opinionBy Jonathan Moyo
Zimbabwe today is a living hell for all and sundry. If you are in hell, there is no amount of convenience that can make you comfortable. Hell is by definition inconvenient. Period, writes Jonathan Moyo
In Zimbabwe, August is a sacred month in which the heroes of the armed liberation struggle that led to independence in 1980 are commemorated and their achievements celebrated. This year there was a twist to the usual pomp and circumstance when the memory of the many heroes had to give way to a megabucks publicity blitz on the three zeroes which the country's Central Bank, led by its ubiquitous Governor Gideon Gono, removed from the greatly devalued national currency amid anger, controversy and confusion which turned otherwise conservative money matters into a deadly battle ground in President Robert Mugabe's increasingly bitter succession war.
Here is the background. On July 31, 2006 Gono took the nation by surprise when he announced during a much awaited presentation of his midterm monetary review statement that a new family of bearer's cheques would be introduced by midnight that day and further that the new notes would be minus three zeroes.
What this meant in nominal terms is that if one had a trillion Zimbabwe dollars that was immediately reduced to a billion; if you had a billion that became a million; if you had a million it shrunk to a thousand and if you had a thousand dollars they zeroed to just one dollar. Under a multimedia media blitz dubbed, "Project Sunrise", the Central Bank prescribed maximum amounts of the old bearer's cheques that individuals and businesses would be allowed to deposit with banks per day to get the new family of bearer's cheques. The Bank fixed August 1 to August 21 as the prescribed period for the purpose.
Zimbabwe has been using short term bearer's cheques in place of banknotes since 2003 when the country literally and inexplicably ran out of regular banknotes triggering a shortage of local currency that nearly toppled Mugabe's Zanu PF government when people could not access their own money, including salaries, deposited with banks.
Since then there has been endless debate on whether the temporary bearer's cheques are in fact money and the debate got even more animated earlier this year when a rather mischievous junior magistrate who apparently was missing his traditional banknotes ruled that the bearer's cheques were not money at law and his overzealous judgment earned him an embarrassing rebuke from judicial authorities.
Even though the monetary authorities assured Zimbabweans that the removal of the three zeroes was only nominal as the real value of the currency did not change, that assurance did not have many takers, especially because everyone, including the downtrodden, had become a millionaire with farm labourers earning a minimum of 10 million Zimbabwe dollars per month.
The well-to-do had become accustomed to showing off their often ill-gotten wealth by counting it in billions and trillions and so the removal of the three zeroes, just like that, was a psychological blow that left the rich classes crying foul and feeling like victims of an officially sanctioned robbery that was effected through the Central Bank by a stroke of the pen.
More ominous for the governor of the Central Bank, who is being rather maliciously accused in some circles of having embarked on the currency reforms to launch a high profile bid to succeed Mugabe as president, there are strong feelings in the media that the real targets of the currency changeover were Zanu PF barons and bigwigs who had been stashing trillions of old bearer's cheques earned through corrupt deals and used for speculative purposes on the black market.
These feelings gained some credence when the Central Bank governor and some of his officials received death threats soon after the start of the currency changeover.
But accountants and others in the banking and financial sector welcomed the Central Bank's removal of three zeroes from the currency because they say the trillions that were popping up everywhere were beginning to ruin their calculators and financial software programmes that were failing to cope as they had been designed to handle data of a modest economy with manageable numbers.
But there are some, especially among the beer drinking brigade and others that are generally active in the social and clubbing scene, who welcomed what they dubbed the "zero revolution" because it relieved them from the indignity of having to use wheelbarrows or even sacks to carry their money around by bringing back the wallets which had become extinct through being just useless.
With the removal of three zeroes from the currency, the highest new bearer's cheque is 100,000 Zimbabwe dollars which is equivalent to one hundred million dollars of the old bearer's cheques. This means it is now possible to conveniently carry in a wallet one million dollars which is equivalent to the former one billion dollars that was impossible to carry without the help of a crane or a weightlifter.
But the return of the wallet in the streets of places like Harare and Bulawayo has also meant the return of pickpockets and handbag snatchers who had become an endangered criminal species. Vendors and other hangers-on have also returned to the now very busy streets, many of them as pickpockets and handbag snatchers, after having been brutally taken off the streets by the Zanu PF government last year in May during a crackdown called Operation Murambatsvina (or Operation Remove Filth) which the United Nations denounced as a humanitarian disaster for destroying the homes and livelihoods of some informal sector dwellers who make up at least 18 percent of the population.
With inflation in Zimbabwe just under 1,000 percent, making it the highest in the world including lethal war zones such as Iraq, many traders made the inflationary situation worse by taking unethical advantage of the currency changeover to hike prices. Other traders off-loaded their billions and trillions of old bearer's cheques by buying up and hoarding commodities such as fuel, maize meal, sugar and cooking oil which are now scarcely available in the shops.
Perhaps the most controversial aspect of Zimbabwe's currency switch after the removal of three zeroes had to do with the limits that the Central Bank put on the amount of cash that individuals and businesses could deposit a day during the changeover period between August 1 and 21. Individuals were allowed 100 million Zimbabwe dollars of the previous bearer's cheque per day while businesses had an allowance of between one and five billion dollars per day depending on whether the business handled high cash volumes.
Anyone with old bearer's cheques above these limits was required to justify the source of the money or risk losing it all. Many lost it. The reason for this was that out of the 45 trillion Zimbabwe dollars that were in circulation in the form of old bearer's cheques, the monetary authorities could only account for a paltry 10 trillion.
The rest was believed to be stashed in bedrooms, garages, offices and even more was thought to be in hideouts outside Zimbabwe's borders in countries like Botswana, Mozambique, Zambia and South Africa where it was being used for parallel and black market currency exchange and commodity trading to the detriment of the formal banking system which had become cash dry. To enforce these limits, Central Bank officials supported by heavily armed Zimbabwean police, army personnel and members of Mugabe's Zanu PF youth league set up roadblocks everywhere, literally everywhere.
People could hide but they could not run. When the process started, anyone caught at these roadblocks with the old bearer's cheques whose value was more than the prescribed limits had to forfeit it there and then and be thankful for not being thrown in jail.
What was ridiculous and caused as much anger in the public as it caused confusion among the bureaucrats in charge at the Central Bank is that the officials manning the roadblocks would seize everything and not just the amount above the prescribed limits.
Even worse, they would not give receipts for the seized loot thereby creating huge opportunities for rent-seeking behaviour. Although this confusion was cleared towards the end of the currency changeover process, a lot of damage was done as many ordinary people lost their hard earned cash at the hands of unscrupulous and corrupt officials many who turned the roadblocks into lucrative money making ventures.
In a country like Zimbabwe where at least 70 percent of the population lives in the rural areas, there is no need to guess that the real victims of the currency changeover were rural folks. Because there was no prior announcement about the new currency to avoid alerting criminals and currency stashers, and because Zimbabwe's newspapers do not circulate in the rural areas while radio and television reach only less than 45 percent of the country due to the poor national broadcasting transmitter network, an overwhelming majority of rural folks simply did not know about the new money and the need to replace their old bearer's cheques by August 21.
So ignorant villagers were caught unawares and they were disadvantaged big time. Many urban criminals flocked into rural areas to beat the daily limits on allowable cash deposits of the old bearer's cheques by offering unusually high and therefore irresistible prices to buy cattle, goats, donkeys, chicken and grain such as maize and wheat from gullible peasants who were left holding useless money that they could not replace within the prescribed period and at the prescribed limits. While in the rural areas, the urban criminals would tell villages fairytales that the removal of three zeroes from the national currency also applied to livestock such that if one had say 3,000 cattle, they were to be reduced to just 3!
Many villagers had to walk long distances - averaging 100 kilometres - to have their old bearer's cheques replaced because of the absence of banking facilities in rural areas. These problems prompted the Central Bank to extend the deadline of replacing old bearer's cheques for the rural folks from August 21 to September 2 under very strict conditions designed to keep away urban criminals and currency stashers.
In the end, the changeover from the old to a new family of bearer's cheques with less three zeroes was accomplished and the monetary authorities have claimed that the exercise was a resounding success given its magnitude and the fact that it was a home-grown and home-driven effort without any assistance from the international community.
The Central Bank has also emphasised that the main reason for the currency changeover was to bring convenience to ordinary people as well as for businesses and the banking community. Also, because the monetary authorities could not account for some 30 trillion dollars of the old bearer's cheques in circulation that are believed to have been used for illicit purposes, the Central Bank felt it necessary to render all of the unaccounted for currency useless by introducing a new family of bearer's cheques which the authorities think will be manageable and controllable.
But critics have not altogether been impressed. The reason is that while it has been much appreciated from a convenience point of view in technical terms, the currency reform still has a very high risk of being undermined by the absence of wider policy reforms to address Zimbabwe's skewed macroeconomic fundamentals that had led to an economic meltdown which in turn now requires political and constitutional reforms.
Zimbabwe today is a living hell for all and sundry. If you are in hell, there is no amount of convenience that can make you comfortable. Hell is by definition inconvenient. Period.
Poverty in Zimbabwe is above 85 percent, unemployment hovers around 90 percent, the informal sector was destroyed by Mugabe's Zanu PF government last year to the detriment of at least 18 percent of the population, inflation is just under 1,000 percent, interest rates are in the upwards of 400 percent, foreign exchange coffers are virtually dry because of a sharp decline in exports due to company closures, low production levels and the collapse of agriculture since the land invasions of 2000.
Zimbabwe not working
Because of these and related factors, the Zimbabwean economy has shrunk by more than 35 percent over the last seven years. In a nutshell, Zimbabwe is simply not working.
Citing these factors some opposition parties in the country, which are rather very weak at the moment due to infiltration by state security agents and leadership failure, have complained that the removal of three zeroes from the national currency by the Central Bank is doomed to ultimately fail. They say this is because the currency was already valueless with one British pound attracting a parallel market rate of almost one million Zimbabwe dollars of the old bearer's cheques, prompting some opposition politicians to observe that if, as part of the "zero revolution", you remove three zeroes from nothing, you still remain with nothing and that is not revolutionary.
To the opposition, the real zero that should be removed first is Robert Mugabe. That, they say, would be revolutionary beyond money matters.
Prof. Moyo is an independent MP and a former minister of information in Zimbabwe