Goats, Cattle, Sheep and Chickens Instead of Change

How the Cash Shortage in Zimbabwe Affects Daily Life and the Work of the Foundation
Analysis14.07.2017Ekaterini Georgousaki

For the employees of the Friedrich Naumann Foundation for Freedom in Harare, each day begins in the same way - with the way to the ATM and waiting in long queues in front of the bank hoping to at least withdraw a few dollars from their own account. How much money you can withdraw or whether you get cash at all is uncertain every day. Some banks have set a maximum withdrawal limit of $50 or even $20 per person, but this amount is not guaranteed either. Even if one is among the few Zimbabweans who have work, the unemployment rate is estimated to be around 90 percent, one can not access the bulk of their own wages. Also affected are the thousands of Zimbabweans, who are dependent on the transfer of family members who work abroad (mostly in South Africa). In 2015, a total of $1.8 billion went from the Diaspora to Zimbabwe, accounting for 15% of the country's gross domestic product. 

Back to barter?

In light of the massive cash shortage, it is hardly surprising that other forms of trade are used. At the beginning of April, the Minister of Finance presented to Parliament a bill that would allow goats, cattle, sheep and chickens to be accepted by banks as collateral for loans. A few days later the Minister of Education suggested that parents should have the possibility to pay outstanding school fees in the form of livestock. In addition to exchange trades, which are practiced especially in rural areas, there are currently three forms of payment in Zimbabwe: US dollars, which are scarce, bond notes and credit cards. In addition, the South African border is sometimes accepted as a means of payment, especially in the cities. In 2009, the US dollar and the South African rand had replaced the Zimbabwean dollar as the official currency after inflation reached 231 million per cent in the country. The current situation in the country is reminiscent of the crisis in the years before 2009. In the face of the acute shortage of US dollar notes, the government, under the 93-year-old Robert Mugabe, who has been in office for almost 40 years, allowed the so-called bond notes as a parallel currency. Many consider the introduction of "bond notes" as a reinstatement of the Zimbabwe dollar through the back door. The anticipated effect that this would stabilise the economic situation in the country has not been sustained. The "bond notes", which do not have any value outside Zimbabwe, are now rare and are traded on the black market. A staff member of the Foundation was paid only $40 from her total salary after waiting for hours in her bank branch. This was issued to her in the form of 25 cent "bond notes" coins. In addition, the "bond note" coins are of poor quality and often fall apart. In the face of cash shortage, the use of credit cards is often the only way out, but there are massive difficulties. Large supermarket chains, in which the pack sizes of everyday commodities and foodstuffs are continually shrink as people are able to afford less and less, are legally obliged to accept card payments. In rural areas, however, card readers are usually not available, and even in a large city like Harare, one reads "cards not accepted, cash only" in many shop windows.

When arriving at Harare International Airport, there are a lot of things to be wondered about. First of all, one is greeted by an oversized portrait of President Robert Mugabe in the arrivals hall - admittedly a similar picture is also found in other authoritarian countries. While a large number of African countries, as a European passport holder, must apply for a visa in advance at the embassy of the respective country, the situation in Zimbabwe is different. A visa can only be obtained from US dollars on arrival, there is no change. Once you have a stamp in the pass, you go on to the customs, where you meet a group of about five to ten officials, who scan every piece of luggage, hoping to find something on the list of prohibited import goods , To get some US dollars in the form of penalties.


"Buy local"

Last year, the Zimbabwean government published a multi-page list of goods that could not be imported into the country. The list ranges from milk products and cans to window and door frames. After protests, the provisions were relaxed, but the import volumes for certain goods are still strictly regulated. To name just a few examples: a maximum of 1kg of coffee cream, 2kg of muesli, 1kg of yoghurt, 4kg of detergent, 24 soaps and 180 ml of creams can be imported per month. The government explains the strict import regulations with the aim of protecting the domestic economy. The crux in this narrative: Zimbabwe itself produces almost nothing more. As a result, the country is thus forced to import basic food and everyday items from the neighboring countries, mainly from South Africa. These are then repackaged in the country (usually in smaller quantities) and sold for a higher price. The financial burden, especially for families, is steadily increasing. In September 2016, a family of five in Harare would have to spend around 161 US dollars a month on food to ensure minimum care for each family member. This went up to 178 US dollars a few months later in April 2017. In terms of total cost of living, the amount required by a family of five to survive in Harare increased from $478 in September 2016 to about $519 in April 2017.



The work of the Friedrich Naumann Foundation for Freedom

Rising costs and massive cash shortages also affect the work of the Foundation in Zimbabwe. The responsible project worker reports that events often have to be postponed for lack of cash until sufficient cash can be spent to pay for the transport of participants and other costs. The next elections are scheduled for July / August 2018, but there are strong indications that the elections could take place at an earlier date. The health of 93-year-old Robert Mugabe, the president of ZANU-PF, has visibly deteriorated. Early in July, Mugabe traveled to Singapore for a "routine examination", according to the official statement.

Election campaigning has already begun, activists are being arrested and recently, during a protest by opposition parties, parts of Harare were sealed off by the police. The work of the Foundation must adapt to the changed framework conditions in the country. As the opposition in Zimbabwe is severely fragmented, the issue of coalitions will play an important role. In addition, events are planned with civil society partners in which strategies for dealing with human rights violations in the context of the elections, which are most likely to increase strongly in the coming months, are likely to be developed.

Ekaterini Georgousaki is a program co-worker in the Regional Office of the Friedrich Naumann Foundation for Freedom in Johannesburg, sub-Saharan Africa.