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A single brick now costs the same as a 1990 house as Zimbabwe inflation soars
Angus Shaw, Associated Press
April 08, 2007

http://www.capetimes.co.za/index.php?fArticleId=3771493

THE economic chaos engulfing Zimbabwe has turned even a mundane task such as renting a car into an unachievable dream for the average law-abiding citizen.

A car rental company on Saturday quoted a day rate of Z$690 000 to hire a basic model, plus a deposit of Z$25 million. This is the equivalent of a staggering US$2 760 per day - plus a deposit of US$100 000 - at the official exchange rate, but only US$35 and US$1 250 respectively on the black market.

The figures provide an insight into the growth of the black market economy in this once-prosperous nation, which is now reeling under hyperinflation of over 1 700% and suffering from shortages of most basic goods.

Most analysts predict inflation will soar even further this year.

The number of Zimbabwe dollars that bought a three-bedroom house with a swimming pool and tennis court in 1990 today - at official exchange rates - would buy a single brick.

The independent Consumer Council estimates regular supermarket goods increased in price by between 50 and 200% last month alone.

President Robert Mugabe blames sanctions, drought and former colonial power Britain for the collapse of an economy based on exports of agricultural and mineral products.

Others blame land grabs, in which Mugabe encouraged blacks to force out most of the 5 000 white commercial farmers who owned 40% of all agricultural land and produced 75% of agricultural output.

Zimbabwe's main foreign currency earnings comes from an estimated 3.5 million of its nationals living abroad, replacing tobacco exports, tourism and mining revenues slashed in six years of political turmoil.

Zimbabweans abroad routinely send hard currency home to their families, much of it ending up on the black market - and giving even impoverished villagers the benefit of black market deals, making most of the population lawbreakers, analysts say.

Currency violations carry the penalty of a fine or imprisonment in laws, which are invoked often but mainly by political and business rivals seeking to settle grudges.

Many Zimbabweans are prepared to run the risk, saying they have no choice as the official rate is Z$250 to the US dollar, and the black market rate is Z$20 000 to the US dollar.

For instance, a pack of six wax candles, traditionally used by the rural poor but now essential in urban homes during frequent power outages, sold for Z$47 000, which was US$188 by the official rate, or US$2.35 at the unofficial one.

A can of soda water on Saturday cost Z$10 000, or US$40 at the official rate, and 50 US cents at the black market rate. The shop price of a bottle of imported Scotch whisky was about Z$500 000, or US$2 000 officially and US$25 on the black market.

A Zimbabwean motorist wanting to rent a car on Saturday was told that the Z$25 million deposit on a Volkswagen Chico was payable in cash - bundles of it - or a bank certified cheque on a day banks were closed for Easter.

Automatic teller machines dispense a government-fixed maximum of Z$500 000 a day, or US$2 000 officially and US$25 on the black market, to each account holder.

"When we accept cash, it's obviously coming from the black market.

"We don't ask questions or we'd be out of business," said an official of the rental company. - Sapa-AP

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