June 27, 2008
Where an egg tray costs billions
Angus Shaw | AP
HARARE, Zimbabwe: For many Zimbabweans, the chief worry is not political violence or President Robert Mugabe’s iron hold on power. It’s out-of-control inflation that puts anything more than a single daily meal beyond reach.
Underlying the current political crisis is an economic meltdown that has caused a shortage of food and all basic goods, while leaving the people an abundance of zeros.
The official inflation rate was put at 165,000 percent by the government in February, but independent estimates put the real figure closer to 4 million percent.
Zimbabwe is believed to be the only country in the world that now carries out routine financial transactions in dizzying set of quadrillions — one quadrillion is a 1 with 15 zeros behind it, or 1,000,000,000,000,000.
“It’s gone completely crazy. Our computers and calculators can’t deal with all the zeros even on the cheapest products,” said Harare economic analyst David Moyo.
Brokers said this week that the Zimbabwe dollar broke the barrier of 10 billion to a single U.S. dollar in direct bank buying, while in electronic transfers, it exceeded 20 billion Zimbabwe dollars to $1 U.S.
Bread has disappeared from stores. Previously, a loaf in a supermarket cost 2 billion Zimbabwe dollars (20 U.S. cents at the official exchange rate), or 15 billion Zimbabwe dollars ($1.50 U.S.) on the black market, where prices of scarce items can vary up to 10 times higher.
A shopper lucky enough to find milk will spend 3 billion dollars (30 U.S. cents) for about 1 pint. A tray of 30 eggs, also scarce, can bought in a store for 45 billion dollars ($4.50 U.S.).
Butter is hard to find, but 17 1/2 ounces of margarine will cost 25 billion dollars ($2.50 U.S.) and a pack of 10 cookies costs 19 billion dollars ($1.90 U.S.).
Most stores and business across Zimbabwe have already knocked six zeros off price tags, showing 45,000 dollars for two pounds of scarce low grade beef — but at the cash register, it’s tallied back at 45 billion dollars ($4.50 U.S.).
Moyo said a car battery was priced Monday at 2.4 trillion dollars ($240 U.S.), a tenfold increase in the past two weeks.
The largest Zimbabwean bill in circulation is a 50 billion note ($5 U.S.), while the smallest currency unit a one cent coin, which buys nothing by itself.
The sight of a person carrying brick-sized wads of notes — or even wheelbarrows full of cash — is less common now, because consumers are limited to withdrawing 25 billion dollars a day from the bank, usually in five 5 billion-dollar notes.
The highest amount a check can be made out for is 900 billion dollars ($90 U.S.) but many people complain that there is not enough room in the space provided to write out the high figure.
“Whatever happens on the political front, the economy has to be addressed, which no one seems to be doing right now,” Moyo said.
Since the first round of national elections on March 29, shortages of basic goods have worsened, public services have come to virtual standstill, power and water outages have continued daily, and streets and highways have crumbled.
The price of gasoline has soared, pushing up bus and commuter fares to more than what many workers earn in a day.
Production lines have been halted as factories report mounting absenteeism.
“We certainly can’t go on like this. Something’s got to give before too long. Everyone hoped we could move on once the election was over,” said James Davis, a factory manager.
Opposition leader Morgan Tsvangirai claims to have finished first in the first round of presidential voting March 29, although he did not win the simple majority needed to avoid a runoff, scheduled for Friday. A campaign of violence and intimidation caused Tsvangirai on Sunday to quit the runoff, saying it would not be credible. That has cleared the way for Mugabe, 84, to continue his 28-year rule, despite mounting condemnation from the international community, including even loyal African allies who say the former independence hero has become a despot who has bankrupted the nation.
“If they think they can tame inflation with an illegitimate election and no international support, let them try,” said Tsvangirai spokesman George Sibotshiwe.
So far, Mugabe has not moved to try to put the country back on a sound financial footing. The problem, analysts say, is that few options are available.
“If Mugabe continues, the economy will continue to decline,” said Brian Raftopolous, a South African-based economic researcher. “Mugabe has no solutions.”