Luke Nyoni thought dollarising Zimbabwe’s economy meant an end to inflation, but the weaker greenback is causing headaches in a country that relies on imports for most of its goods.
Much of Zimbabwe’s food and consumer goods now come from neighbouring South Africa, where the rand in October touched a 33-month high against the US dollar, driving up prices in Zimbabwe.
“It’s difficult this side without the rands. We have been forced to cut down on some essentials such as flour. Last month we bought four packets of flour, but this month we bought three packets,” said Nyoni, a civil servant originally from Mberengwa, 430km south-west of the capital said as he strolled a Harare shop with his wife.
Zimbabwe dumped its local currency in January 2009, allowing trade in a range of foreign currencies but adopting the US dollar for all government business.
At the time, the rand was trading around 10 to the dollar. Now it’s closer to seven to the dollar, having reached as high 6,76 earlier this month.
The exchange problem is especially acute in southern Zimbabwe.
Close to the border and dominated by ethnic Ndebeles who migrated from South Africa in the 1800s, stores in the south prefer to price goods in rands, forcing workers to convert their salaries every month.
Government workers earn up to $350 a month, but for those who need to shop in rands, their salaries have shrunk by about 25%, said Wellington Chibebe, secretary general of the Zimbabwe Congress of Trade Unions.
“The rand appreciation is causing anguish for our members,” he said.
In northern Zimbabwe, the problem is with change. While shops price goods in US dollars, they don’t have any American coins to offer as change.
Instead they give a voucher for the change — handwritten on a scrap of a till slip — or force consumers to buy small products like chewing gum until they reach an even dollar amount.
Banks have brought in millions of rand coins from South Africa, which they want retailers to give as change for US dollar transactions.
“The major problem we have is the issue of coins as retailers are not collecting them from banks,” said John Mushayavanhu, chairperson of the Bankers Association of Zimbabwe.
“Right now we have thousands of thousands of rand coins equivalent to R89-million, but retailers are not collecting them.”
Many shops and consumers battle with idea of calculating change in rands for every walk through the till, which has ignited a new debate about whether Zimbabwe should simply adopt the rand as its official currency.
Namibia, Lesotho and Swaziland already peg their currencies to the rand. Southern African nations have agreed in principle to move toward a single currency, but progress has been slow.
Nhlanhla Ncube, an economist in the southern city of Bulawayo, said Zimbabwe’s multiple currency system had created “a tale of two cities in one country.”
“Right now we have the rand dominating this side of the country [around Bulawayo] and yet in Harare the US dollar is widely used,” he said.
“Within two to three years, we should maybe adopt the rand instead of relying on the multi-currency.”
That’s a decision government isn’t ready to take, said economic planning minister Tapiwa Mashaka.
“Definitely some employees have had their earnings eroded due to the strengthening of the rand,” he said, but added: “The debate is still on an academic level to decide whether we formally adopt the rand or any other currency.” – AFP