In the case of Zimbabwe, cash is disappearing because export production has foundered under misrule and Zimbabweans imported their needs and wants instead. As of now, Zimbabwe imports US$3 billion more than it exports, and the nation’s pool of hard currency has all but disappeared.
The banks are going all out to achieve a mass conversion to plastic. Geoff, who runs a garage workshop, realised he would quickly find himself in trouble if he insisted on the Zimbabwean habit of paying for everything in cash. He went to a local bank and asked for a card. Fill in a form, he was told, and asked the bank official when he would be able to collect it. She reached into a deep drawer stuffed with boxes of debit cards and gave him one on the spot – a dramatic change for a banking sector that has been stuck in the sixties.
However, the cards are useless without swipe machines. Business applying for them have been told of waiting lists of up to six months.
There are also cultural reason preventing the banks from achieving the large-scale switch to electronic banking. Ordinary working Zimbabweans hold fiercely to the “cash under the mattress” tradition. It is strengthened after the repeated Mugabe-induced money crises that have swallowed people’s savings in the custody of the banks.
The World Bank says that only 17 percent of Zimbabwean adults use banks, and of the poorest 40 percent of adults – most of whom are in the “informal” group of street traders – only seven percent are banked.
What really got up the noses of ordinary people, however, was the announcement by central bank government John Mangudya that he was going to introduce US$200 million “bond notes” at the value of the US$, which would be used to pay companies an export incentive of five percent as a way of boosting fresh inflows of hard currency. The “bond notes” would then circulate into the general market.
The amount is an almost insignificant sum compared with the rest of cash in circulation and Mangudya is seen as a regular banker and a decent man, compared with his predecessor, the hated Gideon Gono who brought desperation to millions of people as he smilingly carried out Mugabe’s instructions to print money at will in 2008-9.
But Mangudya’s proposal has been met with extraordinary hostility, and it is seen almost unanimously by Zimbabweans as a ruse bring back the”Zimkwacha,” as it is derisorily known. The governor initially set production of the bond notes for August, but last week deferred it to October, apparently in the realisation that it would take longer for the idea to be swallowed.
snip (there's more)
A side not: Listened to Stevie Wonder, Master Blaster today, from the song:
Peace has come to Zimbabwe
Third World's right on the one
Now's the time for celebration
'Cause we've only just begun
Yea,right. F'em.
Interesting article, thanks for posting it.
Venezuela is not amused
Does this mean I can now buy 10 Trillion dollar Zimbabwe notes for less than $60 US?
Africa.
End of story.
Jimmuh “MrMuggs” Carter and his band of traitors and imbeciles..
Not to worry, there is a plentiful supply of US $ in north Korea.
Thank you
Do they still breed Zimbabwe ridgebacks?
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