By Karin Brulliard
Washington Post Foreign Service
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.
Meanwhile, the nation is in an odd currency limbo, as its new coalition government makes plans to rescue the economy and mulls whether to euthanize the Zimbabwean dollar. Tendai Biti, the new finance minister, has vowed not to officially adopt the rand, despite encouragement from South Africa's president and Zimbabwe Reserve Bank Gov. Gideon Gono, the man widely accused of ruining the currency by printing too much of it in ever more colossal denominations, such as the $100 trillion note.
At the same time, Zimbabwe seems to retreat from its dollar each day. This week, the nation's stock exchange reopened after three shuttered months -- trading only in U.S. dollars. Last week, Prime Minister Morgan Tsvangirai, leader of the main opposition party, vowed to pay civil servants in foreign currency. On Friday, he told reporters in Cape Town that Zimbabwe would move toward a "multi-currency denominated approach."
"We are looking at the U.S. dollar, rand and so on," he said, without offering specifics.
For the money dealers who found riches in greenbacks, it all meant a return to the Zimbabwean norm of scraping by.
The high life already seems like a distant dream, Mugova and Diva said. Both worked at a low-slung string of downtown shops that turned into fronts for dealing foreign cash when the market rose.
Police often raided the place, but they were easily bribed, Mugova said. Runners from the Reserve Bank stopped by regularly, too, they said -- to buy up the foreign cash.
By pulling in as much as $300 a day in profit, Diva said he was able to buy a new sitting-room set and television, eat meat every day and take frequent trips to his rural home, where he bought food for poor relatives.
Some dealers "even managed to get two wives -- even three!" he said, smiling. But he acknowledged that he did not save.
"It just comes on a silver platter," Diva said with regret. "If you work hard for your money, you will use it wisely."
Webster Bhere ditched his job selling tires in 2004 to begin trading under the trees at the Roadport. Once, he said wistfully, he made $1,300 on a single transaction, when a religious charity needed to convert $8,000 in donor funds to Zimbabwean dollars.
Bhere bought a Nissan and built a house. He sold the Nissan and purchased two Toyota Corollas. He went to nightclubs and helped pay for relatives' funerals.
He knew his boom time was coming to an end last fall, when Zimbabwe's rival political factions signed a power-sharing deal and the government licensed some stores to charge in foreign currency.
"There's no way we can be making profit when there's a government that can run," said Bhere, 33, sipping a Coca-Cola at a Harare bar.
Dealers who "used to move around with big cash" now hawk vegetables and congratulate one another when they meet in the city, he said -- a sign they could afford the $1.50 bus fare from the townships.
Bhere took his earnings and converted a Corolla into a taxi. Trouble is, he makes $20 profit on good days, which is not bad in Zimbabwe but still barely pays for groceries.
But if the dealers reminisce for the glory days, they do not necessarily wish for their return. Even some teachers and nurses abandoned their jobs for dealing, Mugova said with frustration.
"It is no way to live. Parents should not hustle," he said. "We just need formal jobs. Not this informal, illegal economy."