THE United States Agency for International Development food security watchdog, the Famine Early Warning Systems Network, reported a 20% increase in the price of bread and cooking oil last month.
This is amid regular price increases of goods and services as businesses scramble to maintain the value of their wares or facilities. Wages and salaries can barely keep up. The situation has become like a dog chasing its own tail.
The rate at which the Zimbabwe dollar — bond notes, RTGS dollar or whatever the authorities are calling it now — is depreciating simply shows the complete collapse of the local currency.
At the start of this year, the official exchange rate stood at US$1:$108,66, which has now depreciated to $116,65 on the auction market while on the verdant black market, the rate has climbed from $200 to $240 against the greenback.
We cannot make this up. It is happening and consumers are facing these realities.
So, the question then becomes: Why is the Zimdollar still in use?
We note that both Treasury and the Reserve Bank of Zimbabwe bosses say there is not enough US dollars in the market.
They even reported that total foreign currency receipts for 2021 were US$9,7 billion.
Further, these same authorities tell us as of November 2021, there was an estimated US$1,5 billion worth of notes and coins in circulation, US$1,7 billion in nostro accounts and US$1,2 billion at the central bank in reserve money.
That means, by their logic, Zimbabwe has enough US dollars.
So, again, why is the Zimdollar still being used when it is clear that the market has rejected it? Why not simply redollarise?
Well, maybe that could be because the market doesn’t trust government and probably never will until fat cats are arrested for corruption and poverty is seriously dealt with.
Sadly, though, when people raise these issues, government “releases the kraken,” as in the popular American movie, Clash of the Titans, wherein Zeus releases a monster on civilians for daring to stand up to him.
In Zimbabwe’s case, “kraken” is the security agents in the form of police, central intelligence officers and soldiers to brutalise civilians for being unhappy about their lot in life under this administration.
This is why when the current government installed itself through a military coup in November 2017, the system sacrificed something far greater, democracy.
That’s because if there was democracy, government would understand the economy has completely rejected the Zimdollar. Zimbabwe will undoubtedly perform better as an economy with its own, strong and stable currency, but fundamentals to enable that are missing and government has been skirting the issue of reforms for political expediency.
No one wants a currency whose value changes by the minute and even government itself doesn’t trust the Zimdollar. That is why it pegged local tenders against the parallel market exchange rate for its services.
Incomes are losing value, prices are shooting through the roof, people are starving in their homes, and businesses are demanding US dollars or offering significant discounts for them, so the writing is on the wall.
The auction market is a joke, except for the connected few who are making a killing from it.