Zimbabwe’s impoverished 'millionaires'

Wednesday 26 March 2008

As a presidential election in Zimbabwe looms, President Robert Mugabe's real challenge could be the hyperinflation that currently sits at 100,000%.

What can $10 million buy you at your local grocery store?
 
If you’re talking about Zimbabwe dollars, and the shoppers in question are living under the economic diktat of President Robert Mugabe, the answer, say some reports, is…a chicken.
 
Unless you’re late getting to market – in which case it’s a few eggs.
 
That’s the price you pay when inflation in your country is running at 100,000% – and rising. (Compare that with the roughly 3% inflation that’s inspired so much hand-wringing by Europe’s central bankers.)
 
This Saturday, voters in Zimbabwe will head to the polls for a presidential election in which the country's long-ruling leader, Robert Mugabe, faces a rare challenge from two determined opponents.
 
Many analysts see little chance of a fair contest from a ruler whom they accuse of clinging to power by hook and crook and cronyism - even as he has presided over a systematic demolition of Zimbabwe’s once-rich economy.
 
The real challenge for Mugabe, they say, is the ticking time-bomb of hyperinflation that makes a mockery of any attempt to earn an honest living – when there are any jobs to be had in a country where unemployment stands at an estimated 80%.
 
Zimbabwe today is a place where prices can change dramatically in the time it takes to get to the market.
 
The inflationary spiral, seen in numbers, does not even begin to reflect the magnitude of the hardship it implies for a citizenry reduced to scrabbling for the barest necessities.
 
Starting in 1998, when inflation was 32%, consumer prices have been blazing an upward trajectory at near-warp speed: inflation stood at 59% in 1999, 208% in 2002, 1040% in May 2006.
 
Today, it’s soared into the six-digit stratosphere – at more than  100,000%.
 
The New York Times reported earlier this month that a bakery bun purchased for 800,000 Zimbabwe dollars can be resold on the black market immediately afterwards for $1 million. The report said soap is routinely carved up into sugar-cube-sized chunks, while cooking oil is sold by the tablespoon.
 
To “combat” the inflation scourge, Mugabe’s put a $10 million note in circulation. But as we’ve already seen, a multi-millionaire in Zimbabwe can barely make an omelette these days.
 
The tragedy, most economists agree, is that it didn’t have to come to this.
 
Zimbabwe, with its fertile farmland, was once the bread basket of Africa. Today, it relies on food aid.
 
The root of the problem, analysts say, are the decolonization policies that forged Mugabe’s reputation as a great African liberator when he came to power in 1980.
 
His regime set about seizing thousands of white-owned farms and redistributing the land to poor blacks, as well as to his own associates. A noble policy, on the surface. Except that the new owners, often with little or no farming experience, fell disastrously short of the productivity levels achieved by the former owners.
 
As for the country’s vast mineral wealth – much of it in gold and diamonds – Mugabe is widely accused of expropriating it for his own, and his friends’, personal enrichment.
 
Ahead of the elections, Mugabe has ordered businesses to slash prices to their mid-February levels. But some economists fear such draconian state-imposed controls will only stoke further inflation down the road.
 
In the meantime, many Zimbabweans can only rue the days when inflation was a mere…1040%.