In Zimbabwe, bread costs Z$10 million
With inflation at 100,000 percent, few can afford even basic goods.
Bulawayo, Zimbabwe — In her pink-and-yellow Indian sari, Neeti Patel sees the customers come into her shop, look longingly at the sandwiches, and walk back out empty handed.
It's not that her prices are high – a sausage sandwich sells for a mere 30 million Zimbabwe dollars, or about $1.25. The problem is that Zimbabwe's skyrocketing inflation – now the world's highest, running at more than 100,000 percent a year – keeps her costs rising. A 30-pound bag of potatos cost 90 million in the first week of March. Now that same bag costs 160 million, and her potential customers simply don't have the money.
"We have to put the prices up, but then people cannot manage to pay us," sighs Ms. Patel, who moved to Zimbabwe with her husband six months ago from India, assuming that this southern African nation would present the same opportunities to her as it has for generations of Indian shopkeepers. "But if we don't raise our prices up, we don't see any profit. We didn't think it would be like this."
There are plenty of theories for why Zimbabwe has descended from Southern Africa's breadbasket to its basket case. Western economists blame the socialist-inspired redistribution of commercial farms by President Robert Mugabe to his cronies and supporters. Mr. Mugabe's supporters blame Western governments, which withdrew economic aid in response to Mugabe's human rights violations. Whatever the cause, the hardship of ordinary Zimbabweans is easy to see in their shops and homes, and difficult to resolve as long as Mugabe and his supporters stay in power.
"It's really frightening what the future holds for people," says Paul Siwela, an economist in Bulawayo, an opposition stronghold. Ethnic purges against Zimbabwe's own people, combined with attacks against white commercial farmers has sent much of the country's skilled manpower elsewhere. "In the last eight years, the economy has contracted to 60 percent of what it was before."
Supporters of Mugabe, who faces the strongest-ever challenge to his 28-year presidency in elections on March 29, blame the country's economic woes on Britain, its former colonial ruler. But Mr. Siwela says most of the country's problems are self-inflicted.
Economic sanctions levied by Western countries on Mugabe's regime don't explain a huge growth in government spending which now equals nearly 60 percent of the total gross domestic product, he says.
With a manufacturing industry now operating at just 5 percent of capacity – largely due to a lack of reliable electricity and water – there are fewer taxes to pay for that spending, and Zimbabwe has fallen deeper into debt.
Most troubling, however, is the way Zimbabwe lost its ability to feed itself, and the region. In 1979, when Mugabe's nationalist rebels overthrew the white-dominated government of Rhodesia, and changed the name of the country to Zimbabwe, thousands of commercial farms managed to grow enough food to export throughout the region. Today, more than a decade of mismanagement and neglect have dropped agricultural production to precolonial levels.
This year, Zimbabwe's shortfall in maize is 360,000 tons, and its shortfall in wheat is 255,000 tons. Food aid, from friendly neighbors, from the United Nations' World Food Program, and from individual family members living in neighboring countries, will help to stave off starvation – for a while.
If most of Zimbabwe's economic misery is self-inflicted, as many economists say, then the solutions also come from within. One senior economic adviser to the government, speaking on condition of anonymity, says that the first step for Zimbabwe is to "liberalize everything."
Solutions must come from within
"First, you have to allow people to trade their Zimbabwe dollars freely, and buy their goods in US dollars. Then you have to look at the government deficit, the whole government budget, including the parastatal companies (such as electric utilities) and the central government. You add it all up, and subtract what you get in revenues, and then you have to bring the difference down."
The stark inequities of the current system of cronyism mean that most people will benefit from a wholesale change in the economy, the adviser says. "It will be painful as you liberalize, but when you liberalize, you are also taking away the risk of doing what people are already doing," such as illegally trading their Zimbabwe dollars for US dollars at black market rates. "It's almost like lifting a giant tax on everybody, because you will be taking that risk away."
A stroll through a regional capital like Bulawayo shows that there is food on the shelves, but all of it highly priced. Massive department stores, built for a time when farmers from miles around would come to do their weekend shopping, are full of clothes, but without customers.
Gas stations have closed down entirely, and most people who can afford it buy fuel from roving bands of illegal fuel salesmen, who ladle out gasoline by the liter and even by the spoonful.
At a local greengrocer, 12 million dollars (50 cents US) buys you a head of wilted lettuce. Ten million dollars will buy a loaf of bread (40 cents US), if you can find any. These prices are now beyond the reach of most Zimbabweans
"We've gone two months without butter," says Sihle, a former schoolteacher from Bulawayo. "For the common man, it's much worse."
The rooms of her apartment show photos of happier times. Now, teachers like Sihle are quitting their jobs, when their 400 million-dollar salary fails to pay for taxi fare to and from school, let alone grocery bills.
With cash almost a worthless possession, Sihle has invested her savings in something more meaningful. She stacks bags of maize meal six feet high and five feet wide in her bedroom, enough to last for months.
"I've never seen a country that doesn't appreciate professionals," she says. "There's no point taking your kid to school. For what? In this economy, if you see someone selling tomatoes cheaper, you buy them and sell them again to get money. Now everyone is a commodities broker."