February 2009

That’s when things got much better here in Harare.

In February, the Zimbabwean government permitted the use of other currencies. Now, the U.S. dollar is the main currency in Harare. The South African Rand is legal tender of choice in Bulawayo, Zimbabwe’s second biggest city.

Before February 2009, there were big problems. It was a crime to transact business in Zimbabwe using a currency other than the Zimbabwean dollar, so the Zim dollar was all law-abiding Zimbabweans could use. But the Zim dollar wasn’t doing so well.

At one point after independence in 1980, less than two Zim dollars would get you a greenback. But things have changed since then, particularly after 1999. In January 2008, for example, it would take 2.5 million Zim dollars to buy a single U.S. dollar. When the Zim government introduced the 100,000,000,000,000 (yes, that’s 100 trillion) note about a year later, it was worth approximately $30.

In 2004, the inflation rate for the Zimbabwean dollar was over 600%. In June 2008, it was about 11,250,000 percent. By November 2008, according to one estimate, prices increased by about 170-200 times each week. Hyperinflation was so severe that quotes on currency exchanges rates were given in 15-minute increments. After 15 minutes, the quote was no good because the Zimbabwean dollars would have lost a chunk of their value.

In February 2009, Zimbabwe revalued its currency, making one Zim dollar equal to what was formerly one trillion Zim dollars. Lopping off zeros from the Zim dollar was nothing new. Since the advent of hyperinflation, the government had removed 25 zeros in total. Each Zim dollar today would be worth 10 septillion dollars if those zeros hadn’t vanished.

Regular people broke the law as they hid dollars, euros, rand, whatever currencies they could collect, under their mattresses and in other hiding places. As hyperinflation destroyed whatever official savings they had, these illegal stashes became the only money many people possessed.

Before February, there was no food on the shelves in stores. Why? Imagine you own a store. You are required by law to sell goods for Zimbabwean dollars. But Zimbabwean dollars are inflating so fast that you can’t set a price for the goods you sell. Within minutes (let alone hours), the price you set is too low. And once you sell a product, the Zimbabwean dollars you receive in exchange are worth less and less each minute you held on to them. If there’s no way to recoup your costs (let alone turn a profit), you can’t afford to stock your store.

I met a man who worked for a Zimbabwean bank for 39 years. His pension, in Zimbabwean dollars, was worth nothing until recently -- when the government “restored” it to $40 per month. Before February 2009, he was paid in toilet paper. Seriously. He also received soap (the cheapest green bars available), grain, chicken, and eggs. And he was grateful.