“Give me just a dollar? Only a dollar,” laments Dumisani as I step out of the shop. If I had a dollar to spare, one US Dollar to be precise, I would oblige him. Unfortunately, even I need someone to hand me a couple of greenbacks, so I can service the rising cost of living. This is Zimbabwe, after dollarization and the elimination of hyperinflation, dollars are very hard to find.
Three years ago, Dumisani and myself were billionaires; no trillionaires, if I remember correctly. Times have changed. We would have both had trillions that could not purchase anything. Today we are using greenbacks and no longer ‘paper barons’.
Foreign currency shortages have been endemic since 1965. In fact Zimbabwe, which was then called Rhodesia, was the first country to be sanctioned by the United Nations. Even today after independence, which was over 31 years ago, Zimbabwe is under sanctions. The most sanctioned nation on earth I hazard to guess.
Being sanctioned by the world’s economic giants brings with it a shortage of foreign currency. Dollarization (the use of US Dollars instead of your own domestic currency) does not automatically get rid of perennial currency shortages.
During the first phase of sanctions, from 1965 to 1980, the government of that time had unilaterally declared independence from Britain. To punish the ruling regime, Western powers stopped investing directly in the country. The government responded by investing heavily in import substitution. This worked as the economy only served to produce for the minority Rhodesian elite. The majority of inhabitants, around 96%, had to survive as subsistence farmers.
When new government came into power after Independence, an attempt to improve the standard of living for the national majority met fierce multinational resistance. Deindustrialisation, fuelled by capital flight- worsened the already prevalent currency shortages. With no discernible economic growth, and poor exports, the currency was devalued repeatedly by a struggling Central Bank. Imported inflation and money printing, to service historical debt obligations, culminated in hyperinflation; which at one point made Dumisani a billionaire.
Dumisani’s grandparents struggled to get foreign currency. Dumisani sees things priced in scarce foreign currency. The question remains: where shall Zimbabwe, once called Rhodesia, finally get its hands on that essentially needed foreign currency?
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