You Can Rig An Election, But You Can’t Rig An Economy

Why is KFC closed?” We asked the gas station attendant in Victoria Falls. She shrugged, “Currency problems.” The exchange rate for Zimbabwian bond to United States dollar is one to one. Ask any shop. Ask any bank. Ask any vendor. One to one they all say. Then, there’s a chuckle. Everyone knows it isn’t one to one, but the law says it is and anything to the contrary is illegal. . . What? The official statement is Zimbabwe has backed its national bond at a one to one rate with the United States dollar. And most people say it has for the last two years or so - since they rolled out the bond - but speculation has taken over. This week’s Zim Business Weekly newspaper wrote that in the black market, Zimbabwe bond notes have been traded anywhere from one USD for one bond and fifty cents to one USD for five bond. There was even a few cases of one for six! Our experience in reality reflected something quite similar. Local super markets and restaurants had increased their prices, but not so drastic to alert the authorities of price manipulation. As a foreigner this is either a bane or an opportunity. At times you can take advantage of the strength of foreign currency (i.e. USD, Euros, Pounds, etc.) while at other times the inflated one to one prices can really hurt your pocket. For Zimbabweans who received their salaries or had bond on hand, they seemed to be in a buying frenzy. Whether at the supermarket or the black market, people were in no shortage of spending cash for goods or forex. There was one place in particular where it seemed you could find the best deal in the world. The gas stations - whose prices I’m sure are regulated by the government - were selling a litre of fuel at one bond fifty cents. At the average one USD for three bond exchange we found, that meant each litre of fuel cost fifty US cents. This is less than half of the region’s average that we’ve seen. As you can imagine, people started lining up for a deal like that. But sadly, that’s all people really seemed to be doing; lining up and waiting. Most gas stations seemed to be out of fuel, but for the few that had, cars and people stretched around the blocks to queue up (see picture below).

This is no doubt the beginning of a potential fuel shortage as speculation on the bond continues to grow.

Another commodity that was bemoaned was cooking oil. Unquestionably a staple for any house hold - and an item that usually seems to have an aisle on its own in this region of the world - was completely absent from any store or market we passed. A Zim woman we spoke to chalked it up to opportunist Zambians coming across the boarder during the currency crisis and buying up all their necessities at a depressed rate against their Zambian kwacha.

Although this is one speculation, ironically many Malawians and Zambians say 20 years ago most of their processed agricultural products like dairy, eggs, and the like used to be imported from this once relatively affluent country of Zimbabwe. This country was even a place that others in the region migrated to for opportunities like work and higher paying salaries. So clearly, when a once agricultural powerhouse is running out of cooking oil, someone must be sowing salt.

On a different note - our time in Zimbabwe, speaking to Zimbabweans has been very pleasant. Whether it was a brief conversation or one that went late into the evening, chats were friendly and open. No one seemed surprised or frustrated with the governments handling of the cash crisis. After all, this wasn’t anyone’s first time seeing an economic crisis play out in the country, most siting 2008. Despite being democratic in the way they talked about the government, people expressed they had no real influence over the government, so getting frustrated or making a bunch of noise wasn’t going to help. Instead, most people told us they’ve chosen to focus on their work and just hope for the best.

#costrip