As Zimbabwean Dollar Dies, So Does a Lucrative Career
Saturday, February 21, 2009
It was a steamy day, but Kempton Mugova proudly wore a smart sky-blue sport coat, purchased with the hundreds of dollars a day he reaped as a dealer on inflation-racked Zimbabwe's black market for foreign currency.
His was a lucrative but short career. Last month, the government approved the already widespread use of foreign money. That essentially killed the beleaguered Zimbabwean dollar. And Mugova's market.
"It's now different," said Mugova, 22, who dreams of returning to computer classes but instead ekes out a living selling gasoline coupons, cornmeal and dried fish. "At the moment, I'm trying by all means to make money."
Any crisis breeds profiteers. As Zimbabwe's economy eroded in recent years, rendering Zimbabwean dollars scarce and virtually worthless, money traders were among the most prominent. A few merchants and companies continued demanding local cash, even as prices for goods sometimes doubled overnight, but a rising number wanted more stable U.S. dollars or South African rand. So everyone swapped like mad.
Mere months ago, fast-talking dealers swarmed a downtown intersection that serves as a long-distance bus depot called Roadport. They waved handfuls and bagfuls of cash near the Holiday Inn. They turned a parking lot in a Harare suburb into a trading floor that became known as the World Bank.
Now those places are quiet, no shops accept Zimbabwean dollars, and many dealers are broke like most other people in a nation where the United Nations estimates that just 6 percent of the population is formally employed.
"It was an opportunity which has arisen, and we grabbed it," said Mugova's friend Diva, 35, who did not want his last name published for fear of government reprisal. Now back at selling stationery after saving none of his earnings as a dealer, Diva concluded: "We were not thinking too much."
The death knell for the Zimbabwean dollar came as it does for currencies in all hyperinflationary markets, said Steve H. Hanke, a professor of applied economics at Johns Hopkins University.
"That is that people just refuse to use the money. It really is a nuisance. So it just disappears on you," said Hanke, who recently wrote an online article for the Cato Institute, where he is a senior fellow, titled "R.I.P. Zimbabwe Dollar."
Officially, Zimbabwe's monthly inflation is an unfathomable 231 million percent. Economists scoff at that figure as far too minute. In November, the last time reliable data were available, Hanke calculated it at 79.6 billion percent and proclaimed Zimbabwe "second place in the world hyperinflation record books" -- surpassed only by Hungary in 1946.