Harare economics for beginners

I arrived in Harare at about 11am, but the Zimbabwe effect kicked in prior to touching down on the runway. A fuel shortage in Harare meant that for the Air Malawi flight to be able to return to Malawi, it needed to completely fill its tanks, and this meant that some luggage had to be removed. The passengers were presented with a trolley with the bags selected to follow at a later date, and there was mine. I tried to argue, but they kept saying it was for my own safety, and were not willing to make any changes. However, they did let me open my bag and grab a change of clothes and other items I really didn’t want to be delayed. The rather stern airport/airline official informed me the next flight from Blantyre to Harare would be on Saturday.

Harare international airport (where the plane was greeted soon after landing by a fuel truck – perhaps the fuel shortage was merely a rumour) is a remarkably modern airport, more similar to Seatac or Gatwick than it is to Nairobi or Lusaka – in fact it outshines many European airports in terms of cleanliness. The ceilings are high, the floors polished, and the space huge. Due to the current situation there are not a great deal of flights through this airport, so it is also remarkably quiet.

I had been informed, rather alarmingly, by my colleagues here that I should make sure to “just tell the truth” when confronted by immigration officials, which somewhat increased my feelings of trepidation about dealing with the bureacracy. However, as ever with such anticipation, the two immigration officers who greeted me (not so much as peered over the high booth at me) were not really interested in any sort of conversation. $55 later my passport was stamped up with a 30 day business visa, and I was on my way, holding my plastic bag of pants and toiletries in one hand and my trusty ukulele in the other. Customs, which I had similarly been warned about (“just walk through, don’t declare anything or hand any forms over”), was a breeze, with the staff far too deep in their own conversations to pay attention to any passengers.

The other side of officialdom, I was met by Jealous, a smily chap who drives and logisticizes for Christian Aid, who patiently waited while I tracked down the Air Malawi staff who could at some point in the future reunite me with the rest of my clothes. Then we headed into town and Jealous began to explain the situation here to me.

As you will likely know, Zimbabwe is currently in a condition of hyperinflation, which sounds very dull and boring and distant from the real world. The value of the Zimbabwean Dollar is in free fall in relation to hard currencies such as the British Pound, US Dollar or South African Rand (not exactly “hard” itself). This means that every time someone in Zimbabwe wants to import something, it costs considerably more than the last time they did it – and of course this difference is passed on to subsequent purchasers. So prices in shops go up and up. In a country where almost everything is imported (estimates are that 50% of food is imported into this, what was once the breadbasket of Africa) this means the price for anything you care to name will be different from one week (or even day) to the next. Another way of understanding it – if inflation is over 100% a month , if you keep money in a bank account for a month, you’ll be able to buy less than half what you could have done if you’d blown it all on pay day! The official inflation rate in Zimbabwe is 4,000%!

This makes for a chaotic and stressfull life for people in Zimbabwe, apart from the few who have access to hard currency, and can thus change a little as they need it. As a visitor I fall into this category, and while it is complicated, as I will describe later, for a Zimbabwean life is very hard. For example, Jealous told me how he has a son at a boarding school somewhere else in Zimbabwe. They payment for the school is made annually, however, since the price of food is doubling each month in ZW$ terms the fees paid cannot possibly cover the cost of food for Jealous’s son and other students. So the school has little choice (short of closing) but to ask the parents to make emergency payments each month to cover the increased cost. And that is the situation for someone in a relatively well paid and stable job. Unemployment is running at about 80%.

For a visitor like myself with hard currency well hidden and secured over various parts of his body, the greatest stresses are spared, but there are some interesting things that must be born in mind.

There are several exchange rates which must be understood. There is the official exchange rate of ZW$250 to the US dollar. There is the semi-official negotiated exchange rate used by NGOs and other international organisations of ZW$20,000. And there is the parallel market rate of ZW$90,000. For official expenses I am changing at the ZW$20,000 rate, which means what I spend money on officially costs roughly five times more than it could. But there is worse! The hotel is allowed to charge for accomodation in USD, but must charge for meals, laundry etc in ZWD. But if you put these things on your room bill, they must be converted to USD at the official rate of 250:1. Let’s look at buying a beer at the bar. A bottle of Zambezi beer (very tasty!) costs ZW$50,000. At the black market rate, that is somewhere between 50 and 60 cents. At the rate I’ve been using, it is $2.50. But if I make the mistake of signing for that beer, when I come to check out US$200 will have been added to my bill. When I enquired about laundry at the check in counter, the concierge informed me that getting a suit dry cleaned would cost $1,200 if I signed for it. “That can be quite embarrasing” he said.

And remember that inflation – the non-official rates change on a daily basis! Tomorrow the black market rate may be as high as ZW$100,000 to US$1. The beer may cost 60,000 tomorrow. But the official rate stays at $250, inflating my tab considerably.

Everyone in Zimbabwe I have met so far seems to be talking and thinking about money all the time – things are so complex, I am not surprised. I was surprised to hear that the stock market here is doing fairly well, with many middle class participants, and some people even making a tidy profit in companies that have found legal loopholes or other ways to beat the system. Of course, some people are losing everything, but the way things are here, you lose everything by standing still.

What amazes me is that the country isn’t in a total state of decay. Much of the infrastructure (in Harare at least) is operational – tap water is even supposedly drinkable, traffic lights work, electricity flows, the internet connection in our office here is easily the best I have seen in seven African countries. Economically, things have been “unsustainable” here since 1999 – rather a sustained record of economic chaos. How much can it spiral before something happens, and does this duration of extreme problems translate into extreme outcomes. Time may tell…

It’s all very strange.

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