When we arrived in Zimbabwe 3 weeks ago, it became immediately clear that we should have brought a stash of USD with us. Upon fetching us at the airport, my relative, Nicky, gently reminded us that she had in fact told us to do that because Zimbabwe was literally short of cash - in other words, you couldn’t simply go the an ATM and withdraw some crisp dollar bills. To make it worse, foreign cards are also not widely accepted so we could have been in a bit of a pickle had we not had family to help us out, setting us up with a local card (side note: make sure you bring cash if you are visiting any time soon!).
But seriously, there is no cash. And if the banks happen to have any, you can only withdraw up to $20 per day.
So why exactly is this happening? It’s complicated, and I still don’t understand all the dynamics, but here is a brief explanation.
Since introducing the US dollar in 2009 (post the hyperinflation crisis - the height of which was 79,600,000,000% inflation per month), it seems there has been little done to boost the local economy. It remains a unattractive market for foreign investment and local production is minimal. As a result, Zimbabwe has to import nearly everything - with money that they don’t have - which has ultimately resulted in this liquidity crisis.
In response, the Reserve Bank started to print ‘Bond’ notes and coins last year, which are meant to ‘represent’ the US dollar. This also meant that the electronic money in your bank account became 'bond money’.
Wait, what? Well think about it... unless you could covert it into USD (i.e. withdraw real dollars), which is becoming increasingly hard to do, is your money even real? It’s a scary thought.
As tends to happen though, life continued, and for months, people duly paid with bond notes and bank transfers, and trusted that their ‘money’ still held their dollar value, and that everything was under control.
Until they didn’t.
As real $$$s slowly disappear, suppliers are losing faith in the value of the bond notes, hence upping their prices or demanding US dollars. This has meant that some goods have become unavailable or incredibly expensive (if you lucky to find butter, it will cost anywhere between $11 - $13 per 500g). And I guess people can only take so much.
On Saturday, there seemed to be a collective loss of confidence among the average man which culminated in a mass panic, as citizens drove en masse to fill up their tanks, and Harare ran out of fuel.
The panic continued to spread. Last night, we ordered pizzas. When asking what we owed, the lady on the phone informed us that as of today, they now had 3 prices:
1. The menu price if you pay by Bond cash
2. The menu price - 25% if you pay by USD cash
3. The menu price + 25% if you pay by local swipe card!
The choice was ours, except that we really had no choice. That meant we paid ‘USD’66 for 4 pizzas, which is a helluva lot in this part of the world.
Today, Nicky went in search for diesel. She eventually found it along with 250+ cars that were already in the queue...
So is hyperinflation starting all over again? I guess only time will tell. Regardless, it’s surreal being here and seeing how things can change overnight. More so, it’s made us realize how fragile monetary systems are if not managed properly, and at the end of the day, currency is only as strong as people believe it is.