One practical problem of hyperinflation is the sheer inconvenience of carrying bundles of cash. As a response, the Zimbabwean authorities this week introduced a new Z$50 000 (US 50 cents) note, but critics warn its value has already been overtaken by inflation.
”The new Zim $50 000 note is not enough to buy a bottle of beer or a newspaper. How can it be expected to ease the problems of carrying huge sums of money?” complained Dunstan Moyo, who has been making wallets and handbags in the capital, Harare, for the past five years.
He has watched his original business dry up, but has diversified into knapsacks — a handier way of carrying around large wads of cash. Enterprising street vendors have also spotted the gap in the market and stand outside banks dangling plastic bags, rucksacks and, for larger withdrawals, suitcases.
Zimbabwe’s current inflation rate is 600%, and the Reserve Bank predicts it will climb by 200 points before the end of the year. Some analysts suggest 1 000% would be closer to the mark as the local currency steadily devalues in the face of a crippling foreign exchange shortage.
The highest denomination was previously the Z$1 000 note, which no longer buys a packet of sweets. Following disastrous money shortages in 2003, temporary bearer cheques were printed with a maximum value of Z$20 000.
But an average Zimbabwean family now needs Z$16,6-million ($166) a month to survive and even with a Z$50 000 note, that is a lot of paper.
Queues outside automated teller machines have become chaotic as customers struggle to withdraw enough money to cover basic daily groceries and transport fares.
Economic consultant John Robertson said plastic money was not an option for most Zimbabweans, as they cannot meet ”the basic requirements demanded by banks to open accounts”.
Banks have stringent conditions for new accounts, including proof of residence and a pay slip, but more than 70% of Zimbabweans are unemployed.
The government, which blames unofficial sanctions by western governments for the economic crisis, has responded to the rampant inflation by announcing it will soon introduce a new currency, after ”wide-ranging” consultations. – Irin