The world is changing fast and to keep up you need local knowledge with global context.
EDINBURGH — From a distance, the Zimbabwe currency markets are confusing. People trade in a variety of currencies on a black market in order to pay for basic services and goods, while the government plays games to squeeze more money out of its citizens. Author Cathy Buckle has cleared a path through the smoke-and-mirrors: in a nutshell, Zimbabwe’s move to a new currency is a nifty way for the government to extract more funds out of its struggling citizens. President Emmerson Mnangagwa pledged to take decisive action to bring foreign investors back to Zimbabwe when he took over from Robert Mugabe, who ruled for nearly four decades, in a light-touch coup in November 2017 and a follow-up rigged election the following year. Instead, he is fumbling as Zimbabwe plunges into ever darker depths. – Jackie Cameron
By Cathy Buckle*
Watching a game show on TV the other day the big prize winning question was how many zeroes are there in a trillion. Not many Zimbabweans have to think for more than a few seconds to come up with the right answer.
Thanks to our government’s ruinous economic policies when Robert Mugabe was in power, we all learnt to never trust the banks with our money and to count in threes: 3 zeroes is a thousand, 6 zeroes a million, 9 zeroes a billion and 12 zeroes is a trillion.
We had million, billion and trillion dollar notes in our wallets and our bank balances were in quadrillions, quintillions and septillions. The Zimbabwe government called the money Bearer Cheques and we went shopping with “bricks” – piles of packed notes- stuffed into shopping bags and rucksack while supermarket tellers had cardboard boxes under their counters which they filled with notes every thirty minutes.
That madness all changed for a brief period from 2009 – 2013 while the MDC’s Tendai Biti was the Minister of Finance; the Zimbabwe dollar Bearer Cheques were scrapped and we traded freely in US dollars and South African Rand.
When Mr Biti left so did sanity: US dollars evaporated and before we knew it were back to another made up currency: Bond Notes. In the last year, with Mr Mnangagwa in power, our downward slide has become a plunging free fall and this week we heard that all the US dollars in our bank accounts, along with all the Bond notes and coins in our pockets, are now called RTGS dollars.
RTGS dollars are to be valued against the US dollar at an exchange rate which will be announced everyday. The RTGS rate to the US$ will apparently float depending on supply and demand. The supply will come from exporters (who have to surrender most of their US dollar earnings to the Reserve Bank anyway) and people depositing real US dollars into the banks or swopping real US dollars for RTGS dollars at whatever the rate is on the day. The demand will come from ten million ordinary Zimbabweans.
In other words, on Wednesday I went to bed with $100 in my bank account. On my bank statement it specifies that my money is: “Currency: USD.” Today my $100 is apparently called RTGS$100 and if the exchange rate is 2 Bond to I USD then my RTGS $100 is only worth $50. If tomorrow the exchange rate has changed and is 3 Bond to 1USD then my RTGS$100 is only worth $33.33. If by Monday the exchange rate has changed again and is 5 Bond to 1USD then my RTGS$100 is only worth $20. Simply put, the government of Zimbabwe have, yet again, stolen all our US dollars.
The big question is can I, as an individual go into the bank and say I want to withdraw my RTGS $100 as US dollars at whatever the rate is on the day? I know I’m going to lose half or three quarters of the value if I do this but hey, a real US dollar note is a real US dollar note and I can use it anywhere in the world, unlike the RTGS invisible bank note which I can only use in Zimbabwe.
For the past three years (since the Bond note was introduced in 2016) withdrawing our money from the banks has been virtually impossible. Sometimes, on a very good day we may have been able to withdraw one crisp green $20 note; mostly we’ve been lucky to be able to get 20 Bond dollars or 20 dollars worth of Bond coins.
So can I go and withdraw my RTGS$100 in US dollars at the rate on that day? That’s not yet clear but the Reserve Bank statement says: “Foreign Currency from the Inter Bank Market shall be utilized for bonafide foreign payment invoices,” and that at a Bureau de Change I can only get US dollars if it is for: “ foreign subscriptions, business and personal travel.”
Tendai Biti who a decade ago made sanity from Zimbabwe’s currency mess said that the Reserve Bank Governor: “is a thief because he has effectively devalued people’s salaries to the extent that if you earn $500, it means you now earn $100.”
Global economist Prof Steve Hanke said: “Zimbabwe’s Min. of Fin. Mthuli Ncube has just officially blessed a huge devaluation in Zim quasi currencies and said they will float. He should have added that they won’t float on a sea of tranquility, but sink.”
And the saddest thing of all is that it’s the ordinary people of Zimbabwe whose earnings, be it from bananas on the roadside or low paying jobs in the private and public sector, are already just withering away and nothing’s being said about them. In the past four months prices have gone up by 200% but wages and income have not. The huge queues in supermarkets have disappeared because people can’t afford to buy groceries anymore and our highways are wide open as people can’t afford to travel anymore either.
As I end this letter the military are still in our towns and on our highways, there is yet to be any accountability for the people killed by armed soldiers in the January protests, people are still being abducted from their homes at night (two young men this week in Mutare) people are still in hiding, still in prison cells, still haven’t been tried in court.
The RTGS Dollar nonsense has provided a convenient and very thick smoke screen to the horrors of the past few months in our country and to the question everyone still wants to know: where did all our US dollars go?
- Cathy Buckle is the author of four children books. She has also written the non-fictional African Tears, the Zimbabwe Land Invasions, Beyond Tears: Zimbabwe’s tragedy, Innocent Victims: Rescuing the Stranded Animals of Zimbabwe’s Farm Invasions and Sleeping Like a Hare. The article was first published at www.cathybuckle.com.
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.