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A woman walks past a "No Petrol" sign at a gas station in Harare, Zimbabwe, in October.
Philimon Bulawayo / Reuters
Africa
Africa
The cost of some consumer goods increases by 400%, echoing the hyperinflation of ten years ago; some employees literally work for food
A woman walks past a "No Petrol" sign at a gas station in Harare, Zimbabwe, in October.
Philimon Bulawayo / Reuters
A gas station in Harare, Zimbabwe, in October, when the cost of some items jumped 400%.
Photo:
philimon bulawayo / Reuters
Prices for some consumer goods are skyrocketing in Zimbabwe, a painful echo of the hyperinflation that ripped the country of southern Africa a decade ago.
In October, the cost of some items, including cooking oil, alcoholic beverages and flu drugs, jumped up to 400%, while many Zimbabweans rushed to liquidate their savings and that businesses have struggled to pay for their imports. The long gas lines have forced people to refuel at the price of three times more expensive black market. Some companies have begun to pay part of their staff salaries in the form of food products, while many stores no longer accept card payments for imported products.
The sudden price rises and the purchase of panic are the result of an increasingly serious economic crisis, triggered by the long-time strongman Robert Mugabe, who has not been stopped by his ousting there is a year. The disputed July elections, followed by a brutal crackdown on opposition supporters, have complicated Mugabe's successor Emmerson Mnangagwa's efforts to heal relations. with the West, secure the rescue plan of the International Monetary Fund and attract investors looking for solutions. mineral resources.
Shock sticker
Shortages are pushing Zimbabweans to buy some goods on the black market at much higher prices, while companies are charging more for card payers.
Cooking oil, bottle
5 liters of fuel
Influenza medications
Drugs for blood pressure
Bottle of tequila in a high-end club of Harare
$ 3.90 in cash
$ 14 on the black market
$ 5
$ 15
$ 4
$ 14 if you pay by card
$ 20
$ 75
$ 40
$ 160
The finance ministry announced in October that it would post a budget deficit of 11.1 percent of gross domestic product this year, well above its previous target of 3.5 percent. In September he launched a crowdfunding campaign to fight a deadly epidemic of typhoid and cholera in the capital, Harare. He raised $ 14,748.24 on a goal of $ 2 million.
Current price fluctuations occur nine years after Zimbabwe abandoned its own currency to end nearly a decade of hyperinflation, which peaked at $ 79.6 billion in November 2008 and which has resulted in printing worthless notes of 100,000 trillion Zimbabwean dollars. Since then, the US dollar has been the dominant currency, although banks have effectively stopped dispensing cash dollars and most payments are made by card or wire transfer.
Zimbabwe now has two types of dollars: those that exist digitally in bank accounts or mobile money, and real cash dollars, which are trading at a high premium level.
Since November 2016, the central bank has also printed bonds, a form of alternative payment officially equal to the dollar, but which is now trading at a rate of three to one on the black market. Getting cash dollars by wire transfer or mobile money is even more expensive, informal money traders living in the capital Harare charging up to $ 350 for a $ 100 bill this month.
"Bonds are quickly becoming useless because everyone is charging US dollars or raising prices every day," Cosmas Gatsi, a 42-year-old mobile phone technician, said while waiting in a supermarket. in Harare to buy cooking oil.
A poster announces an increase in the price of bread in Harare in October.
Photo:
aaron ufumeli / epa-efe / rex / Shutterstock
He added that he had been told to buy $ 15 from the grocery store before he could join a queue for a $ 3.90 bottle of oil, which cost now $ 14 on the black market. "The price difference between the supermarket and informal traders is just too much."
Some analysts have said that one of the reasons for the soaring prices was the announcement made October 1 by the Zimbabwe Reserve Bank, according to which all local lenders would be required to offer a new type of account to guarantee individuals or businesses depositing dollars from outside Zimbabwe or in cash. withdrawals in dollars and the ability to send money abroad quickly. The bank said the goal was to encourage remittances and exports.
"This statement was perceived by people as meaning that [other] Dollars are not real dollars, "said Evonia Muzondo, senior research analyst at Imara Edwards Securities, a brokerage firm based in Harare. "This is the first step towards devaluation."
Meanwhile, pictures of warrants circulated on social media, fueling speculation that the central bank printed many more notes than she had publicly stated. In July, the bank announced it issued $ 426.9 million in bonds and coins. It has not published any updated data and has not responded to requests for comment.
Mnangagwa has announced his intention to reintroduce a local currency, but only when the country has sufficient foreign currency reserves to support it. His office said on Sunday that illegal dealers would now risk up to 10 years in prison and that their products would be confiscated by the authorities.
A measure of the actual devaluation of the dollar in Zimbabwe is the share price of a South African financial services company
Old mutual
PLC on the Harare Stock Exchange, which reached 8.9 times its price on the London Stock Exchange in October. They are now trading at 3.9 times their London price.
In October, a young boy walks past empty shelves, including bread and meat products, in a grocery store in Harare.
Photo:
jekesai njikizana / Agence France-Presse / Getty Images
International companies operating in Zimbabwe are struggling to adapt. In October, the American fast food chain KFC closed its six restaurants after the exhaustion of chickens.
"We sell bond notes, but suppliers require payment in foreign currency. This put us in a delicate position, "said the channel, owned by
Yum brands
Inc.
said in a sign posted on the door of his central branch of Harare.
French oil company
Total
HER
capped card payments at its local service stations and said it could not guarantee fuel supply. South Africa
Standard bank group
Ltd.
pays half of its staff salaries in cash, while several Zimbabwean companies have made temporary increases or handed weekly food rations to their staff.
Those who do not have access to cash dollars have no choice but to pay higher prices. Munashe Tugwete was this month in a pharmacy in the suburbs of Harare buying a cold medicine. The pharmacist told him that the drug, which had cost $ 4 at the beginning of October, was now $ 14, unless the 40-year-old could pay in cash.
"This year, many people will die," said Tugwete, handing over his bank card. "Where will we have money to buy drugs?"
The pharmacist said his suppliers were asking for cash dollars for imported drugs.
"Many think we are heartless, but if we do not charge prices that allow us to restock, we will close stores overnight," he said. "Blame the economy, not us."
Write to Gabriele Steinhauser at [email protected]
