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Zimbabweans Turn to U.S. Dollar as Hyperinflation Erodes Value of Local Currency
Officially, the store is allowed to charge only in Zimbabwe dollars. That is of little concern to Timothy. "You just bribe the policeman," he said. Police officers are paid in the national currency, the equivalent on this day of about $3 a month. They are as eager for American cash as anyone, he said.
Humanitarian organizations say the scarcity of Zimbabwean cash has combined with rising prices to bring widespread hunger, once a rural problem, to the city. This year, for the first time, the U.S. Agency for International Development opened soup kitchens in Harare.
"We survive by the grace of God," said Virginia Mago, 46, a toothless vegetable seller who lives in Epworth, a short distance from Timothy's shop but a world away from being able to buy there.
Mago once knitted sweaters in a shop in the city, but business dried up. She has no relatives overseas. Her bank account, which she said once held enough to pay for her daughter's university education, disappeared, consumed by bank fees.
To raise cash, she rises at dawn and takes a bus to a market 10 miles away. She buys vegetables and fruits in Zimbabwe dollars, then sells them from a table outside her brick hut, also usually in Zimbabwe dollars.
For her one daily meal, she buys cornmeal from sellers in her neighborhood, never the store. The sellers let Mago buy on credit. But they demand foreign currency, so she must change her Zimbabwe dollars on the black market. Each time, the exchange comes at a steeper price. "Life is getting tougher," she said, thinking to remember the last time, two weeks before, that she ate meat.
Experts say foreign cash comes in mostly via money transfers from the 3 million or so Zimbabweans abroad, in the hands of foreign executives and tourists, and from sales of illegally mined gold and diamonds.
In downtown Harare, black-market money dealers operate openly, thrusting wads of U.S. and Zimbabwe dollars toward cars pulling up to the Holiday Inn or Eastgate mall. Dealers and Western diplomats say values swing widely when the Reserve Bank, desperate for foreign currency, sends runners to snatch up U.S. dollars, encouraging the black market and fueling scarcities.
Cash scarcity has prompted the invention of currencies. Schools and doctors accept gasoline coupons, their values pegged to about 20 U.S. dollars. Zimbabwe Online, an Internet service provider, takes payments in the coupons or shares of Old Mutual, an insurance company listed on stock exchanges in Harare and London -- although many business executives say checks and bank transfers are no longer viable because they devalue massively in the days it takes them to clear.
Ben Nturi's printing company used to hum 24 hours a day. Now just two of 20 printing machines run, and sales have dived nearly 90 percent. On a recent rainy evening, publications in the silent warehouse testified to Zimbabwe's plight. On a table were stacks of gasoline coupons. In a corner were dusty textbooks, ordered eight months ago by a public university but never paid for.
All sales are in U.S. dollars now, Nturi said. But to give a quote for a new job, he must first call his paper and ink suppliers to inquire about their prices and their stock.
"For you to be doing business in Zimbabwe, you've got to be pricing every hour," said Nturi, 49.
Like most Zimbabweans, he now hoards cash and pours it into assets -- machinery, property. At night, he frets.
"Look, you work 16 years running a company. Now you watch your investments diminish. You watch your money diminish in the bank," Nturi said. "When you have money and your money is worthless, you are now poor. We are all poor now."