Poverty for a few dollars more

The redundancy of Zimbabwe’s local currency and the officially sanctioned use of foreign currencies is increasing poverty levels in rural areas, where most of the population live.

Transactions for services and goods are mainly being conducted in foreign currency, particularly US dollars, South African rands or Botswana pulas, after the Zimbabwe dollar crumbled in the face of a trillion percent hyperinflation rate.

Photo: Wikimedia Commons

Foreign currency has dominion

Although the Zimbabwe dollar remains in circulation – with the highest denomination a Z$100 trillion note – it is shunned by shops, transport services and consumers because of its constant devaluation, and providing change to complete a transaction is a challenge.

“Dollarisation has inevitably spread to rural communities, most of which have until recently been unable to tell the rand from the pula, and that is worsening poverty in those areas,” Innocent Makwiramiti, an economist and former chief executive officer of the Zimbabwe National Chamber of Commerce (ZNCC), told IRIN.

“Given that foreign currency was being used minimally in most rural areas, unlike in towns and cities, it is not easy for people from those communities to adjust. The majority of them are encountering problems sourcing the foreign currency to buy commodities and paying for essential services,” he said.

In the last five years, an economy already in recession contracted by 45 percent and unemployment reached 94 percent, according to a report by the UN Office for the Coordination of Humanitarian Affairs (OCHA).

The foreign currency available to most people is usually remitted by the estimated three million or more people who have left Zimbabwe in search of work in neighbouring states or further afield in Britain and even Australia.

John Robertson, an independent economist based in the capital, Harare, commented: “Rural populations have to depend largely on the money remitted to them by relatives and friends living outside Zimbabwe and, to some extent, breadwinners who can generate it in urban areas.

But, given the fact that the economies of most of the countries that Zimbabweans have gone to as economic refugees are in recession, the future is bleak,” he told IRIN.

“Dollarising an economy that for about a decade has not had any foreign currency worth talking about in the formal financial sector, tends to make the population poorer, and the situation is going to be worse in rural areas, which have been more vulnerable than urban communities during the economic meltdown.”

Those formally employed – about 480,000, down from 3.6 million in 2003, according to the OCHA report – were paid in the local currency, putting goods and services sold in foreign currency out of reach.

Stella Makore, 54, a widow from Chirumanzu, a rural district in Midlands Province, travelled about 360km to Harare to get foreign currency from her eldest son, Tichafa, after borrowing US$10 for the bus fare from a local shop owner.

“It is as if the Zimbabwean dollar no longer exists. Every commodity you intend to buy is now sold in foreign currency, and most of us just stare at the items in the shops because we don’t have the money to buy them with,” she said. “Even those selling wild fruits picked from the forests by the roadside are demanding foreign currency.”

Nearly seven million people are in need of food aid, and a shortfall in donor funding has seen rations for the recipients reduced to less than half the recommended monthly minimum.

“I bartered my goat for 50kg of maize grain but have been keeping it at home because the miller demands a payment of US$2 to grind it into mealie-meal [maize-meal], since I did not have the money,” Makore told IRIN.

“Very soon, most villagers will be left without livestock, since they are being forced to sell their goats, sheep and cattle at give-away prices to the traders and shop owners who have foreign currency.”

Makore’s other son left their home in Chirumanzu to engage in illegal gold panning in Shurugwi district, also in Midlands. His absence, despite the possibility of quick riches, has created a quandary for her because she now has no-one to help her tend the fields. Her eldest son, Tichafa, 32, a car salesman in Harare, has little foreign currency to spare.

“I have just paid US$600 demanded at my children’s school, leaving me completely dry,” said Tichafa, who raised the foreign currency from sales commissions. “I don’t even know when I will be able to get the money to send my mother back home.” – IRIN