Big Question Economy In Print 

Dollars to Donuts

From the Fall 2014 Issue “Connectivity

By Tafadzwa Chigumira

HARARE, Zimbabwe—“It was a thrill when the U.S. dollar was introduced in Zimbabwe as legal tender. Before that, we were all too often balancing the cash in the office, which was a nightmare—especially with all the zeros, not to mention the coins and having to weigh them,” says Anna, a bank teller. The bank, it seems, had a standard weight for a certain amount of coins for each denomination. Instead of going into the bank and counting the coins, they would weigh them because there were so many. “Inflation got so bad,” she continued, “it was a relief to have a stable currency, as our money was losing value by the minute. Before the [U.S.] dollar came, we were in a spending frenzy as our own currency lost value so quickly, it was necessary to get rid of it quickly—to buy something, anything solid.”

“One disadvantage of the changeover to the [U.S.] dollar is that many people were unable to withdraw their money and convert it to dollars [fast enough] because the bank placed withdrawal limits on those funds,” adds her colleague, Tapiwa. “As it happens, though, our Zimbabwean bills were carried over and dollarized, but alas not our bank balances. In short, they simply evaporated.”

Could our local money simply expire? The past seven years I’d spent abroad in neighboring South Africa, I’d missed a host of financial issues in Zimbabwe. Petrol queues, food shortages, bearer checks, and expired money all colored the Harare landscape. For those who could get their hands on foreign currency, however, Zimbabwe was a land of opportunity. A lavish lifestyle could be bought for U.S. $80— and especially in the alcohol trade, there were plenty of lucrative opportunities. A local could buy cases of foreign beer from a white businessman, who had smuggled the beverage into the country, and then sell it for a substantial profit. A case of 24 Stella Artois cans, for example, could be bought for $16 to $24, then sold off as six packs for $12 to $18—tripling the investment. And if one had friends in the expatriate community, a myriad of commodities could be bought and sold. Expatriates wanted the luxuries they had left behind. Fuel coupons, salt, sugar, and flour were especially profitable.

The story of those trying financial times and the transition to post-hyperinflation Zimbabwe serve as a cautionary tale for a host of other nations in Africa and beyond, tottering on the economic brink. Many African currencies are under attack, with no clear path to a debt-free future that can guarantee a stable society. And each is potential prey to a future filled with opportunism, corruption, and violence.


Zimbabweans were long known as the best educated and most industrious laborers in southern Africa. During hyper-inflation days, young men and women aspired to make clever deals—creating something from nothing. Selling cigarettes and mobile phones, even exchanging money, were means to ensuring financial security. Ticha, a talented young rugby player, earned enough to buy his mother a car by buying and selling fuel on the Zimbabwe-dollar market.

Now, however, exchange rate differentials between the U.S. dollar and the South African rand have paved a path for arbitrage. Many seventeen-year-olds had to drop out of school because their parents could not afford fees or due to the exodus of qualified teachers. Now they buy cars or expensive clothes by selling their bodies. They approach male club members offering to be their girlfriends or to provide sexual favors for financial support. Society’s role models, quite simply, have become those individuals who’ve mastered the art of the hustle.

In financial terms, Zimbabwe is a nation of commodity brokers. Economic development has come to a halt since it is fiscally irresponsible to manufacture or grow anything locally. The cost of labor, raw materials, and the effect of price con-trols mean that entrepreneurship and business development cost more than simply importing products.

The events leading to the abandonment of the Zimbabwe dollar are truly painful to recount. Zimbabweans watched every bit of normalcy evaporate. The consequence was the birth of a national psyche where professionalism gave way to a “hustler” mentality, where individual s
took the quickest 
and easiest path to 
a mass goods and
 capital. Zimba-
bweans were forced
 to queue for every
 item, and without 
a clear indication
 of what product 
would greet the m
at the end of their 
wait. And once
 they arrived at the
 front of the line,
 they would have to
 hustle and haggle 
for items as basic
as soap or tea. If 
they were fortunate 
enough to find fish 
and pork chops,
 they would never learn the poultry’s origins.

Zimbabwe’s fall from economic grace was a net gain for neighboring southern African countries. As Zimbabwe’s skilled class left the country, they poured into neighboring South Africa and Botswana— eager to pursue business and trade opportunities. The South African economy was the largest beneficiary of Zimbabwe’s collapse. As Zimbabwe’s biggest trade partner, South Africa gained from the one way flow of goods and services. In a state of financial ruin, Zimbabwe was forced to import everything from bread makers to toilet paper and clothing. Trade imbalances, such as these, ultimately crippled the country.

By the end of 2008, it had become virtually impossible to import much-needed commodities, such as bread and eggs, and provide critical amenities, like electricity and clean water. Both politically and economically, Zimbabwe had become isolated, operating outside the global economy and failing to meet the needs of its citizens. Its neighbors, like South Africa, which had initially profited from the instability, were now reeling from the mass migration and a rise in crime.

Consequently, the Zimbabwean dollar’s exchange rate was frozen by the reserve bank governor, giving birth to a volatile black market. Money-changing became both a highly dangerous and highly lucrative profession, particularly at a time when it was illegal to exchange foreign currency anywhere but in banks at an official rate well below the black market value. This discrepancy gave rise to a hyperinflationary economy. Inflation reached 30,000 percent, and when the official exchange rate pegged 180 Zimbabwe dollars to 1 U.S. dollar, the black market rate had reached into the trillions. At the height of hyperinflation, it made more sense to buy loaves of bread than to hold the local currency.

Established economic policy was subsequently abandoned, while monetary authorities adopted protectionist policies, which included bans on imports, exorbitant taxes on earned incomes, and price controls on basic goods. Wage increases for civil servants spurred salary raises in the private sector, which ultimately collapsed under the weight of unions and restrictive labor laws and taxes.

In short, Zimbabweans had to be well-connected to acquire goods. Most people couldn’t buy bread—a notably scarce commodity. If a Zimbabwean was fortunate enough to know where to find bread, he’d invite his entire family to join the queue, in the hopes that each member would walk away with his own loaf. Other times, the army or some other government agency would seize all the bread or cooking oil without explanation. As a result, many would travel to South Africa or Botswana to buy flour and yeast, along with any other basic necessities. Even Mazoe, a local soft drink, was scarce. When it was available at all, it was quite expensive because while Schweppes was producing it, they were exporting most of the product due to spiraling production costs and price controls on “essential products.” Locals would have to befriend workers in the Schweppes factory to access bottles of Mazoe. In other words, it was essential to have friends who worked in manufacturing in order to access any locally produced good. In return, locals would need to have something to exchange. Currency was notably absent from those trades.


The nation’s financial and currency problems were all too often couched in political terms. The economy had taken a turn for the worst, at the same time former liberation war veterans had begun seizing the vast lands of white commercial farmers. After decades of post-colonial rule had failed to deliver economic emancipation, many black Zimbabweans resorted to a more direct, be it precarious, approach to equality.

The vibrant manufacturing industry,
productive agricul
tural sector, and burgeoning mining businesses remained in the
hands of a minor
ity white population
and international corporations. By the end of the 1990s, the added pressure on a new black government, which had failed to implement successfully the structural adjustment programs introduced by the IMF and the World Bank, made the economic fissures even more glaring. Coupled with this was the growth of a black middle class clamoring for broader inclusion in economic activity. As black Zimbabweans conversed about class divisions, they also engaged in discussions ranging from currency to nationhood.

The events of the last decade reveal more about Zimbabwe’s black political elites and privileged class than the previously glaring racial divide between black and white ever could. Monetary decisions were made to protect political privilege and safeguard established positions. Black industrialists and businessmen, as well as the politically connected, received cheap government money to build their own positions in the face of white wealth. The government printed money that enabled connected individuals to profit, while protecting positions in sectors where former white owners had fled. Meanwhile, the necessary fiscal and policy safety nets were not put in place. The majority of Zimbabweans were casualties of a war that was disguised as a war on race. The ensuing reality was a struggle between a capitalist middle class and a still largely socialist political class that sought a shift of economic power to the majority of black citizens. Indeed, the war of liberation was fought over the concept of power to the people. The Zanu Popular Front argued that it had fought to remove white rule that protected the interests of a minority white population in favor of access for all, though particularly the black majority.

This ideological struggle—against a backdrop of the mass exodus of white wealth and international money—gave way to greed and survival. Money became the currency for this ideological war. Foreign currency was precious. In 2007, it cost U.S. $100 to buy a sim card for a mobile phone— assuming the buyer had the “right” connections. Otherwise a local would be told the cards were sold out, as early as 8:30 A.M. By 2008, the price had come down to U.S. $20, but in South Africa, a sim card cost a mere 70 U.S. cents.


Eventually currency became a metaphor for the lives of the people of Zimbabwe. When the country lost its economic and monetary power, the Zimbabwe dollar lost its meaning—and with it the lives of the Zimbabwean people. The Zimbabwe dollar had been framed as the mark of the nation’s sovereignty—a symbol for the country’s right to chart its own destiny in the face of continued post-colonial interference in local affairs. Local currency quickly became a political currency for the powerful elite.

Loaded with palpable hate for Western institutions and post-colonial rhetoric, the national agenda and its importance were dwarfed by peoples’ need simply to survive. This gave birth to a strong patron-client system where politically connected individuals who had access to information, favors, and foreign currency maintained a group of privileged clients who would in turn sustain the illusion of the national project. The lofty ideals of sovereignty and nationalism, as those established at Bretton Woods, did not translate into the daily struggles of the majority of people who had lost their livelihood and social safety net. Most days were spent hunting for goods, either for household consumption or for sale. Those who had jobs did the bare minimum to keep them and spent the rest of the day finding customers for whatever side business they were running. Those who did not or could not find work became “runners”—chasing after Zimbabwe dollars for the political elite or for large retail companies.

Thus began the age of “burning”—the local term that called for creating money from nothing. Burning worked in any one of three ways. First, a person could give someone U.S. $20, which would promptly be exchanged at the black market rate. The trillions or quadrillions (at some point it became septillions) of Zimbabwe dollars would then be deposited into a bank account using the Real Time Gross Settlement System (RTGS), a local funds transfer system. Then, with a local debit card, these funds could be used to pay for goods and services that were priced in the local currency. Or, customers could pay an individual by RTGS and, with a good connection at the bank, access his cash. With cash in hand, a customer could purchase foreign currency at the bank rate, which was much lower than the black market rate. Some of these funds could then be held as foreign currency, and some of the foreign currency could be exchanged back into Zimbabwe

dollars as the rate changed daily. Finally, relatives in the diaspora would deposit foreign currency into a bank account outside the country, and family members would receive Zimbabwe dollars locally.

Because all goods were priced in Zimbabwe dollars, people who had access to this “burning” system could easily buy cars, houses, and property. However, most Zimbabweans did not have these privileges and struggled to survive on whatever relatives in the diaspora could send.

Some of the money would be changed to local currency, and the remainder would be used to purchase goods in South Africa or Botswana, which could later be sold in Zimbabwe. While many wounded by the fiscal collapse of 2008 would agree that the racial divide had become too wide, it was the ensuing division between the haves and have-nots that contributed to the national sense of betrayal.


For the majority of Zimbabweans, the depreciation of local currency also meant a loss in dignity, as well as identity. Professionals abandoned their careers to become cross-border traders. Being a medical practitioner or teacher could no longer pay the rent. Many educated members of the family were sent abroad, not to continue in their field of study, but to find any job that would allow them to send money back home. The economic situation also led to the destruction of a vibrant manufacturing sector and the collapse of entire industries, with the resulting loss of productive capacity, as well as jobs and incomes. As the situation spiraled out of control, one commodity after another disappeared off the shelves.

John Robertson, a leading local economist, noted that when the government unilaterally amended the constitution to cancel private ownership rights, it also effectively cancelled the collateral value of agricultural land. Until then, the economy was largely based on agriculture, extending to the manufacturing sector which depended on agrarian inputs. The tobacco industry suffered a near collapse. Textiles, sugar, canning, and fertilizer industries were not as fortunate and folded entirely.

In a world where cash was king, many homes and families were left without a patriarch. Fathers could no longer support their families because factories began to lay-off workers. Children stopped going to school because there was no money for school fees. Families were broken up as mothers and their children were sent to rural areas where they could subsist on the land while the traditional breadwinner tried to make money in the city.


Zimbabweans were and still remain a proud people, who have failed to fully grasp the nature and scope of the nation’s fiscal and monetary meltdown. Early during the hyperinflationary period, monetary authorities introduced bearer checks—the first set introduced in 2003 and the second in 2006—a type of currency that carried an expiration date. When the official currency had been inflated out of all proportion, the reserve bank began issuing this form of money, but without any of the security features of real money. They were often and easily copied, quickly becoming the butt of jokes, especially abroad. Zimbabweans, it seems, rarely laugh at themselves, the reality simply being too traumatizing. Instead, many found solace in “making-a-plan,” coming up with an ingenious way of overcoming the latest dilemma—rather than tackling the economic crisis head on.

On Zimbabwe’s 34th year of independence, the wounds of 2008 hyperinflation are still fresh. Zimbabwe now operates under a multi-currency system where the U.S. dollar, the South African rand, and the Botswana pula dominate. All happen to be legal tender in present-day Zimbabwe. For many, the move to international currencies and an abandonment of the Zimbabwe dollar is a return to normalcy, a restoration of dignity to this nation and its economy. For others, it’s a loss of opportunity.



Tafadzwa Chigumira, who studied anthropology and archaeology in Cape Town, South Africa, returned to Harare, Zimbabwe in 2007, where she now runs a mining services company.

[Photo Courtesy of Peter Bihr and Ari Bronstein]

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