Why Do You Have to Buy Bread for 10 Million Dollars in Zimbabwe
Imagine going to your local shop and handing out a note of 200 million dollars to buy some bread. The shopkeeper hands you two loafs and gives you back around 180 million. Sounds absurd? Well not for everyone, no. It has been a reality for Zimbabwean people for a long time.
Today 1 USD is equal to 361.9 ZWD. It is an output of a massive economic catastrophe called Hyperinflation. We won’t be talking about the serious textbook terms that only an Econ major will understand. Simply put, hyperinflation occurs when inflation rate exceeds 50%. It occurs for two reasons: an increased money supply incoherent to economic growth and when demand outruns supply in case of demand-pull inflation. What happened for Zimbabwe is that a series of bad decisions by the Govt., international sanctions, use of multi-currency-based system and not achieving a substantial GDP led to this economic turmoil.
In the aftermath of liberation from the British, Robert Mugabe’s Govt. issued land reforms to oust the whites and put the black native farmers in charge. However, this initiative nipped in the bud as the black farmers proved incompetent. Majority of the whites left the country taking a portion of its capital and the lands were given to the Mugabe loyalists. Meanwhile, the govt. started printing excessive amount of money to fund the Congo wars and used a wicked tactic of understating their funding to the UN to hide the discrepancies. But it didn’t go as intended and they soon faced sanctions from the IMF and The European Union.
Naturally the blame game started by Mugabe’s Govt. But it was well obvious who were at fault. The multi-currency system in 2009 to allow the use of South African, Congolese and US currencies as legal tender made the situation even worse as the citizens started using ZWD as toilet tissues. It was an honest reflection of their thoughts on their national currency. But honestly, when the highest bank note of your country is 100 trillion that is equivalent to a staggering amount of 5 USD, you can’t really blame them.
The now extinct ZWD has become a collector’s item as people are buying it on Ebay at twice or thrice the price of its real rate. I mean, who wouldn’t want to have a 100 trillion dollar note?
A lot of measures were taken to counter this mess. But most of them failed. Demonetization, redenomination, black market all proved inadequate. The inflation rate although plunged down to 97.9% in June 2019, it leaped back to a massive 676% in March 2020 due to massive drought and the Covid-19 pandemic. So, there is a chance of you to experience this in person. If you want to buy a loaf of bread worth millions, booking a flight to Zimbabwe might be your best bet.
