The year 2008 will go down in history as the worst year for Zimbabwe ‘s economy as it climaxed the spiraling inflation rates whose magnitudes were probably unmatched anywhere else in the world . The Zimbabwe Dollar had lost its bearings and made no monetary sense as it incessantly lost value by the hour against major currencies. This culminated in a sub- economy which totally outdid any system in the actual economy . The new system which had no precedent in the entire world depended on and was perpetrated by the banking system of the day . If one had United States Dollars they would sell them to a cash baron on the streets who would pay for them either by issuing a cheque or effecting a bank transfer of a rated equivalent in Zimbabwe Dollars or Bond as they were commonly known . The cheque would then be deposited into a bank account . The economy was literally being run and driven from the streets and as much as monetary authorities changed policies to curb the prevailing scenario, they were always on the losing side . Streetwise men and women rose to the status of barons by doing a few transactions . School and college dropouts statistics escalated as young men and women raced to join the Eldorado on the streets .It no longer made much sense to remain in school while others of their peers, probably of lower intellectual capacity, had better lives hustling at street corners. Lavish lifestyles became common , holiday resorts were no longer the domain of the elite , air travel outpaced and outdated road travel as almost anyone who so wished to travel could do so by air . Properties in the leafy locations of Harare became common habitations for ordinary people as people were so liquid and could afford classy livelihoods paying exorbitant rentals . Shop shelves were eroded of goods as demand exceeded supply but this did not deter Zimbabweans as they would cross into neighboring countries to purchase basic commodities . It was a runaway economy and anyone who dared won .
On the other hand the real drivers of the economy began to suffer and shrink . Major companies were slowing down and others shutting down laying off thousands of people . Salaries of professionals such as medical doctors made them laughing stock as the money could hardly last them a day while someone who hardly went through high school would be making much more money and living comfortably . Many left the country in search of greener pastures in neighboring countries or overseas draining the country of the much needed brains to push the nation forward . Hospitals went without doctors and nurses , schools without teachers and those who held the fort did their work without the requisite passion and enthusiasm . Price controls, put in place to protect consumers from fluctuating and escalating price regimes , began to hit back against the same people they purportedly sought to shield as production came to a halt .Companies could no longer afford selling their products at prices far below the cost of producing them . It was only after the eventual decision of the central Bank to introduce the use of multiple currencies coupled with a porous political union of the country’ s two major political parties, ZANU PF and MDC in a government of national unity that the economy began to take a turn for the better . For the next 4 years the economy was to reasonably stabilize .
It was after the disbanding of this union and the holding of the 2013 harmonised general elections that the economy once again assumed a downward trend which has trailed to this day where, from the horizon, those days of a dominant street economy are resurfacing and the toll is slowly weighing on the population, the only difference being that the present day situation is aggravated by a liquidity crunch as the central bank tries to deal with the rampant externalization of the much valued United States Dollar . Dorothy Minda , of of the street money traders interviewed by this reporter had this to say ,’This is now our way of living and we pray that the situation in the country remains as it is as this is my job I wake up to every morning and if the situation normalizes I am doomed .’ This is the mindset that a significant number of Zimbabweans harbor and this is detrimental to the well- being of any nation.
There is now a tightly controlled distribution of cash and most transactions are being carried out electronically using debit cards and telephone banking systems. Banks are issuing out coins on withdrawals and there is a withdrawal limit per day . A parallel banking and monetary system has arisen . Cash in the hands of unscrupulous money traders is being rated and sold on the streets . A buyer in need of cash transfers money into the trader’s phone or bank account and is given cash with a premium on top . The rate, which started off at 5percent when bond notes were introduced in 2016, has risen to as much as 35% implying for every dollar purchased you are paying an extra 35 cents . Those who buy bond notes do so with the intention of purchasing United States Dollars from the street and there is yet another rating for such transactions and people are left with no option but to pay the required rate as they need to purchase goods from other countries where only the US Dollar is tradeable. This has impacted negatively on businesses as they are adjusting their prices in accordance with these ratings . The official price index is rising and with it inflation is likely to surge, hopefully not to the levels of 2008 although we are living in its shadows .
The fears are real and predators are ready to pounce on the prevailing situation . There will always be a few beneficiaries to such an eventuality and the economy will be in turmoil and fire fighting will not help tame the situation . Monetary authorities need to revisit every facet of the economy , address and eradicate the root causes of anomalies . An economy that flip flops between bona fide custodians and manipulators will never work . Stability will attract external and internal investment together with participation in the mainstream economy by ordinary people , an aspect which is key in the economic development of the nation of Zimbabwe .