
As of four days ago Zimbabwe has its very own gold bullion coins, one troy ounce, 22 carat gold. Like gold coins sold all over the world it even has its own name, Mosi-oa-Tunya, which is the name the Tonga people gave the Victoria Falls and roughly translates to “The smoke that thunders”. Unlike gold coins elsewhere nobody has any idea if it will be tradable outside the country and therein lies the catch.
The coin has been introduced to try and rescue the local Zimbabwe dollar from oblivion. Nobody wants it and on the parallel market it’s trading at 720 to one US dollar though for some reason now outlets I spoke to yesterday were using less than 760. That is actually down from 750 a week ago when I had to sell 1,000 US dollars to part-fund my staff wages. Not many retailers are using the local dollar anymore and, although they are bound by law to accept Zimbabwe dollars, they price goods so that it’s very attractive to pay in $US. Supermarkets are the lone exception and they price at the official rate of 400 or so to the US dollar. Those who can obviously pay for their groceries and consumables in the local currency.
The initial run of gold coins will number 2,000 and will be sold at around US$1,800 or so depending on the value of the metal. One can also pay in any other major currency and, here’s the kicker, Zimbabwe dollars at the official rate! Yes, this means that if you can get enough local dollars you can get yourself a gold coin or several very cheaply indeed. The government admits that this price is out of consideration for most people, so will consider minting smaller coins at a later stage.
Cynics are easily found in Zimbabwe and it’s not difficult to see why. Many have pointed out that these coins are there purely for the rich and politically connected to mop up easily and hopefully in the process rescue the local dollar (the price is way beyond the average citizen intent on daily survival). I suggested to my cousin, who is a gold smith in Cape Town, that she should see if she could get her brother, who lives in Harare, to buy her some that she could then melt down for use in her business. Gold jewellery is usually diluted with silver to around nine carats. It would be really worthwhile doing if possible. My local cousin is well-connected but probably not that well connected.
It has not of course escaped notice that Zimbabwe does not have a great reputation for fiscal responsibility and those who do buy the coins might well find out that nobody outside the country is interested in buying them. Why should they when in South Africa, our neighbour, one can buy the internationally recognized gold Krugerrand not to mention the plethora of other coins available worldwide?
It doesn’t take a huge amount of mathematical intellect to work out that gold coin sales are unlikely to make much difference to Zimbabwe’s dire financial status. Let’s have a look:
Initial minting is 2,000 coins valued at $1,800 each. That’s a grand total of $3.6 million. Not a lot to get excited about. This has not stopped the government owned newspaper The Herald from waxing lyrical and claiming that that existing stocks of the coins have already sold out. How many were available in the first place was not mentioned. Perhaps even more tellingly the article claims that the gold coins will take local currency out of circulation. Does this mean that we are reverting to using the US dollar once again?
Gentleman John
21 11 2021“Look what I’ve been given” Marianne said.
I turned around to see her admiring a large bunch of mainly red roses; she was positively purring.
“I got them from John” she added.
“Because you are my guardian angels” enthused John as a way of explanation. “Thank you for thinking of me”.
I told him that we had thought of him because he does good work which was quite true. He has cut out a number of diseased trees for us over the past five years and always does a good job and is reasonably priced to boot. And of course he is a gentleman too. So I had to think of a way to “get him back” so to speak. More about that later.
We turned out attention to the avocado tree in question. It had grown very big so the only way to get avocados off it was to wait for them to fall. Avocados don’t do falling well, especially from eight metres, and whilst they were not bad as humble grown-from-a-seed fruit of this type are, there are definitely better around. The plan was to cut the tree back to three stems, wait for new shoots to grow out, and then graft on several known cultivars that I like and get a tree that can produce for some 6 months or more.
I showed John where I wanted the main stems cut and with yet more thank yous for thinking of him he got to work.
Our president, E. D. Mnangagwa, or just ED as Zimbabweans know him, is not much like John. He has been at the COP 26 climate conference in Glasgow. Not one for scrimping on costs or being environmentally conscientious he took along 100 sycophants in a specially chartered jet. Technocrats were left behind in favour of party buddies. Judging by the videos on social media they know how to party too.
An address by ED to a nearly empty auditorium was picked up by the press, and whilst not that unusual at that time slot, plenty of mileage was got. Apparently ED has committed us to a 40% reduction in greenhouse gas emissions by 2030. Details on how this would be done were omitted. One social media wag commented that since the land invasions of the 2000s the destruction of the economy has already achieved the 40% reduction target – we just have to be careful the economy doesn’t grow. That shouldn’t be too difficult – the current regime is only interested in self-enrichment. He also made claims that the sanctions to which he and other party bigwigs are subjected are stifling Zimbabwe’s economy and hamstringing our economy. One of his sons recently imported, by air, a Rolls Royce car valued at some US$500,000.
The local Zimbabwe dollar continues to lose traction in the economy. ED has buckled to the war veterans’ (loosely defined as those who supported the nationalists in the civil war of the 70s) demands that they get their pensions paid in US dollars. The civil servants saw this as an opportunity and made the same demand which was flatly refused. In other countries it would be unwise to anger one’s voter base but in Zimbabwe elections are predetermined so it’s not a big issue.
Our gardener comes from the rural north of the country and he says that there the US dollar holds sway – don’t bother offering local dollars. My senior foreman comes from the east and there the local dollar is still acceptable in some situations. While it’s not illegal to price in US dollars it is illegal to convert it to the local equivalent at anything but the official rate which is determined by the central bank’s (Reserve Bank of Zimbabwe) daily auction rate. Senior figures at a local company were charged for this infraction and I have noticed that signs claiming the rate of exchange used in their outlets became prominently displayed. Everyone else is ignoring it and the black market rate continues to climb. It’s now around 200 local dollars to 1 US dollar whereas the official rate is 105.
We paid Gentleman John in US dollars because we do like him and he does a good job, this one was no exception. My revenge on him giving him Marianne roses was to give him a bar of Lindt chocolate for his wife who I hoped would to ask why. I haven’t heard back.
Comments : 1 Comment »
Tags: avocados, COP26, ED Mnangagwa, Lindt chocolate, zimbabwe dollar
Categories : Social commentary