World
Worried About Inflation? Try Zimbabwe's 1,000 Percent
All Things Considered, May 17, 2006 · Melissa Block talks with Zimbabwean economist John Robertson about the massive inflation in real prices caused by the devaluation of government currency. Anecdotes in recent news reports put prices for goods such as bread and orange juice at as much as 500,000 Zimbabwe dollars -- or five U.S. dollars.
Click here to listen via NPR
Thursday, May 18, 2006
Sunday, May 14, 2006
Zimbabwe in black and white
Zimbabwe in black and white
Christina Lamb tells the true story of a white farmer and his black servant before and after Mugabe in her illuminating and flawed House of Stone, says Jason Cowley
Sunday May 14, 2006
The Observer
Buy House of Stone at the Guardian bookshop
House of Stone
Christina Lamb
HarperCollins £14.99, pp290
Rhodesians Worldwide is a website through which old Rhodies communicate, and wonder about the lives they might have lived if Robert Mugabe had not won the war to liberate from white minority rule the country that became Zimbabwe. These dispatches are inevitably nostalgic and Rhodesia is remembered as a kind of Arcadia, when these reluctant exiles were enjoying the time of their lives, unburdened, it seems, by any sense of racial or liberal political conscience. The contributions to the site can be read as an exercise in willed denial; what is missing is any curiosity about the lives of the black Africans among whom they once lived, what they thought, believed or wanted.
Denial is the subject of Christina Lamb's book, which tells the story of a white farmer called Nigel Hough and his black maid, Aquinata, and how they were brought together and changed by the farm invasions that began in 2000 and have since led to the ruin of the agricultural infrastructure of one of the most fertile countries in Africa and to the misery of its people.
Nigel's father, an Englishman, settled in Rhodesia in the late 1940s, attracted there by the ease of the lifestyle, the climate, the landscape, and by the privileges of being white in this part of colonial Africa. What is often forgotten about Rhodesia is how resolutely suburban it was. To visit the capital, Salisbury, was like finding yourself in Tunbridge Wells on a Sunday afternoon; the polite hush and the prejudices were certainly the same. How can this be Africa, you thought?
Nigel grew up certain of his superiority over the black majority: the 'munts', the 'kaffirs'. Later, they would become the 'terrs' - terrorists - as the whites, led by the ferociously stubborn Ian Smith, fought a long, futile and, above all, murderous civil war to prevent the inevitability of black majority rule. He went to one of the best schools in the country, where he excelled at sports and, as war intensified out in the bush, dreamed of becoming a commando, even of serving in the elite Selous Scouts. The Scouts were an SAS-style unit who, operating behind enemy lines, committed some of the worst atrocities of the war.
Growing up in a village, Aqui had her own dreams and aspirations. She wanted to be educated, and she wanted to be a nurse. She believed in the war to liberate her people and she was sure that once the whites were defeated and the blacks controlled their own destiny, there would be equality and the country would flourish.
For a brief period following the free election of Robert Mugabe as president in 1980, there was hope that reconciliation between the black majority and the remaining whites was possible. In his post-election address to the nation, Mugabe spoke of forgiveness and urged whites to stay on to build the new country. The white farmers, despite faltering attempts at reform, were allowed to continue very much as before, working the richest and most fertile land.
Nigel was encouraged; Africa was his home, he was a white African; he wanted to believe, as Aqui did, in the possibility of a harmonious future. He stayed on and, in time, married a local white woman and settled on a farm in the tobacco-growing district of Marondera. It was there that Aqui came to work for him, her life before then, even in liberated Zimbabwe, amounting to a convoy of sorrows: raped as a child by a schoolmaster, a drunken, abusive husband, absolute poverty.
Nigel and Aqui's stories are told in alternating chapters, their own words, rendered in italics, merging with the flow of Lamb's hurried prose. But there is a problem: too often one struggles to differentiate Aqui's voice (her English would surely be Shona-inflected) from Nigel's. In their flatly modulated diction they both sound like Christina Lamb.
Lamb is a courageous and excellent reporter but she can be a careless writer. In her acknowledgements she thanks her editor 'who somehow turned round her manuscript in record time'. But her editor failed to prevent her worst excesses: repetition, overstatement and a serious absence of attribution. One section, on the Selous Scouts, reads as if hastily paraphrased from a website dedicated to the Scouts. If this site was indeed one of her sources, as it must have been, why isn't it cited? Why wasn't she advised to include a bibliography or source notes, in what is, after all, not only reportage but a semi-scholarly history of Zimbabwe?
The final section of the book, the best, sees Lamb back in Zimbabwe, illegally. The farms have been destroyed. The shanty settlements of the blacks in the cities who dared to vote against Mugabe in the last election have been demolished as part of Operation Clean Up the Filth. Most of the whites who can have emigrated, and the prevailing mood is one of menace and fear - a geriatric tyrant holding on to power at any cost. The Houghs remain in the country, though they have lost their farm, and Aqui is still working for them in a subordinate role. Nigel and Aqui now live without dreams, illusions or hope. Yet they have mutual respect - and a greater understanding of what it means to be black, and indeed white, in southern Africa. But, oh, the pain, and the regret.
Christina Lamb tells the true story of a white farmer and his black servant before and after Mugabe in her illuminating and flawed House of Stone, says Jason Cowley
Sunday May 14, 2006
The Observer
Buy House of Stone at the Guardian bookshop
House of Stone
Christina Lamb
HarperCollins £14.99, pp290
Rhodesians Worldwide is a website through which old Rhodies communicate, and wonder about the lives they might have lived if Robert Mugabe had not won the war to liberate from white minority rule the country that became Zimbabwe. These dispatches are inevitably nostalgic and Rhodesia is remembered as a kind of Arcadia, when these reluctant exiles were enjoying the time of their lives, unburdened, it seems, by any sense of racial or liberal political conscience. The contributions to the site can be read as an exercise in willed denial; what is missing is any curiosity about the lives of the black Africans among whom they once lived, what they thought, believed or wanted.
Denial is the subject of Christina Lamb's book, which tells the story of a white farmer called Nigel Hough and his black maid, Aquinata, and how they were brought together and changed by the farm invasions that began in 2000 and have since led to the ruin of the agricultural infrastructure of one of the most fertile countries in Africa and to the misery of its people.
Nigel's father, an Englishman, settled in Rhodesia in the late 1940s, attracted there by the ease of the lifestyle, the climate, the landscape, and by the privileges of being white in this part of colonial Africa. What is often forgotten about Rhodesia is how resolutely suburban it was. To visit the capital, Salisbury, was like finding yourself in Tunbridge Wells on a Sunday afternoon; the polite hush and the prejudices were certainly the same. How can this be Africa, you thought?
Nigel grew up certain of his superiority over the black majority: the 'munts', the 'kaffirs'. Later, they would become the 'terrs' - terrorists - as the whites, led by the ferociously stubborn Ian Smith, fought a long, futile and, above all, murderous civil war to prevent the inevitability of black majority rule. He went to one of the best schools in the country, where he excelled at sports and, as war intensified out in the bush, dreamed of becoming a commando, even of serving in the elite Selous Scouts. The Scouts were an SAS-style unit who, operating behind enemy lines, committed some of the worst atrocities of the war.
Growing up in a village, Aqui had her own dreams and aspirations. She wanted to be educated, and she wanted to be a nurse. She believed in the war to liberate her people and she was sure that once the whites were defeated and the blacks controlled their own destiny, there would be equality and the country would flourish.
For a brief period following the free election of Robert Mugabe as president in 1980, there was hope that reconciliation between the black majority and the remaining whites was possible. In his post-election address to the nation, Mugabe spoke of forgiveness and urged whites to stay on to build the new country. The white farmers, despite faltering attempts at reform, were allowed to continue very much as before, working the richest and most fertile land.
Nigel was encouraged; Africa was his home, he was a white African; he wanted to believe, as Aqui did, in the possibility of a harmonious future. He stayed on and, in time, married a local white woman and settled on a farm in the tobacco-growing district of Marondera. It was there that Aqui came to work for him, her life before then, even in liberated Zimbabwe, amounting to a convoy of sorrows: raped as a child by a schoolmaster, a drunken, abusive husband, absolute poverty.
Nigel and Aqui's stories are told in alternating chapters, their own words, rendered in italics, merging with the flow of Lamb's hurried prose. But there is a problem: too often one struggles to differentiate Aqui's voice (her English would surely be Shona-inflected) from Nigel's. In their flatly modulated diction they both sound like Christina Lamb.
Lamb is a courageous and excellent reporter but she can be a careless writer. In her acknowledgements she thanks her editor 'who somehow turned round her manuscript in record time'. But her editor failed to prevent her worst excesses: repetition, overstatement and a serious absence of attribution. One section, on the Selous Scouts, reads as if hastily paraphrased from a website dedicated to the Scouts. If this site was indeed one of her sources, as it must have been, why isn't it cited? Why wasn't she advised to include a bibliography or source notes, in what is, after all, not only reportage but a semi-scholarly history of Zimbabwe?
The final section of the book, the best, sees Lamb back in Zimbabwe, illegally. The farms have been destroyed. The shanty settlements of the blacks in the cities who dared to vote against Mugabe in the last election have been demolished as part of Operation Clean Up the Filth. Most of the whites who can have emigrated, and the prevailing mood is one of menace and fear - a geriatric tyrant holding on to power at any cost. The Houghs remain in the country, though they have lost their farm, and Aqui is still working for them in a subordinate role. Nigel and Aqui now live without dreams, illusions or hope. Yet they have mutual respect - and a greater understanding of what it means to be black, and indeed white, in southern Africa. But, oh, the pain, and the regret.
Zimbabwe Inflation Tops 1,000 Percent
Zimbabwe Inflation Tops 1,000 Percent
(AP) HARARE, Zimbabwe
Zimbabwe's annual inflation rate has topped 1,000 percent for the first time, underlining the economic collapse of a country crippled by shortages and where people have to carry bags full of cash even for basic purchases.
Moffat Nyoni, director of the Government's Central Statistical Office, said that inflation for the 12 months to April 2006 was 1,042.9 percent, according to a report on state radio Saturday.
In March the figure was 913 percent. Figures released by Nyoni's office showed 21.1 percent inflation for the month of April alone, fueled by a 27 percent increase in the cost of basic foodstuffs, 24.8 percent in rents, 35.1 percent in fuels such as gasoline and kerosene and 48.1 percent in motor vehicle and health insurance.
The economy has been in free fall since President Robert Mugabe started seizing 5,000 formerly white-owned commercial farms in February 2000.
"We are living with the consequences of (the government's) destructive policies of the past," said economist John Robertson. "They cannot raise the necessary taxes from our shrinking economy."
The radio broadcast said the poverty datum line - absolute minimum consumption needs - for an average family of five reached 37 million Zimbabwean dollars (US$366; euro284) per month at the Government's rate of exchange but only US$148 (euro114) on the more realistic and flourishing black market.
The lowest-paid workers in formal employment - domestic gardeners - earn 2.5 million Zimbabwean dollars a month, but 70 percent of the work force lack regular jobs due to waves of bankruptcies.
Most people get paid by the hour for casual work. Church groups have appealed to employers that the hourly rate should at least cover the price of a loaf of bread, currently 100,000 Zimbabwe dollars.
An estimated 4 million Zimbabweans, many of them skilled professionals, are living outside the country.
Most remaining Zimbabweans make ends meet by growing sweet potatoes and maize on roadsides, railway sidings and plots of vacant land.
A package of the cheapest candy costs 57,000 Zimbabwe dollars, but the maximum denomination note is 50,000 Zimbabwe dollars, forcing shoppers to carry a bag full of money.
Since mobile phones went into service in 1996 as fixed phone services crashed, the price of the cheapest range of phones with a line connection has increased 5,000-fold. The price of a single car battery this year could have bought 14 brand new cars 10 years ago.
There is a joke that toilet paper costs so much that it would be cheaper to use 500 dollar notes.
Robertson said the point of "meltdown" had already been reached for pensioners and others living on small fixed incomes.
An entire life's savings, invested before the 1998 start of the Zimbabwean economy's collapse, is now needed to meet a month's living expenses.
Money from charities or from relatives living abroad is the only means of survival for many elderly. The United Nations estimates at least 3 million of the 12 million population are in need of emergency food aid ahead of next month's harvests.
Mugabe last week announced increases of up to 300 percent in salaries for more than 120,000 government employees including soldiers and police.
Robertson said there was "not a hope in hell" of reaching the government's target to reduce inflation to double digits by the end of the year and it would take five to 10 years to restore production on farms, in mining and industry, even if Mugabe reversed current policies.
Robertson predicted shortage-driven inflation might soon reach 2,000 percent as state employees rushed to spend their pay rises while goods were still in stores. There is currently a nationwide shortage of sugar, while supplies of cooking oil, maize meal and bread are erratic.
"People should get angry and start demanding things happen," said Robertson.
(AP) HARARE, Zimbabwe
Zimbabwe's annual inflation rate has topped 1,000 percent for the first time, underlining the economic collapse of a country crippled by shortages and where people have to carry bags full of cash even for basic purchases.
Moffat Nyoni, director of the Government's Central Statistical Office, said that inflation for the 12 months to April 2006 was 1,042.9 percent, according to a report on state radio Saturday.
In March the figure was 913 percent. Figures released by Nyoni's office showed 21.1 percent inflation for the month of April alone, fueled by a 27 percent increase in the cost of basic foodstuffs, 24.8 percent in rents, 35.1 percent in fuels such as gasoline and kerosene and 48.1 percent in motor vehicle and health insurance.
The economy has been in free fall since President Robert Mugabe started seizing 5,000 formerly white-owned commercial farms in February 2000.
"We are living with the consequences of (the government's) destructive policies of the past," said economist John Robertson. "They cannot raise the necessary taxes from our shrinking economy."
The radio broadcast said the poverty datum line - absolute minimum consumption needs - for an average family of five reached 37 million Zimbabwean dollars (US$366; euro284) per month at the Government's rate of exchange but only US$148 (euro114) on the more realistic and flourishing black market.
The lowest-paid workers in formal employment - domestic gardeners - earn 2.5 million Zimbabwean dollars a month, but 70 percent of the work force lack regular jobs due to waves of bankruptcies.
Most people get paid by the hour for casual work. Church groups have appealed to employers that the hourly rate should at least cover the price of a loaf of bread, currently 100,000 Zimbabwe dollars.
An estimated 4 million Zimbabweans, many of them skilled professionals, are living outside the country.
Most remaining Zimbabweans make ends meet by growing sweet potatoes and maize on roadsides, railway sidings and plots of vacant land.
A package of the cheapest candy costs 57,000 Zimbabwe dollars, but the maximum denomination note is 50,000 Zimbabwe dollars, forcing shoppers to carry a bag full of money.
Since mobile phones went into service in 1996 as fixed phone services crashed, the price of the cheapest range of phones with a line connection has increased 5,000-fold. The price of a single car battery this year could have bought 14 brand new cars 10 years ago.
There is a joke that toilet paper costs so much that it would be cheaper to use 500 dollar notes.
Robertson said the point of "meltdown" had already been reached for pensioners and others living on small fixed incomes.
An entire life's savings, invested before the 1998 start of the Zimbabwean economy's collapse, is now needed to meet a month's living expenses.
Money from charities or from relatives living abroad is the only means of survival for many elderly. The United Nations estimates at least 3 million of the 12 million population are in need of emergency food aid ahead of next month's harvests.
Mugabe last week announced increases of up to 300 percent in salaries for more than 120,000 government employees including soldiers and police.
Robertson said there was "not a hope in hell" of reaching the government's target to reduce inflation to double digits by the end of the year and it would take five to 10 years to restore production on farms, in mining and industry, even if Mugabe reversed current policies.
Robertson predicted shortage-driven inflation might soon reach 2,000 percent as state employees rushed to spend their pay rises while goods were still in stores. There is currently a nationwide shortage of sugar, while supplies of cooking oil, maize meal and bread are erratic.
"People should get angry and start demanding things happen," said Robertson.
Friday, May 05, 2006
Zimbabwe's poverty datum line shoots to Z$41 million
Zimbabwe's poverty datum line shoots to Z$41 million
Fri 5 May 2006
HARARE - Zimbabwe's poverty datum line last month shot to Z$41 million up from the previous month's figure of Z$35 million, according to the latest figures released yesterday by the Consumer Council of Zimbabwe (CCZ).
"The cost of living as depicted by the Consumer Council of Zimbabwe's low-income urban earner monthly budget for a family of six has risen from $34 995 428.56 in March to $41 096 610.00 reflecting a 17.4 increase percent," said the state-funded consumer rights body.
The CCZ attributed the increase in the cost of living to last month's hike in tuition fees and health costs. The government last month increased school fees by more than 1 000 percent with a basic school uniform now costing about Z$12.3 million.
"This is a cause for concern as many low-income earners may not be able to purchase these basic uniforms for their children," said the CCZ.
Last week, the government also announced new salaries for teachers and soldiers with the lowest paid soldier getting about $27 million while teachers will now earn about $33 million, which is far below the basic consumption line.
Zimbabwe is in its sixth year of a bitter economic recession which has seen inflation hitting 913.6 percent, the highest such rate outside a war zone.
The main opposition Movement for Democratic Change party and major Western governments blame President Robert Mugabe for ruining the country's economy which was one of the strongest at independence from Britain 26 years ago.
But Mugabe denies the charge blaming the crisis on sabotage by his Western enemies after he violently seized land from whites for redistribution to landless blacks. - ZimOnline
Fri 5 May 2006
HARARE - Zimbabwe's poverty datum line last month shot to Z$41 million up from the previous month's figure of Z$35 million, according to the latest figures released yesterday by the Consumer Council of Zimbabwe (CCZ).
"The cost of living as depicted by the Consumer Council of Zimbabwe's low-income urban earner monthly budget for a family of six has risen from $34 995 428.56 in March to $41 096 610.00 reflecting a 17.4 increase percent," said the state-funded consumer rights body.
The CCZ attributed the increase in the cost of living to last month's hike in tuition fees and health costs. The government last month increased school fees by more than 1 000 percent with a basic school uniform now costing about Z$12.3 million.
"This is a cause for concern as many low-income earners may not be able to purchase these basic uniforms for their children," said the CCZ.
Last week, the government also announced new salaries for teachers and soldiers with the lowest paid soldier getting about $27 million while teachers will now earn about $33 million, which is far below the basic consumption line.
Zimbabwe is in its sixth year of a bitter economic recession which has seen inflation hitting 913.6 percent, the highest such rate outside a war zone.
The main opposition Movement for Democratic Change party and major Western governments blame President Robert Mugabe for ruining the country's economy which was one of the strongest at independence from Britain 26 years ago.
But Mugabe denies the charge blaming the crisis on sabotage by his Western enemies after he violently seized land from whites for redistribution to landless blacks. - ZimOnline
Tuesday, May 02, 2006
Zimbabwe's Prices Rise 900%, Turning Staples Into Luxuries - New York Times
Source: New York Times
--------------------------------------------------------------------------------
May 2, 2006
Zimbabwe's Prices Rise 900%, Turning Staples Into Luxuries
By MICHAEL WINES
HARARE, Zimbabwe, April 25 — How bad is inflation in Zimbabwe? Well, consider this: at a supermarket near the center of this tatterdemalion capital, toilet paper costs $417.
No, not per roll. Four hundred seventeen Zimbabwean dollars is the value of a single two-ply sheet. A roll costs $145,750 — in American currency, about 69 cents.
The price of toilet paper, like everything else here, soars almost daily, spawning jokes about an impending better use for Zimbabwe's $500 bill, now the smallest in circulation.
But what is happening is no laughing matter. For untold numbers of Zimbabweans, toilet paper — and bread, margarine, meat, even the once ubiquitous morning cup of tea — have become unimaginable luxuries. All are casualties of the hyperinflation that is roaring toward 1,000 percent a year, a rate usually seen only in war zones.
Zimbabwe has been tormented this entire decade by both deep recession and high inflation, but in recent months the economy seems to have abandoned whatever moorings it had left. The national budget for 2006 has already been largely spent. Government services have started to crumble.
The purity of Harare's drinking water, siphoned from a lake downstream of its sewer outfall, has been unreliable for months, and dysentery and cholera swept the city in December and January. The city suffers rolling electrical blackouts. Mounds of uncollected garbage pile up on the streets of the slums.
Zimbabwe's inflation is hardly history's worst — in Weimar Germany in 1923, prices quadrupled each month, compared with doubling about once every three or four months in Zimbabwe. That said, experts agree that Zimbabwe's inflation is currently the world's highest, and has been for some time.
Public-school fees and other ever-rising government surcharges have begun to exceed the monthly incomes of many urban families lucky enough to find work. The jobless — officially 70 percent of Zimbabwe's 4.2 million workers, but widely placed at 80 percent when idle farmers are included — furtively hawk tomatoes and baggies of ground corn from roadside tables, an occupation banned by the police since last May.
Those with spare cash put it not in banks, which pay a paltry 4 to 10 percent annual interest on savings, but in gilt-edged investments like bags of corn meal and sugar, guaranteed not to lose their value.
"There's a surrealism here that's hard to get across to people," Mike Davies, the chairman of a civic-watchdog group called the Combined Harare Residents Association, said in an interview. "If you need something and have cash, you buy it. If you have cash you spend it today, because tomorrow it's going to be worth 5 percent less.
"Normal horizons don't exist here. People live hand to mouth."
President Robert G. Mugabe has responded to the hardship in two ways.
Although there is no credible threat to his 26-year rule, Zimbabwe's political opposition is calling for mass protests against the economic situation. So Mr. Mugabe has tightened his grip on power even further, turning the economy over to a national security council of his closest allies. In addition, he has seeded the government's civilian ministries this year with loyal army and intelligence officers who now control key functions, from food security to tax collection.
At the same time, Mr. Mugabe's government has printed trillions of new Zimbabwean dollars to keep ministries functioning and to shield the salaries of key supporters — and potential enemies — against further erosion. Supplemental spending proposed early in April would increase the 2006 spending limits approved last November by fully 40 percent, and more such emergency spending measures are all but certain before the year ends.
On Friday, the government said it would triple the salaries of 190,000 soldiers and teachers. But even those government workers still badly trail inflation; the best of the raises, to as much as $33 million a month, already are slightly below the latest poverty line for the average family of five.
This will only worsen inflation, for printing too many worthless dollars is in part what got Zimbabwe into this mess to begin with. Zimbabwe fell into hyperinflation after the government began seizing commercial farms in about 2000. Foreign investors fled, manufacturing ground to a halt, goods and foreign currency needed to buy imports fell into short supply and prices shot up.
Inflation, about 400 percent per year last November, edged over 600 percent in January, but began to soar after the government revealed that it had paid the International Monetary Fund $221 million to cover an arrears that threatened Zimbabwe's membership in the organization.
In February, the government admitted that it had printed at least $21 trillion in currency — and probably much more, critics say — to buy the American dollars with which the debt was paid.
By March, inflation had touched 914 percent a year, at which rate prices would rise more than tenfold in 12 months. Experts agree that quadruple-digit inflation is now a certainty.
In the midst of this craziness, some Harare enclaves seem paradoxically normal. North of downtown, where diplomats and aid workers are financed with American dollars, and generators and bottled water are the norm, the cafes still serve cappuccino and the markets sell plump roasting chickens, albeit $1 million chickens.
Everywhere else, the hardship is inescapable.
In Glen Norah, a dense suburb of thousands of tiny homes southwest of the city, 58-year-old Ayina Musoni and her divorced daughter Regai, 26, share their five-room house with Regai's two children and three lodgers. The lodgers, two security guards and a teacher, pay monthly rent totaling $3 million, or about $14.25 in American money.
Ms. Musoni's latest monthly bill for services from the Harare city government was $2.4 million. The refrigerator in her closet-size kitchen is empty except for a few bottles of boiled water. Christmas dinner was sadza, or corn porridge, with hard-boiled eggs. For Easter, there was nothing.
Mother and daughter make as much as $10 in American money each week by selling vegetables, from 7 a.m. to 6 p.m. daily. But the profits are being consumed by rising costs at the farmers' market where they buy stock. "Like potatoes," Regai said. "I went last week, and it was $500,000 for a packet. And when I went this weekend, it was $700,000.
Millions of Zimbabweans survive these days on the kindness of outsiders — foreigners who donate food or medicine and, more important, family members who have fled the nation for better lives abroad.
As many as three million Zimbabweans now live elsewhere, usually in Britain, South Africa or the United States. An economist here, John Robertson, estimates that they remit as much as $50 million a month to their families — the equivalent of one sixth of the gross domestic product.
Ms. Musoni's is not a hard-luck story; in Harare, most people now live this way, or worse. Indeed, life for many may be better in the nation's impoverished rural areas, where subsistence farming is the only industry and millions of people are guaranteed free monthly rations from the United Nations and other donors. In the cities, little is free.
Unity Motize, 64, lives with her 65-year-old husband, Simeon, in Highfield, a middle-class suburb turned slum not far south of town. The couple occupies one room of their three-room house. The second sleeps two sons, their wives and their two infants, all left homeless last May after riot police bulldozed the homes of hundreds of thousands of slum-dwellers. A 23-year-old son and an unemployed daughter sleep in the living room.
Hyperinflation is a cradle-to-grave experience here. The government recently announced that the price of childbirth, now $7 million, would rise 463 percent by October. Funeral costs are to double over the same period.
In rural areas, said one official of a foreign-based charity who declined to be named, fearing consequences from the government, even the barest funeral costs at least $6 million, or about $28.50 — well beyond most families' means. The dead are buried in open fields at night, she said. Recently, she watched one family dismantle their home's cupboard to construct a makeshift coffin.
"I'll never forget that," she said. "The incredible sadness of it all."
Critics say that Zimbabwe's rulers are oblivious to such suffering — last year, Mr. Mugabe completed his own 25-bedroom mansion in a gated suburb north of town, close by the mansions of top ministers and military allies.
But the government says it has a plan to revive the economy. That plan, the latest of perhaps seven in 10 years, would quickly raise billions of American dollars to end a chronic foreign currency shortage, cut the inflation rate to double digits by year's end and an end to the recession that has gripped Zimbabwe, halving its economic output, since 1999.
Mr. Robertson, the economist, says that is unlikely. Zimbabweans can and probably will endure greater hardship, he says. As a whole, the nation has only now sunk to standards common elsewhere in Africa. But the government may have reached the limit of its ability to do anything about it. Cutting spending seems impossible, and raising taxes further is unthinkable.
That leaves one option: "much more inflation," he said. "Because this government is always going to be printing its way out of its current difficulty."
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May 2, 2006
Zimbabwe's Prices Rise 900%, Turning Staples Into Luxuries
By MICHAEL WINES
HARARE, Zimbabwe, April 25 — How bad is inflation in Zimbabwe? Well, consider this: at a supermarket near the center of this tatterdemalion capital, toilet paper costs $417.
No, not per roll. Four hundred seventeen Zimbabwean dollars is the value of a single two-ply sheet. A roll costs $145,750 — in American currency, about 69 cents.
The price of toilet paper, like everything else here, soars almost daily, spawning jokes about an impending better use for Zimbabwe's $500 bill, now the smallest in circulation.
But what is happening is no laughing matter. For untold numbers of Zimbabweans, toilet paper — and bread, margarine, meat, even the once ubiquitous morning cup of tea — have become unimaginable luxuries. All are casualties of the hyperinflation that is roaring toward 1,000 percent a year, a rate usually seen only in war zones.
Zimbabwe has been tormented this entire decade by both deep recession and high inflation, but in recent months the economy seems to have abandoned whatever moorings it had left. The national budget for 2006 has already been largely spent. Government services have started to crumble.
The purity of Harare's drinking water, siphoned from a lake downstream of its sewer outfall, has been unreliable for months, and dysentery and cholera swept the city in December and January. The city suffers rolling electrical blackouts. Mounds of uncollected garbage pile up on the streets of the slums.
Zimbabwe's inflation is hardly history's worst — in Weimar Germany in 1923, prices quadrupled each month, compared with doubling about once every three or four months in Zimbabwe. That said, experts agree that Zimbabwe's inflation is currently the world's highest, and has been for some time.
Public-school fees and other ever-rising government surcharges have begun to exceed the monthly incomes of many urban families lucky enough to find work. The jobless — officially 70 percent of Zimbabwe's 4.2 million workers, but widely placed at 80 percent when idle farmers are included — furtively hawk tomatoes and baggies of ground corn from roadside tables, an occupation banned by the police since last May.
Those with spare cash put it not in banks, which pay a paltry 4 to 10 percent annual interest on savings, but in gilt-edged investments like bags of corn meal and sugar, guaranteed not to lose their value.
"There's a surrealism here that's hard to get across to people," Mike Davies, the chairman of a civic-watchdog group called the Combined Harare Residents Association, said in an interview. "If you need something and have cash, you buy it. If you have cash you spend it today, because tomorrow it's going to be worth 5 percent less.
"Normal horizons don't exist here. People live hand to mouth."
President Robert G. Mugabe has responded to the hardship in two ways.
Although there is no credible threat to his 26-year rule, Zimbabwe's political opposition is calling for mass protests against the economic situation. So Mr. Mugabe has tightened his grip on power even further, turning the economy over to a national security council of his closest allies. In addition, he has seeded the government's civilian ministries this year with loyal army and intelligence officers who now control key functions, from food security to tax collection.
At the same time, Mr. Mugabe's government has printed trillions of new Zimbabwean dollars to keep ministries functioning and to shield the salaries of key supporters — and potential enemies — against further erosion. Supplemental spending proposed early in April would increase the 2006 spending limits approved last November by fully 40 percent, and more such emergency spending measures are all but certain before the year ends.
On Friday, the government said it would triple the salaries of 190,000 soldiers and teachers. But even those government workers still badly trail inflation; the best of the raises, to as much as $33 million a month, already are slightly below the latest poverty line for the average family of five.
This will only worsen inflation, for printing too many worthless dollars is in part what got Zimbabwe into this mess to begin with. Zimbabwe fell into hyperinflation after the government began seizing commercial farms in about 2000. Foreign investors fled, manufacturing ground to a halt, goods and foreign currency needed to buy imports fell into short supply and prices shot up.
Inflation, about 400 percent per year last November, edged over 600 percent in January, but began to soar after the government revealed that it had paid the International Monetary Fund $221 million to cover an arrears that threatened Zimbabwe's membership in the organization.
In February, the government admitted that it had printed at least $21 trillion in currency — and probably much more, critics say — to buy the American dollars with which the debt was paid.
By March, inflation had touched 914 percent a year, at which rate prices would rise more than tenfold in 12 months. Experts agree that quadruple-digit inflation is now a certainty.
In the midst of this craziness, some Harare enclaves seem paradoxically normal. North of downtown, where diplomats and aid workers are financed with American dollars, and generators and bottled water are the norm, the cafes still serve cappuccino and the markets sell plump roasting chickens, albeit $1 million chickens.
Everywhere else, the hardship is inescapable.
In Glen Norah, a dense suburb of thousands of tiny homes southwest of the city, 58-year-old Ayina Musoni and her divorced daughter Regai, 26, share their five-room house with Regai's two children and three lodgers. The lodgers, two security guards and a teacher, pay monthly rent totaling $3 million, or about $14.25 in American money.
Ms. Musoni's latest monthly bill for services from the Harare city government was $2.4 million. The refrigerator in her closet-size kitchen is empty except for a few bottles of boiled water. Christmas dinner was sadza, or corn porridge, with hard-boiled eggs. For Easter, there was nothing.
Mother and daughter make as much as $10 in American money each week by selling vegetables, from 7 a.m. to 6 p.m. daily. But the profits are being consumed by rising costs at the farmers' market where they buy stock. "Like potatoes," Regai said. "I went last week, and it was $500,000 for a packet. And when I went this weekend, it was $700,000.
Millions of Zimbabweans survive these days on the kindness of outsiders — foreigners who donate food or medicine and, more important, family members who have fled the nation for better lives abroad.
As many as three million Zimbabweans now live elsewhere, usually in Britain, South Africa or the United States. An economist here, John Robertson, estimates that they remit as much as $50 million a month to their families — the equivalent of one sixth of the gross domestic product.
Ms. Musoni's is not a hard-luck story; in Harare, most people now live this way, or worse. Indeed, life for many may be better in the nation's impoverished rural areas, where subsistence farming is the only industry and millions of people are guaranteed free monthly rations from the United Nations and other donors. In the cities, little is free.
Unity Motize, 64, lives with her 65-year-old husband, Simeon, in Highfield, a middle-class suburb turned slum not far south of town. The couple occupies one room of their three-room house. The second sleeps two sons, their wives and their two infants, all left homeless last May after riot police bulldozed the homes of hundreds of thousands of slum-dwellers. A 23-year-old son and an unemployed daughter sleep in the living room.
Hyperinflation is a cradle-to-grave experience here. The government recently announced that the price of childbirth, now $7 million, would rise 463 percent by October. Funeral costs are to double over the same period.
In rural areas, said one official of a foreign-based charity who declined to be named, fearing consequences from the government, even the barest funeral costs at least $6 million, or about $28.50 — well beyond most families' means. The dead are buried in open fields at night, she said. Recently, she watched one family dismantle their home's cupboard to construct a makeshift coffin.
"I'll never forget that," she said. "The incredible sadness of it all."
Critics say that Zimbabwe's rulers are oblivious to such suffering — last year, Mr. Mugabe completed his own 25-bedroom mansion in a gated suburb north of town, close by the mansions of top ministers and military allies.
But the government says it has a plan to revive the economy. That plan, the latest of perhaps seven in 10 years, would quickly raise billions of American dollars to end a chronic foreign currency shortage, cut the inflation rate to double digits by year's end and an end to the recession that has gripped Zimbabwe, halving its economic output, since 1999.
Mr. Robertson, the economist, says that is unlikely. Zimbabweans can and probably will endure greater hardship, he says. As a whole, the nation has only now sunk to standards common elsewhere in Africa. But the government may have reached the limit of its ability to do anything about it. Cutting spending seems impossible, and raising taxes further is unthinkable.
That leaves one option: "much more inflation," he said. "Because this government is always going to be printing its way out of its current difficulty."
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RBZ Relaxes Exchange Regulations
RBZ Relaxes Exchange Regulations
The Herald (Harare)
NEWS
May 1, 2006
Posted to the web May 1, 2006
By Jeffrey Gogo
Harare
EXPORTERS can now liquidate 100 percent of their foreign earnings at the ruling interbank exchange rate after the Reserve Bank of Zimbabwe (RBZ) last week relaxed exchange control regulations.
The central bank has, with immediate effect, abolished the sale of the 30 percent export receipts threshold at the official $30 000 against the United States dollar. Exporters can now sell that portion at the ruling interbank rate of $100 193 versus the greenback. This means that exporting firms can liquidate 100 percent of their foreign earnings using the interbank rate.
In a statement released to exporters last week, RBZ noted: "In order to further consolidate and support growth in the export sector, RBZ is pleased to advise the market that from 28th April 2006, the whole 30 percent portion currently being sold to the (central) bank shall be at the going interbank exchange rate. "Under the circumstances, this means that as per standing arrangements, exporters will continue to retain 70 percent in their FCAs, in line with existing exchange control rules and sell 30 percent at the going interbank exchange rate. "All exporters, therefore, now enjoy 100 percent conversion of th eir export receipts at the ruling interbank exchange rate." Previously, exporters were required to sell only 70 percent of their foreign earnings at the interbank rate while the remainder was disposed using the auction rate. Analysts say the new policy would greatly enhance exporter viability.
Exporters have persistently decried that exchange rate distortions had caused havoc in their businesses, as input costs failed to meet revenue. But the stability of the Zimbabwe dollar versus key foreign currencies over the last few months has worked in the interests of importers and holders of foreign currency-denominated debt. Financial analysts expect the dollar to remain stable against major currencies in the short term, although foreign currency shortages are likely to persist. However, what the new RBZ measure has done is to submerge exporter calls for devaluation, as well as addressing, to some extent, the disparities between input and output costs.
Zimbabwe continues to face fo reign currency challenges due to a combination of successive droughts, a declining export base and lack of balance of payments support from multilateral lending institutions. However, RBZ governor Dr Gideon Gono recently announced that the country would receive US$2,5 billion in cash and investments within the next three months.. This is one of the major targets under the New Economic Development Priority Programme (NEDPP) launched two weeks ago. Various efforts are also being pursued to ensure exporters bring in the much-needed hard currency.
The Herald (Harare)
NEWS
May 1, 2006
Posted to the web May 1, 2006
By Jeffrey Gogo
Harare
EXPORTERS can now liquidate 100 percent of their foreign earnings at the ruling interbank exchange rate after the Reserve Bank of Zimbabwe (RBZ) last week relaxed exchange control regulations.
The central bank has, with immediate effect, abolished the sale of the 30 percent export receipts threshold at the official $30 000 against the United States dollar. Exporters can now sell that portion at the ruling interbank rate of $100 193 versus the greenback. This means that exporting firms can liquidate 100 percent of their foreign earnings using the interbank rate.
In a statement released to exporters last week, RBZ noted: "In order to further consolidate and support growth in the export sector, RBZ is pleased to advise the market that from 28th April 2006, the whole 30 percent portion currently being sold to the (central) bank shall be at the going interbank exchange rate. "Under the circumstances, this means that as per standing arrangements, exporters will continue to retain 70 percent in their FCAs, in line with existing exchange control rules and sell 30 percent at the going interbank exchange rate. "All exporters, therefore, now enjoy 100 percent conversion of th eir export receipts at the ruling interbank exchange rate." Previously, exporters were required to sell only 70 percent of their foreign earnings at the interbank rate while the remainder was disposed using the auction rate. Analysts say the new policy would greatly enhance exporter viability.
Exporters have persistently decried that exchange rate distortions had caused havoc in their businesses, as input costs failed to meet revenue. But the stability of the Zimbabwe dollar versus key foreign currencies over the last few months has worked in the interests of importers and holders of foreign currency-denominated debt. Financial analysts expect the dollar to remain stable against major currencies in the short term, although foreign currency shortages are likely to persist. However, what the new RBZ measure has done is to submerge exporter calls for devaluation, as well as addressing, to some extent, the disparities between input and output costs.
Zimbabwe continues to face fo reign currency challenges due to a combination of successive droughts, a declining export base and lack of balance of payments support from multilateral lending institutions. However, RBZ governor Dr Gideon Gono recently announced that the country would receive US$2,5 billion in cash and investments within the next three months.. This is one of the major targets under the New Economic Development Priority Programme (NEDPP) launched two weeks ago. Various efforts are also being pursued to ensure exporters bring in the much-needed hard currency.
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