"zimpact" in zimbabwe: hyperinflation & its worthless currency

Zambia is a landlocked country with 5 other nations surrounding it. The one to its southeast is none other than the "Democratic"(term used lightly) Republic of Zimbabwe. Does Robert Mugabe ring a bell? Mugabe has been the nation's president for over 30 years. Over the past two decades, his administration has been marked by corruption and violence. In the 2008 election, opposition leader (and now the Prime Minister through power sharing) clearly won the Presidency, but through violence and intimidation, Mugabe managed to hold on with a power sharing agreement with Morgan Tzangirai.

Other than Mugabe, Zimbabwe has been known all over the world for having to purchase a loaf of bread with piles and piles of bills. In the early 2000's, Zimbabwe started to experience some economic woes and the Reserve Bank of Zimbabwe responded by massively increasing its supply of money in order to fund public services (without properly accounting for it). How severe was the inflation, you ask? With the world in recession, the Zimbabwean dollar dropped even more in 2008 to ZW$1o trillion = $1 USD. It got to a point where they were close to running out paper to print money. Let's take a look at the numbers below (official inflation rates):

Zimbabwe Average Inflation Rates

• 2004: 132.75%
• 2005: 585.84%
• 2006: 1,281.11%
• 2007: 66,212.3%
• 2008: 231,150,888.87%

Can you imagine? Over 2 hunder million % inflation. Zimbabwians literally needed to bring in cash in wheel barrels in order to purchase simple groceries and household goods. The Reserve Bank responded four different times by literally changing the currency by dropping a certain amount of zeros.

Below is a snapshot of prices in July, 2008:

• An egg: ZW$50 billion
• A loaf of bread: ZW$100 billion
• War veteran monthly pension: ZW$150 billion

Cheques are only accepted at retailers if the customer writes double the amount. By the time the cheque is cleared, the cost would have already gone up. It became so bad that bills needed to have expiry dates after a certain time before they are devalued.

An expired Zimbabwe ZM$500,000 bill given to me by a coworker

After the coalition government was sworn in last year, the Zimbabwian government decided to suspend the Zimbabwe dollar and to begin using foreign currency, mostly the US dollar. This was a good decisions as improvements started to appear. Household goods, like maize meal, bread, cooking oil, matches and toilet paper, have began reappearing on grocery stores shelves. The average basket of goods for a poor family dropped approximately 4% in August, 2009.

How has this affected Zambia. With the on slaught of factories and businesses closing in Zim due to the poor economy, people started losing jobs and putting people already in poverty, deeper and deeper into the hole. There was a large migration of Zimbabwian refugees into Zambia, South Africa, and other neighbouring southern African nations as a result. With little to no capital as refugees, they are reduced to selling petty goods on urban streets.

Now that is what I call ZIMPACT!

Despite the hyper-inflation and Mugabe, I would still like to visit Zim sometime before I leave.