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There are those who thrive amid economic woes
Kitsepile Nyathi, Nation (Kenya)
September 09, 2008

http://www.nation.co.ke/News/africa/-/1066/468776/-/149e6g2z/-/index.html

For Zimbabweans saddled with the world's highest rate of inflation, the adage 'necessity is a mother of all inventions' strikes a familiar tune. For outsiders it is mind boggling how Zimbabweans survive with inflation topping 13 million per cent, an unemployment rate of more than 80 per cent and average wages of less than US10 a month. Yet on the pot holed streets of the major cities you see the latest top of the range vehicles and shelves at supermarkets in the poorest locations filled with imported food stuffs. Longtime ruler President Robert Mugabe who is blamed for destroying the once prosperous economy with populist policies once dared those who claimed Zimbabwe could not afford to import fuel to lie on Harare's busiest high way for five minutes.

His spokesman, Mr George Charamba often boasts that he sells poultry to complement the meagre salary he draws from the civil service. "I think if the government is serious about its anti-corruption drive it should investigate all civil servants to establish how they afford to continue coming to work when their salaries are not even enough for their transport for a week," said Mr Meshack Bere an illegal foreign currency dealer at Harare's International Bus Rank. "It is either they are stealing or they run small businesses from their work stations where they abuse government facilities such as telephones and computers." However, such an audit would be a waste of scarce national resources as the answers are there for everyone to see - almost all Zimbabweans are now "dealers."

In a story that made headlines in the country last week, two men after buying 12 head of cattle at an auction were overhead asking themselves what they would do with the beasts. They did not have a farm neither did they have plans to slaughter the beasts because they bought them on impulse since they had so much cash they didn't know what to do with it. But there are so many other novel ideas of making quick money that keep cropping up that defy all economics models. The latest get rich craze that has hit Zimbabweans has been necessitated by the acute shortage of cash that has seen the central bank restricting daily cash withdrawal limits to an amount not even enough to buy a loaf of bread. "Those with access to foreign currency take it to the banks whose rates are double those offered by foreign currency dealers," Mr Shame Mandizvidza, a bank teller said. "Instead of giving them cash the banks transfer the money to their accounts"

On Friday US$100 gave you Z$250 000 on the streets and double that at the banks. To make profit, those who are enterprising use bank certified cheques to withdraw their money, which they quickly off load on goods that could be resold fast. "Some buy milk or other groceries, which they sell at half price to raise cash that is quickly turned into foreign currency before taking it back to the bank," added Mr Mandizvidza, who drives a Pajero imported from Singapore. "A lot of these dealers have set up permanent bases at these banks where they spend the whole day moving money from one account to another. "They now have sophisticated networks that also involve bank managers and dealing in cash has become a lucrative business." Estimates show that the parallel market cost of the US dollar rose by more than 3,000 per cent during August alone.

In July, the government deregulated the foreign currency trading system, introducing a willing buyer-willing seller concept, which it said would help bring down inflation and eliminate the black market. "Government's belief that complete acceptance of its regulated official inter-bank exchange rate will help bring inflation under control amounts to no more than a shallow attempt to deny the existence of the distortions, imbalances and scarcities that its policies have caused," said Mr John Robertson, an independent economist. Mr Robertson believes it is a tiny fraction of the population, which is benefiting from the new foreign currency trading system. Most of them are connected to Zimbabwe's ruling Zanu PF. As the economic problems continue to bite more Zimbabweans are forced to live by their 'wits' or immigrate, he said.

He said every intervention the government has tried to implement to alleviate the suffering of ordinary citizens has failed dismally simply because industries are not producing anything. In July, the central bank introduced what it called people's shops that sell imported groceries at ridiculously low prices but the move was largely seen as a desperate measure to pacify voters. "People's Shops, stocked with imported food that were paid for with money drawn from exporters' foreign currency accounts, and more recently with the larger off-take from exporters' foreign currency receipts, might be said to have helped the tiny percentage of the population that they served," Mr Robertson said. "However, in no sense have these been an answer to the country's problems. The population at large remains poorly supplied, the prices of many goods remain beyond the reach of most consumers and, as more people lose their formal-sector jobs, more are being forced to live by their wits, go hungry or emigrate."

Economists are also unanimous that a political settlement is the only solution that would fix the mounting problems. "The course changes needed are political, rather than economic," Mr Robertson said. "No economic measures could result in changes that could work fast enough to put the brakes on our downward plunge. "But the political acceptance of the policies needed to restore confidence in the country's future could very much more quickly lead to the release of funding to overcome the wide-ranging scarcities." Western governments have threatened more sanctions against President Mugabe if the ongoing power sharing talks with the opposition fail. Canada took the first initiative last week when it imposed a strict embargo on Zimbabwe protesting against alleged human rights violations.

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