What Inflation?

Who wouldn't want five hundred million dollars?


You know, I can't even say "five hundred million dollars" without automatically holding my pinky to the corner of my mouth and doing my best "Dr. Evil" impersonation.

Guess how much five hundred million dollars will buy you in Zimbabwe these days? Nothing.... Absolutely nothing. How sad is that?


I read in the news this week where the Zim government is now printing (hold on to your hat) Fifty Billion (with a B) Dollar notes. That's $50,000,000,000.00 in case you couldn't figure out how many zeroes that is. How much will fifty billion Zimbabwean dollars buy you? Try two loaves of bread. That was earlier this week. It probably won't even buy that much now. One person interviewed said he didn't even understand why the government was even wasting time printing money nobody uses. He said people are only using foreign currency as their own loses almost 100% of its value daily.

This is nothing new. Their hyperinflation problem has been going on for some time. Zimbabwe has, several times now, knocked a few zeroes off their money to try and keep the numbers functional. Apparently, they keep reaching the limits of the numbers that ATM and banking systems can handle. According to Wikipedia, the current inflation rate is over 80 sextillion percent. (For you math types, sextillion in scientific notation is ten raised to the 21st power). In comparison, the current second worst inflation rate in the world is in Burma (at a paltry 39.5%)

So how did they get like this? Well, since their independence from Great Britain and subsequent civil war which changed the nation from the white-controlled Rhodesia to the black African ruled Zimbabwe, there had been a desire to increase black empowerment and redistribute the nation's farmland. Initially, Zimbabwe was a large exporter of food, grown on it's many large scale (and typically white owned) farms. After the change of power however, there was a widely held belief by black Zimbabweans that the land the farms were on was stolen from them during colonialism and that it should be returned to the hands of the indigenous people of the nation.

Prior to 2000, the government sponsored a "willing-buyer-willing seller" program for land reform. Then in 2000, the government, led by a man named Robert Mugabe, started a compulsory program where almost all white owned farms were seized, (often violently), broken up, and then redistributed. The chaotic implementation of the program, coupled with the small sizes of the new plots, the lack of equipment, and the lack of agricultural knowledge severely traumatized the nation's ability to grow food. Zimbabwe, instead of exporting, now imports almost all of its food and people are starving.

In addition, the commercial system has also broken down. The newest commercial black empowerment program requires all businesses (including foreign owned) be owned/operated by black Africans. This has resulted in the failure of most businesses and the departure of almost all foreign investment, adding to the country's problems.

As you can imagine, the results of these governmental decisions have been disastrous. Due to the violent seizures of farmland, several nations (including the US) have leveled sanctions against the nation. Also, Zimbabwe has ceased making foreign debt payments resulting in suspension from the International Monetary Fund. In addition, due to a lack of donations, the UN World Food Program has stopped food aid. HIV is now at it's highest levels in the history of the country at 1.8 million people infected, and the average life expectancy has plummeted. Since 1990, the life expectancy for males has dropped from 60 to 37 and for females it is now lower than 34 years.

The government, led by Mugabe, denies the severity of the situation and continues to place the blame of the problems on the international community. They are convinced, and tell their people, that their situation is a conspiracy to return the country to colonialism and oppression. They have been accused of numerous human rights abuses and election tampering in order to stay in power. Also, they only allow state controlled news organizations work inside the country. News companies such as CNN and Britain's Sky News do not have permission to operate in Zim.

What a sad situation. One can understand that when the indigenous Africans regained control of their country, they wanted to have a greater stake in land ownership and business ownership. The people wanted better lives for themselves and new opportunities. It's a noble goal. Unfortunately, there was a total lack of patience and planning on the part of the government, resulting in a total crash of the economy and the scaring away of potential investors.

So, who cares? Well, for one, I do. I travelled there years ago with work and spent a week in the capitol city of Harare. It was awesome. I also care that these people are starving and dying and their leaders are doing nothing but making the situation worse. They have only succeeded in scaring away or running off anyone who tries to help them because receiving help would mean they would have to admit they made mistakes and they could lose their power.

My in-laws care. Where they live in South Africa is near the border with Zimbabwe. They are currently experiencing a severe problem with illegal immigration as people come looking for food and work. In addition, there is now a severe cholera outbreak in Zimbabwe and these people are streaming across the border and carrying it with them.

It's a bad situation. It makes me sad. It makes me angry. I don't think they can go on like this for much longer and then something is going to have to change for the better. There are many nations on the continent that, like Zimbabwe, are in various stages of development. I hope they learn the many lessons the situation in Zimbabwe offers. Democracy and emerging markets are new to many of these nations and my hope is that they don't start taking steps backward. That would be a tragedy.