Mon, Apr 09, 2007 - Page 6 News List

Zimbabweans clinging to black market to survive

UNREAL The number of Zimbabwe dollars that bought a three-bedroom house with a swimming pool and a tennis court in 1990 would pay for a single brick today


The economic chaos engulfing Zimbabwe has turned even a mundane task such as renting a car into an unachievable dream for the average law-abiding citizen.

A car rental company on Saturday quoted a day rate of 690,000 Zimbabwe dollars to hire a basic model, plus a deposit of 25 million Zimbabwe dollars. This is the equivalent of a staggering US$2,760 a day, plus a deposit of US$100,000 at the official exchange rate, but only US$35 and US$1,250 respectively on the black market.

The figures provide an insight into the growth of the black market economy in this once prosperous southern African nation, which is reeling under hyperinflation of more than 1,700 percent and suffering from shortages of even the most basic goods.

Most analysts predict inflation will soar even further this year.

The number of Zimbabwe dollars that bought a three-bedroom house with a swimming pool and tennis court in 1990 today -- at official exchange rates -- would buy a single brick. A lifetime public worker's monthly pension cannot buy a loaf of bread.

The independent Consumer Council estimates regular supermarket goods increased in price by between 50 and 200 percent last month alone.

Zimbabwean President Robert Mugabe blames sanctions, drought and former colonizer Britain for the collapse of an economy based on exports of agricultural and mineral products.

Others blame land grabs, in which Mugabe encouraged blacks to force out most of the 5,000 white commercial farmers who owned 40 percent of all agricultural land and produced 75 percent of agricultural output.

Zimbabwe's main foreign currency earnings comes from an estimated 3.5 million of its nationals living abroad, replacing tobacco exports, tourism and mining revenues slashed in six years of political and economic turmoil.

Zimbabweans abroad routinely send hard currency home to their families, much of it ending up on the black market -- and giving even impoverished villagers the benefit of black market deals, making most of the population lawbreakers, analysts say.

Currency violations carry the penalty of a fine or imprisonment in laws.

Many Zimbabweans run the risk, saying they have no choice considering the official rate of 250 Zimbabwe dollars to the US dollar, and the black market rate of 20,000 Zimbabwe dollars to the US dollar.

For instance, a pack of six wax candles, traditionally used by the rural poor but now essential in urban homes during frequent power outages, sold for 47,000 Zimbabwe dollars, which was US$188 by the official rate, or US$2.35 at the unofficial one.

"When we accept cash, it's obviously coming from the black market. We don't ask questions or we'd be out of business," said an official of the rental company who asked not to be identified in case of investigation by central bank inspectors.

"Everyone does it. That's the way it works," he said. "It doesn't make any sense to change at the bank. Do you think our politicians do that?" he said.

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