When I was growing up in Zimbabwe there was something romantic reading about billionaires such as Bill Gates and Warren Buffet in old copies of Forbes we passed amongst each other in Harare’s townships. Little did we know fate was going to conspire to make us more than that.
After years of international isolation hyperinflation in Zimbabwe hit a record 500 billion percent in 2008. Instead of buckling under pressure, Robert Mugabe’s government came up with a brilliant solution: print money on demand. Known for his populism, Mugabe made a wild promise to his followers: “Where money for projects has not been found, we will print it.”
And that’s essentially what happened. The central bank started printing money at will, added or removed zeros. Former central bank governor, Gideon Gono, who was the country’s chief economist, called it the ‘casino economy.’ We quickly became a country of millionaires, billionaires and millionaires in no time. It didn’t matter that the currency was not worth as much as the paper it was printed on. The circulating bills looked temporary and had no security features.
Transacting in billions and trillions rendered coins useless. Business people were not bothered for change. They simply charged their goods and services in big sums. The public taxi fare we paid in the morning was not the same fare we paid on our way back from work. This was the measure of the currency’s daily exchange rate. What the taxi drivers demanded was more or less the going rate.
Despite its worthlessness the Zimbabwean dollar was a scarce commodity. Banks rationed them. We could only withdraw prescribed limits and that meant queuing for long hours. The queue phenomenon gave rise to a new kind of currency – spontaneous relationships. People didn’t need to remember each other’s names; they recognized each other’s faces from yesterday, last month, a year ago. Queueing became more than just a pastime, but an art. Many children were born in the queues. They have telling names too – Billion, Governor, Barclays. This time in our history would always be remembered.
During this period another parallel system thrived on the margins. It was easy to get cash in abundance from the men and women on the street corners, at trendy shopping malls, bus terminuses – the so-called black market – whose speciality was to ‘spin’ or ‘burn’ cash. Everyone had become a hustler.
In typical government propaganda, local shops always appeared stocked on TV news. The president and his young wife gleefully smiled and took pride in the country’s self-reliant capacity on daily news bulletin clips. If only the stock we saw on TV was as easily accessible in reality.
In the 1980s, soon after independence, a single Zimbabwean dollar was equal to a US dollar. Zimbabwe, no doubt, had one of the strongest currencies on the continent but the violent land grabs and a questionable property rights policy resulted in the total financial destruction of a once-booming economy.
When a multi-currency system was ushered in 2009, which allowed currencies from Botswana, South Africa and the US to be used as legal tender, some people started using Zimbabwe dollar bills as toilet paper. This was as much as they felt about the government. The highest note to be printed in Zimbabwe was the $100 trillion dollar bill. It was worth as little as US$5 and could only buy two loaves of bread.
Since the currency went out of circulation a few years ago the Zimbabwe government had not come up with a scheme to demonetize it until now. The country’s central bank recently announced that the demonetization of the Zimbabwe dollar will occur from June 15 until the end of September. According to the demonetization exercise, bank accounts with balances of zero to 175 quadrillion Zimbabwe dollars, for instance, will be paid a flat US$5.
In its announcement the Zimbabwe government indicated it has allocated a US20 million dollar budget for the demonetization. However, Zimbabwe dollar bills are currently worth more on online with currency collectors and novelty buyers who are offering as much as 15 times than they were actually worth.