Zimbabwe: A Land Of Plenty?
By Kudzai Chimhangwa
Imagine waking up and wondering whether you will be able to go to work because of unpredictable transport costs. Imagine being speculative on whether your family will be able to buy essential products like sugar, bread, soap and cooking oil because they can only be obtained at an exorbitant black market price in the street. Unemployment levels are well over 80% while the rate of hyperinflation is soaring above 4500%, the highest ever recorded in world history. The country is reeling under the grip of Western imposed economic sanctions, which have led to attendant foreign currency shortages. This, as the Central Bank governor Dr.Gideon Gono admits, has severely constrained the country’s capacity to meet foreign payment obligations and finance critical imports such as drugs, grain, raw materials, fuel and electricity. Ironically, despite all these vicissitudes in the economy, Zimbabwe has a flourishing stock exchange and a thriving parallel market that keeps the nation on its toes. People trade in Zimbabwean dollars for South African rands, for the
On a ‘good’ day, there are large queues for cash withdrawals at most banking halls. This is one important factor among many that determines the day’s trading rate. When there are more Zimbabwean dollars circulating in the economy on a given day then the parallel market exchange rate shoots up. For example, if many people are making large cash withdrawals on a daily basis for a week, the ‘exchange rate’ goes up daily. Such a scenario translates into large profits for foreign currency traders who would have invested substantial amounts of money into the illicit business. Another factor that determines the day’s trading rate is whether or not the Reserve Bank of
‘The Zimbabwe Stock Exchange (ZSE) is growing some three times faster than consumer prices. This relative out performance versus general prices is a result of stocks being a chief entry point for the flood of newly created money,’ argues John Paul Koning, a stock market researcher based in
It is an incontrovertible verity that the government is short of foreign currency which it needs to service its day to day functions or activities. Fuel is a constant headache that is causing untold misery because of its shortage. Once again, some ‘enterprising’ individuals are raking in huge profits on a daily basis by acquiring and selling the scarce commodity on the parallel market. One litre of petrol or diesel is pegged at the price of US$1, money which can only be obtained in huge quantities on the parallel market. One cannot buy fuel at the official price at the pump station because it is not available. The traders stock the fuel in green 5 liter containers and hide them in trees or underground burrows then sell it at a price that is triple the official price. The rampant profiteering on the parallel market hugely rewards a few but leads to the suffering of the majority. The sustained price increases of retail products have impaired consumers’ decision making abilities to the extent that people just buy a needed product at a whim. Retailers argue that price increases are only a response to the cost increases on the parallel market. Strangely, retailers tacitly condone the trade of essential commodities on the parallel market in the street by allowing people to hoard and sell them at exorbitant prices. Worse still, when basic goods like sugar and cooking oil arrive, people can only buy them upon purchasing any item in the shop more than the price of the required basic commodity. Failure to do so would be tantamount to opting to buy the commodity on the black market instead.
Besides facing political and socio-economic challenges of substantial proportions, the nation seems to be in urgent need of reform in attitude. Almost everybody involved in one business or the other is out to make a very big profit out of any investment made regardless of ethical considerations. Societal values that uphold the sanctity of mutual business that seeks to serve the interests of every party involved in the transaction have been severely eroded by years of hardships. Following the land reform program in the year 2000, shortages of basic commodities and other essential items like fuel and foreign currency are not a new phenomenon to the Zimbabwean. Even after the government initiated a price blitz under which all retailers were expected to reduce prices and sell their products at prices from one month ago, shelves are currently empty as business is hard to handle. Should any product be available for sale, it takes less than five minutes for a long queue to form, and this applies to any product from shoes to meat. The country is indeed one of plenty, but there is still a long way to go before normal and legitimate business can become a reality for the majority of its people.
Tags: Market , Foreign , Rate
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