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Black market economy makes Zimbabwe a nation of criminals
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 690,000 Zimbabwe dollars to hire a basic model, plus a deposit of 25 million Zimbabwe dollars. This is the equivalent of a staggering US$2,760 (¤2,064) per day - plus a deposit of US$100,000
(¤74,800) - at the official exchange rate, but only US$35 (¤26) and US$1,250 (¤934) respectively on the black market.
(¤74,800) - at the official exchange rate, but only US$35 (¤26) and US$1,250 (¤934) respectively on the black market.
The figures provide an insight into the growth of the black market economy in this once-prosperous southern African nation, which is now reeling under hyperinflation of more than 1,700 percent 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. A lifetime public worker's monthly pension cannot buy a loaf of bread. The independent Consumer Council estimates regular supermarket goods increased in price by between 50 and 200 percent last month alone.
President Robert Mugabe blames sanctions, drought and former colonizer 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 percent of all agricultural land and produced 75 percent 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 revenue slashed in six years of political and economic 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 grudge. Many Zimbabweans are prepared to run the risk, saying they have no choice considering the official rate of 250 Zimbabwe dollars to the U.S. dollar, and the black market rate of 20,000 Zimbabwe dollars to the U.S. 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 47,000 Zimbabwe dollars, which was US$188 (¤141) by the official rate, or US$2.35 (¤1.76) at the unofficial one. A regular can of soda on Saturday cost Zimbabwe dollars 10,000, or US$40 (¤29.91) at the official rate, and 50 cents (37 euro cents) at the black market rate. The store price of a bottle of imported Scotch whisky was around 500,000 Zimbabwe dollars, or US$2,000 (¤1,500) officially and US$25 (¤18.69) by the black market.
A Zimbabwean motorist wanting to rent a car Saturday was told that the 25 million Zimbabwe dollar deposit on a Volkswagen Chico was payable in cash - bundles of it - or a bank certified check on a day banks were closed for Easter. Even illegal money dealers were unlikely to raise that kind of money during the Easter break.Automatic teller machines dispense a government-fixed maximum of 500,000 Zimbabwe dollars a day, or US$2,000 (¤1,500) officially and US$25 (¤19) 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 who asked not to be identified in case of investigation by central bank inspectors "Everyone does it. That's the way it works," he said. "It doesn't make any sense to change at the bank. Do you think our politicians do that?" he said.
A foreign tourist could rent the VW Chico at the fixed, hard currency cost for outside visitors of US$26 (¤19) a day and 35 cents (26 euro cents) a kilometer on Saturday.
If he bought a small, locally made chocolate Easter egg at 22,000 Zimbabwe dollars on his international credit card charged by law at the official rate it would set him back US$88 (¤66). But if he changed money on the street, making him a criminal too, he would get it for just over a single U.S. dollar (75 eurocents). 10 April 2007 - SAPA
If he bought a small, locally made chocolate Easter egg at 22,000 Zimbabwe dollars on his international credit card charged by law at the official rate it would set him back US$88 (¤66). But if he changed money on the street, making him a criminal too, he would get it for just over a single U.S. dollar (75 eurocents). 10 April 2007 - SAPA
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