Monday, January 26, 2009

Zimbabwe: ''Dollarisation'' of Economy Hitting Poor Hard

Harare - The collapse of the Zimbabwean economy has led to the ''dollarisation'' of the economy - and even to what some, who have still maintained some sense of tragicomedy, call the ''petrolisation'' of the economy because of the re-emergence of barter trade. Zimbabwe is suffering world record inflation, which has made it even harder for many businesses to budget or plan ahead. The Central Statistical Office put the inflation figure at 231 million percent when it was last calculated in July 2008. According to a recent report by the international civil society organisation Civicus, ''most retailers are not accepting Zimbabwean currency. Goods are being sold mainly in US dollars and South African rand, which has pushed up the prices of basic food items, water, fuel and medicines, putting them out of reach for ordinary people.'' Lynette Sarimana works for an accounts firm in the capital Harare where she is being paid with fuel coupons. ''For us it is the 'petrolisation' of the economy because we are paid with fuel coupons which we exchange for groceries, '' was her sardonic comment on the situation. Harare-based economist Martin Tarusenga told IPS that, ''the economy of Zimbabwe has collapsed. Hyperinflation has led in part to the unofficial dollarisation of the Zimbabwean economy, forcing many people to resort to the use of foreign currency. ''The US dollar has become the de facto currency, along with the South African rand, and most goods are only available in foreign currency stores.'' It has been illegal to buy or sell goods or services in any currency other than the Zimbabwean dollar. However, the government gradually loosened these restrictions and in November 2008, dollarisation became legal when the Reserve Bank of Zimbabwe licensed selected businesses to sell goods in foreign currency. Showing that he too has lost confidence in the Zimbabwean dollar, reserve bank governor Gideon Gono established government-sanctioned foreign currency shops and businesses in September 2008 as a means of capturing some of the foreign currency circulating in the country. The creation of the ''foreign exchange licensed warehouses and retail shops'', Foliwars for short, are seen by some analysts as negatively impacting not only on Zimbabwe's economy, but also on the rural poor and vulnerable populations who have no access to foreign currency. Those without relatives abroad struggle. The Global Poverty Research Group (GPRG) estimates that in 2006, 50 percent of all households surveyed in Zimbabwean cities and towns were regular recipients of money, food, and other goods from relatives who are abroad. GPRG is attached to the universities of Oxford and Manchester in the UK. ''The dollarisation essentially means that all employers, including government, have to meet their salary requirements in forex (foreign exchange) as the Zimdollar cannot buy sufficient forex for their requirements. The January salary for a teacher is 23 trillion Zimbabwean dollars (46 dollars),'' Harare-based economic commentator Hopewell Gumbo, who works for the Zimbabwe Coalition on Debt and Development (ZIMCODD), told IPS. ZIMCODD is a nongovernmental organisation working towards social justice regarding issues of debt and trade. The money is only enough to buy a few bags of mealie-meal. Today nearly every business accepts, if not prefers, foreign currency for payment, whether licensed or not. Even the most essential everyday basics, such as transport fares, hospital fees, bread, milk, water, cellphone cards and medicine are now being traded in foreign currency. But 90 percent of Zimbabwean workers are still paid in Zimbabwean dollars, according to the Zimbabwe Congress of Trade Union (ZCTU). It is advocating for the payment of salaries in dollars. ''The ZCTU notes that the Zimbabwean market has been dollarised and most social services such as education, health, rental and transport, among other things, have been dollarised,'' Lovemore Matombo, ZCTU president, told IPS at the end of a recent meeting to discuss the dollarisation of the economy in Harare. ''The ZCTU general council has therefore resolved that, starting from January 1, all ZCTU affiliates and the general workforce should negotiate wages in terms of the United States dollar, failure of which the sector will withdraw its labour.'' The ZCTU is the largest representative labour body in Zimbabwe. Gumbo said failure to pay workers in foreign currency will force them to find other ways to survive, such as migrating to neighbouring countries or engaging in the many informal dealings that now characterise the Zimbabwean economy. Many civil servants have taken to corruption as a means of survival. ''Service delivery by government will collapse further than what we are seeing at the moment. The civil service is in a tight corner. The next fiscal year's budget is going to be a nightmare but for now we continue to wait for the formation of a new government,'' argued Gumbo. The Zimbabwe National Chamber of Commerce (ZNCC) wants the total dollarisation of the economy. ZNCC president Obert Sibanda told IPS that dollarisation will help rescusitate the economy. ''We have to accept that the economy has been dollarised and that all companies should be registered to trade in hard currency to boost production,'' Sibanda demanded.

No comments:

Post a Comment