Spectre of Zimbabwe hyperinflation triggers panic-buying
Inflation peaked at 500 billion per cent before the national currency was abandoned in a favour of the US dollar, and the economy never recovered
Harare: Driving to work last week, Dennis Zhemi found his usually busy neighbourhood garage in the Zimbabwean capital, Harare, deserted and a forecourt attendant signalling “no fuel”.
For Zhemi, it was a worrying sign that Zimbabwe’s chronic economic collapse could be heading for another vicious downwards spiral of basic shortages, hyperinflation and social chaos.
Zhemi’s heart sank as he drove on, hoping to refuel at the next station, but at least 40 other cars were queuing on the side of the road towards the petrol pumps.
“Immediately, I was reminded of 2008 when we slept in fuel queues and I prayed silently that we don’t return to those days,” the 43-year-old human resources consultant said.
He left his car at the garage as he did not have enough fuel to reach his office, and caught a bus to work.
A decade ago, hyperinflation in Zimbabwe wiped out personal savings, left shops empty and made it all but impossible to buy a tank of petrol or daily groceries.
Inflation peaked at 500 billion per cent before the national currency was abandoned in a favour of the US dollar, and the economy never recovered.
Fears of a repeat of those desperate days have grown in recent weeks in Zimbabwe, and panic-buying has seen prices rocket.
The stockpiling has been driven by a collapse in confidence in the parallel “bond note” currency that was launched by 93-year-old President Robert Mugabe’s government nearly a year ago.
Bond notes dispersed by banks and ATMS are in theory worth the same as the US dollar, but consumers worry the currency could be rendered worthless like the old Zimbabwe dollar that was scrapped in 2009.
“We are already witnessing shortages of basic commodities,” Peter Mutasa, president of the Zimbabwe Congress of Trade Unions, told AFP.
“The situation has been triggered by lack of confidence in the bond notes. We are being driven to barter for goods as there is no hard currency in the banks.”
Currency traders who gather near the foreign bus terminal in Harare now offer to exchange one US dollar for 1.37 bond notes — an illegal transaction that underlines the bond note’s weakness.
For non-cash bank transfers, the traders offer to pay 1.50 in bond notes for each US dollar, AFP reporters witnessed.
Like many shops in Zimbabwe, one small supermarket in Harare visited by AFP offers several different prices for goods — an illegal but common practice.
A 175-gram bar of Protex soap costs $1 (Dh3.6), but 1.30 in bond notes or if you pay by swipe card.
A two-litre bottle of Pure Drop cooking oil sells for $3.20, but its price has jumped suddenly to 4.50 in bond notes and $5 — or sometimes even $7 — when paying by card.
Mugabe, whose land policies are widely blamed for Zimbabwe’s economic collapse since 2000, this week railed against currency “saboteurs” and vowed that the “price hikes would be dealt with”.
Further economic breakdown could reignite street protests that shook Mugabe’s regime last year, and the president used a speech on Thursday to acknowledge the inflation threat.
“There are those eager to manipulate the currency so that they can trigger inflation [and] cause panic-buying,” he said. “Those are the mischief-makers in our midst.”
Harare-based economist Prosper Chitambara said Zimbabwe’s economic problems were likely to worsen ahead of next year’s election, when Mugabe will again stand despite his weakening health.
“There is a lot of uncertainty due to the political situation,” Chitambara said.
“That is why we have seen the re-emergence of the parallel market and a multi-tier pricing structure. As we approach the elections, the uncertainty will increase.”
A brief demonstration on Friday in Harare by anti-Mugabe activists over the economic crisis was dispersed by police using teargas.
Unemployment in Zimbabwe is estimated at over 90 per cent, and at least 80 per cent of government revenue is used to pay state workers’ wages.
With cash so scarce, many Zimbabweans have resorted to bartering — exchanging goods directly — to survive.
Brenda Mpofu, who runs a second-hand clothes stall in Harare, said she now travels to rural areas to swap clothes for maize and later sells the maize or exchanges it for other goods.
“I used to be able to afford to pay rent, buy food and clothes and send my children to school,” she said.
“But these days I am barely managing. There is no money and business is just so low.”