Our weather has become increasingly erratic over the last 15 years or so. I put it down to climate change. Right now we are in the middle of a relatively normal rainy season. That means that the ITCZ (Inter-Tropical Convergence Zone) moves over the country and it rains – quite a lot. Most of our rains happen from mid November to the end of March which in Harare means some 700 to 800mm. The rain can be quite intense – we had 75mm (3 inches) in several hours last week which meant all the rivers around town were up and one of the reservoirs that supplies town was spilling. As a country we’ve had good rain for the last 3 years due to the la Niña effect though it has been quite variable over the country and Harare, which is in a high rainfall area, received less than average. We are due for a drought and I see that there is a el Niño predicted later in the year which is a reliable indicator.
There’s rain around as I type this and yesterday afternoon we had quite a storm with high winds and hail and of course the power went off. It’s still off but we are geared for this eventuality and have solar panels and two lithium batteries to get us through the night. Power outages for other reasons, mainly incompetence and over-use of Lake Kariba as a hydro source, are common so everyone who can has a solar backup plan. Solar water heating makes a lot of sense in our climate so we have three solar heaters, one for us, one for the cottage tenants and one on the domestic employee’s rooms. In the cloudless, hot days of August and September the water can easily boil.
The complete Zimbabwean domestic survival system: visible are two solar water heaters, two solar panel systems and rainwater collection into tanks and a swimming pool.
I see your weather has been erratic too. Mt Washington in the north-east of the USA hit a record -70C a few days back and Europe had an unseasonably warm Christmas. It seems that California has had some heavy rains too; the default weather app on my new iPad is set to the Apple headquarters in Cupertino and they had flood warnings out recently.
Planned, and I use that word loosely, power outages are called “load shedding” in this part of the world. Towards the end of last year it was announced that Lake Kariba, which is our major source of hydro power, had got to it’s minimum level permitted for generation due to over-use by the Zimbabwe power authority and load shedding would become a daily occurrence. We have another major thermal power station at Hwange in the west of the country but it has become a byword for mismanagement and cannot take up the shortfall. We also import a lot of power from Mozambique and South Africa but have managed to get into a lot of debt so the aforementioned countries are fed-up and restricting our supply. South Africa has its own power supply issues (again due to mismanagement by the state-run utility) and is also imposing load shedding but at least it sticks to a schedule. In Zimbabwe the power generally goes off in the suburbs about 6.30 a.m. and comes back on around 10 p.m. Businesses are not exempt either and incur heavy costs due to diesel generators. It’s not unusual for some to run just on night shifts.
Our swimming pool was an early casualty of the power cuts. It’s essential to keep the filter running which the solar panels can do on a sunny day but those are rare in the rainy season so it’s more green than clear these days. Marianne was muttering about the cost of more chemicals to try and clear it. I pointed out that we could always fill it in but it wouldn’t be a cheap procedure and then we’d lose some 70,000 litres of stored water that would be very useful in a drought. We have decided to live with it being more green than not (it is covered over in winter when not in use).
The book you asked about is, I think, “The Shackled Continent” by Robert Guest who was an Africa correspondent for The Economist for a number of years. I found it fascinating and very insightful. Maybe I should read it again.
My business muddles along. I have a lot of outstanding debtors and it’s not so simple as insisting that they pay up front for their orders. I hate having to get nasty but it may eventually come to getting professional debt collectors in as I need to get the money to pay for imports of the coir “peat” raw material that we use to grow the seedlings. I obviously cannot use Zimbabwe dollars but fortunately I did invoice in US dollars which once again is becoming the currency du jour. The government is still trying desperately to keep the local dollar alive but with an official exchange rate of 740 to the US dollar compared with a “parallel”, i.e. street, rate of 1,100 to the dollar, it doesn’t have much of a chance. The local currency is still used, and has to be offered, as a payment method but most outlets make it very attractive to use the US$ by offering massive discounts . Government departments don’t do this so get paid almost entirely in local currency which means they are perpetually in financial difficulties – hence the disastrous state of the power supply, roads, rail links and anything else they are involved in. Am I making sense?
The government is also trying to stifle speculation on the currency markets by lending money at vast interest rates, 110% in November 2022, which makes doing business very difficult and one of the reasons that I use to explain why my business is so flat. The other is the proliferation of competition, often informal, which cut lots of corners allowing them to undercut my prices. Their quality is dismal but people either don’t care or see it as an acceptable consequence of the cheap prices. My prices haven’t changed in four years despite the rising costs of inputs in real (US dollar) terms. It doesn’t make for attractive business. Curiously the construction business is booming with cluster homes (small, single level apartments – several to a property) and other developments being built throughout the suburbs. Quite where the money is coming from I cannot ascertain – but in an economy as moribund as ours it’s almost certainly dirty.
Yes, us Zimbabweans are a resourceful lot and I guess in that respect Diana remained true to her heritage. My workroom/office is full of junk that I cannot throw away just in case I find a use for it in years to come. It must be a hold-over from the days when Zimbabwe was Rhodesia and under sanctions so nearly everything that could be was recycled. It’s probably an attitude of my generation rather than today’s “youngsters” – I drive past a municipal rubbish tip on the way to work and there’s never a shortage of trucks pulling in to offload. I suppose people do make a living out of recycling here though it’s not as fashionable as in the developed world. An elution plant (recycling gold from electronics) has recently been constructed at the former rubbish dump. It’s also not unusual to see carts being pushed around the suburbs and having one’s gate bell being rung by the owners looking for scrap metal.
I guess our “big” news for this year is that we’re going over to the UK in May to attend a rock concert! I’ve never been to one as standing for a long time in rowdy crowds is obviously not possible for me but this is Mike & The Mechanics who are not as popular as they used to be so seating is an option. Time to tick off the bucket list.
Then we are going to stay on the Cote d’Azur with an old girlfriend and her husband for four days. Apparently we’ll be quite close to St Tropez. Marianne is keen to go and see how the ultra-rich live but I may give it a miss. Really looking forward to it and we’re brushing up our rudimentary French in anticipation.
Well, on that positive note I’ll sign off and wish you all the best for this year. Forget the snow shoveling, go skiing and may it be exceptional.
Ciao
Andrew
Note: this is a genuine reply to a friend in Washington State U.S.A. who was a good friend to my sister Diana, and helped look after her in the terminal stage of her cancer three years ago.
Oh these were the days back in 2008. And this was not the biggest which topped out at 100 TRILLION dollars! For a while one could buy them on the way out of the airport at US$20 or so each. Now THAT’S an effective way to make moneyout of inflation!
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?
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.
Yes, that really is “weed” on which the stinkbug is sitting. I wouldn’t recommend smoking it, the weed that is, as it’s industrial grade cannabis which is grown for the fibre content and has no narcotic effect. Stinkbugs should absolutely not be ingested – they taste as bad as they smell, which is vile.
The Zimbabwe government has been pushing the various cannabis crops (hemp fibre, CBD oil and THC) as potential export crops and Stewart and I were at the Tobacco Research Board (TRB) to see what research they’d been doing. Stewart works part time for the Commercial Farmers’ Union and was trying to persuade me to write a growing guide, I knew how little I knew and was resisting but was still interested in finding out more about the crop.
The lead researcher was a young, dynamic fellow by the name of Munyaradzi or just Munya for short. He was passionate and knowledgeable about the crop. He quickly explained that they were just looking at the industrial or hemp quality cannabis at the TRB – the CBD oil and THC varieties, which have up to 0.3% THC and more than 0.3% THC respectively required onerous security which was not feasible. Industrial cannabis merely requires a fence and lockable gate so they were interested in getting small-scale growers into growing the crop.
The TRB had imported a number of different cultivars of the industrial hemp from origins as diverse as China, France and the USA. Some were clearly not suited to the relatively short Zimbabwean days though Munya did admit that it was early days and the seed had only been sown in January. Extending the day length with lights is practiced by the growers of the CBD and THC strains which keeps the crop from flowering too early. He told us that they’d approached the CID (Criminal Investigation Department) of the police to see if they could visit areas in the west of Zimbabwe where the THC version of cannabis has been grown illegally for many years to see if they had any selections that may be useful as he felt they’d certainly be climate adapted. Apparently breeding out the THC would not be difficult and yes, the police had approved the idea in principle.
Industrial hemp is quite widely used in the automotive and other industries that required cladding but the real money, Munya said, is in the CBD oil and THC. Unsurprisingly the buyers require the product to be GMP certified which requires stringent quality controls and regular inspections by a certified inspector which Zimbabwe doesn’t have. If it’s to be used for medicinal purposes the crop also has to be grown organically. A neighbour to the TRB who is growing the CBD cultivars has had to destroy his entire product so far as he cannot get it certified. Currently there are not a lot of major players in the industry but Munya predicted that it was going to get going within a few years.
One could be forgiven for thinking that the Zimbabwe government has other ideas. On Thursday this week they introduced a bill (SI 127 of 2021) forbidding anyone from trading in Zimbabwe dollars at anything other than the official rate of 84:1. The legislation has been around for some time but was not enforced. Now apparently it will be, with punitive fines for those who choose to ignore it. Most businesses have been pricing in US dollars and then multiplying by around 125 to get the Zimbabwe dollar price. This makes it attractive to pay in US and then more imports can be sourced. There is a government “auction” in place where one can bid for US dollars but the price is fixed, so it’s not really an auction at all, and there’s no guarantee of getting the hard currency. That there has to be an “auction” at all is indicative of just how short hard currency is. Forcing businesses to trade at the official rate is only going to make goods very expensive in US dollar terms so people will use Zimbabwe dollars and imported goods (most things) will become scarce. This graphic from a local asset management company says it concisely. “Decline in economic activity, stagnation, loss of confidence in local currency, and increased probability of second collapse of local currency”. Yes, we have been here before.
This is a cosmos flower, the last of the season. It’s not indigenous but apparently was introduced in contaminated horse feed from Argentina during the Anglo-Boer War. It can be found in the grasslands (veld) of the high rainfall areas of Zimbabwe from about March into April. This one is in our garden and is not the species found in the wild which is Cosmos bipinnatus. This came from a customer at the nursery who had some spare and they have been self-seeding in the garden for a couple of years. I have no idea why its popped up now, very late in the season, but here it is making a defiant last stand.
The Zimbabwe dollar is also making a last stand but it is looking anything but defiant. The official exchange rate for the local dollar to the US dollar, i.e. if one went to the bank to sell US dollars, is 25:1. You cannot buy US dollars at the bank probably because the black market rate is around 82:1 so nobody is stupid enough to sell their dollars at the official rate. The banks just haven’t got US dollars to sell.
Fuel is also sold at controlled prices in Zimbabwe dollars. The current price for petrol is $22 per litre which your cellphone calculator will tell you is about US27c a litre at black market rates – probably the cheapest in the world if you have access to US dollars. The government, which does most of the fuel procurement and allocation to the filling stations has no US dollars. Well, not for fuel at least so what fuel does make it to the the pump generates VERY long queues.
The government DOES have US dollars to buy the senior military figures new Land Cruisers at around US$80,000 each. Apparently they were becoming disgruntled with their forever diminishing salaries and needed pacifying lest they felt like changing the government for a more pliant one. This comes hot on the heels of the Finance Minister’s recent trip to the USA with the begging bowl in full view and he actually admitted that Zimbabwe’s fiscal policies were not well thought out (“mistakes have been made” he said). Quelle horreur! The begging bowl returned empty. Zimbabwe’s elite are nothing if not thick skinned so no sooner was the minister back than another appeal went out for money to help with the Covid-19 pandemic. That too was unsuccessful. Nobody can, or will, explain where the money for the vehicles is coming from. Those of us who have Foreign Currency Accounts (FCAs) at the banks which as the name suggests are in real money, mainly US dollars, are feeling a little nervous. The Mugabe regime raided these accounts on two occasions and gave the owners local dollars at the official rate (yes, this is the second time down the tubes for the local dollar).
FCAs are a perfectly legal mechanism for exporters to keep their income for importing new inputs. Whilst the Covid-19 pandemic is raging the government has allowed anyone to trade in US dollars both as cash and between FCAs. The local dollar is also still valid but most people are skewing local prices to make it attractive for people to use US dollars. Last Friday I was buying some irrigation fittings at a local outlet and they admitted that they were using a rate of 92 local dollars to the US dollar. The black market rate was indicated at 72:1. It’s now 82:1 and sliding on an almost daily rate.
The cosmos will almost certainly pop up in the garden next year. I’m not betting that the Zimbabwe dollar will still be around. As for the US dollar – that genie is now well out of the bottle.
The last Zimbabwe dollar invoice through my business in January 2009 – are we heading back there?
Last Monday morning we were greeted with the news that the much dreaded Zimbabwe dollar had made a return. Then it got worse, much worse as befitting a Monday morning. Only the “new” dollar could be traded within the country. All other official currencies (US dollar, yen, euro, UK pound) have been restricted to use for import purposes only. Those of us with bank accounts in foreign currency (usually US dollars) may not use them to trade within the country. They can be used to import goods otherwise they can only be used to buy Zimbabwe dollars at the official bank rate which, at the time, was less than half the black market rate.
Some background
Back in February 2009 Zimbabwe officially adopted the US dollar as its currency. It had to – inflation was the second highest on record and the largest Zimbabwe dollar note was one hundred trillion dollars (100,000,000,000,000). Inflation stopped and for seven years we enjoyed relative economic stability by our standards. But the government never stopped its excessive spending and by 2016 they were unable to pay salaries which make up some 80% of the budget so they introduced the bond dollar (supposedly backed by a bond from the Afrexim bank in Egypt which was later shown to be a lie) to cover a general shortfall in small change, and lots were printed. Their value was pegged at 1:1 with the US dollar and for a while the general population accepted this. Then the US dollars became more and more scarce until the banks didn’t have any to give out – the government had stolen most of them. The black market began to pick up as the public realised they’d been conned. It really got into gear when the government told us that our bank accounts, which were still listed on the statement as being US dollars, were actually a new currency called RTGS dollars and were still valued at 1:1 with the US dollar. We were told that if we had hard currency, or were exporting and earned foreign currency, we could open a FCA (foreign currency account) and the money would be kept there for importing, or trading for goods locally that were priced in US dollars. In an import orientated economy such as ours US dollars became more and more valuable so the pressure increased to charge in them. The much derided Finance Minister, Nthuli Ncube, announced that the banks would be able to sell hard currency at the inter-bank rate, i.e. what the government thought the rate should be, which was about half the black market rate. In theory one was able to purchase hard currency at this rate but nobody in their right mind was going to do that except those “with connections” i.e. party fat-cats and their relatives who have been making quick money buying at the low rate and selling at the black market rate. This loop-hole made some people very rich very quickly in the late 2000s.
Inflation was soon above 100% and basic commodities became extortionately expensive for the ordinary folk. Fuel queues became legendarily long (and still are) as filling stations were forced to sell at controlled prices based on the inter-bank exchange rate way below the black market rate. In an unrelated development, power cuts were introduced to compensate for reduced generating capacity from the Lake Kariba hydro scheme – a victim of over development on both the Zambian and Zimbabwean banks of the Zambezi River and the poor rains experienced last season in the catchment area. Compounding this is the 50% reduction of generating capacity at the Hwange thermal power station in the west of the country due to a lack of maintenance and development caused by incompetence and corruption – the power station is built on top of a vast, high quality, coalfield.
Back to the present
The black market exchange rate leaped several points and those outlets selling or marking their products closed for “stocktaking” whilst they figured out what to do. The government directed banks to return money to the Reserve Bank owed to external clients which could not be sent out (as it is in Zimbabwe dollars) thus removing money that could be changed on the black market for hard cash. The black market has since dropped several points as a result. The government has released a propaganda video explaining that having our own currency is a “good thing” even though nobody wants or trusts it. We owe Mozambique and South Africa some US$83 million for imported power and have no way to repay them. The passport office has no money to import the paper and ink to print the backlog of some 240,000 passports. All maize, the staple diet, has to be sold to the government owned Grain Marketing Board (GMB) and there has yet to be an announcement as to how much the local farmers will be paid for their crop which has just been harvested. Will it be equivalent to imported maize? The GMB has been instructed to put 750,000 tonnes of maize to import tender to make up the shortfall from last season’s harvest that was badly affected by poor rains. The President has announced that Zimbabwe has a stockpile of rhino horn and elephant tusks worth US$600 million that he wants to sell, presumably to fund some of the country’s debts, and wants CITES to allow us to do it. They must be horrified.
Will it work?
Attempts to directly control the value of any currency seldom succeed. Most currencies in the world are left to float and find their own value. The memories of the desperate shortages of 2007/8 are still fresh and the distrust of the new currency are deep so acceptance of it is going to be sketchy at best. I have yet to see any announcement of plans to print new notes – if we don’t have money to print new passports how will we have money to print new bank notes? Of course “printing money” these days is much easier than printing notes; a few keystrokes on a computer and suddenly there is a lot more “money” in the fiscus. As cash notes have become scarce so the electronic banking has taken over – mobile phone banking in Zimbabwe is ubiquitous so we have little need for large amounts of cash. However the local population is well aware of this and would prefer money-in-hand, preferably a type they know cannot be fiddled.
There is much more to economic recovery than having one’s own currency. Only a few nations have ever de-dollarized successfully and it requires economic stability to be in place – the Zimbabwean authorities seem to think that this stability will be a consequence of the introduction of our own currency.
The Market Watch website showing the effects of policing
Most people used one of three websites to keep track of the exchange rates over the past several months. One of the more popular ones is shown on the left (a screenshot of my phone on two separate days). I’m not entirely sure how they ascertained the various rates but it’s clear that they have become victims of government pressure as the image on the right only shows the official rate, after the introduction of the Zimbabwe dollar, which is indicated by the line USD/RTGS. OMIR stands for Old Mutual Implied Rate. Old Mutual is a South African banking/insurance group that has a significant presence in Zimbabwe. It is also listed on the London Stock Exchange so it’s possible to get an approximation of the value of the Zimbabwe dollar by comparing what a share is worth in both Zimbabwe and the UK. RTGS stand for Real Time Gross Settlement dollars i.e. electronic transfers. BOND refers to the cash notes that should be equivalent to the RTGS but are not due to short supply. If you find this confusing then you are in the majority.
Also in the news this week has been a report that the Auditor General has noted that Air Zimbabwe (rebranded Zimbabwe Airways) cannot account for the purchase or leasing of three of it’s aircraft; turboprop MA60s. The troubled airline owes US$30 million to foreign creditors and $292 million to various government companies. Getting into a mess of that magnitude must have taken considerable effort. The Auditor General released her report on state enterprises to parliament earlier this week and it makes for depressing reading, not least because very little will come of it.
So will we be heading back to trillion dollar invoices of 2009? It’s difficult to say. In a way I won’t be too upset if we do. It means that we could pay off the bond on our house for a few US dollars – something I missed out on doing back then. Anyway, my computer will be ready (I wrote the software specifically to deal with multiple currencies. The box on the left is an algorithm that converts large numbers to their spoken equivalent so that my staff could explain to customers how much money was owed).
Who wants to look at picture of cars queuing at a fuel station?
“The bottom borehole is not working” is not the most encouraging announcement I want to hear on a Monday. The borehole in question is some 500m from my office and has been a headache ever since I started my business. Originally it used a 3 phase motor which are more efficient than single phase motors but I got so fed up with the transformer dropping a phase to a low voltage that I swapped it out for a single phase motor. This means that if a phase goes low I can switch all critical motors onto a good phase relatively quickly with some simple wiring changes on the distribution box by my office (farming in Zimbabwe requires a good deal of DIY expertise). The cable to the borehole is not really large enough for the distance so if the supply voltage drops it can spell disaster for the motor.
A quick test ascertained that the motor was drawing far too much current and probably was burnt out. We got it out the hole and I took it off to the supplier along with the warranty card that showed the it was to expire by the end of the week. I was advised that if I wanted a quick response to whether the motor would be replaced under warranty I should take it to the workshop in the industrial sites. Yes, they still had that model in stock and it was $380. The workshop people in town said they’d get back to me soon.
On Tuesday there was a surprise announcement from the new finance minister, Mthuli Ncube, that bank accounts would be split into FCA (foreign currency accounts) i.e. real US dollar accounts earned from exports, and local money accounts. This is a tacit admission that the local money accounts are not in fact the same as US dollars even though they are listed as such. The local money immediately lost 10% on the unofficial market – the rate is now around 2.2 local dollars to US$1. Ncube also announced a new transfer tax on all electronic transfers of 2% starting at $2 to replace the old flat rate of 5c. Given that some 96% of all money transactions in Zimbabwe are electronic it is estimated that this will bring in some $4bn extra per year. This has already changed as of the time of writing with a lower limit of $10 being imposed. He also fired the entire board of ZIMRA, the local tax authority. There was no mention of how the government was going to reduce the budget deficit.
By Wednesday we were running low on water at the nursery so I had to go and buy another motor for the borehole pump as I still hadn’t heard from the workshop. It cost me $430, up $50 from Monday. I decided I had to raise my prices at the nursery by 50% – still short of the estimated exchange rate but better than we had been. I have a lot of competition so I’ve been wary of hiking prices to realistic levels up until now.
Other businesses around town have been less circumspect to the point of profiteering. Marianne went to buy some pharmaceuticals this week and they’d gone up 40% – US dollars cash! I priced a cordless drill at a local hardware outlet that had increased from $380 to $1030 in about a year. Some shops are no longer displaying prices on the shelves – you have to ask at the checkout or consult and easily changed list on the end of the shelf. Bread is now short and so is fuel. Pharmaceutical companies have stopped trading due to shortages of raw materials.
Queues at fuel stations are blocking traffic. Apparently international trucking companies are taking advantage of the disparity between US dollars and local money by sending their trucks through Zimbabwe with just enough fuel to get into the country, buying local money with US dollars at 2:1 and then buying fuel with the local money. Do it this way and diesel costs about US65c per litre – way below what it costs to import.
On Friday I got a call from the workshop – the motor had burnt out likely due to low voltage. Did I have one of their voltage protection units on the borehole? No I didn’t. Then the warranty was invalid. I was not surprised – like all forms of insurance they will look at ways to get out of paying. I have since put a 3rd party protection unit on the switch box – hopefully it will work.
My seed supplier is not returning my calls. His secretary tells me he is trying to decide whether to charge US dollars cash for the seed or hike the local price. The former will be a disaster for my business which is already in the doldrums. We have a lot of gum tree seedlings for a local company charged with reforesting farmlands that have been denuded by farmers cutting timber for curing tobacco but we negotiated the contract in April. By the time we get paid in November and December the payment is going to be very small indeed. The future is not looking bright.
A very miniature mantis
And the roses at the top of the post? Like I said, it beats looking at pictures of a fuel queue. There is a neighbouring nursery next to mine that specialises in roses and over the weekend they had their annual charity open day. The roses were stunning – worthy of a diversion. The mantis? Well, it just called by this afternoon at tea time.
The comparison with the hyper inflation of 2008 is obvious but this time the collapse has been much faster. It’s Tuesday now and over the weekend cooking oil (much used by Zimbabweans) prices have doubled and in some areas tripled. The public transport system is unreliable as many of the mini buses that ply the trade are in fuel queues. A friend who supplies agricultural chemicals has asked me if I want to trade diesel for chemicals I need. Yup, déjà-vu indeed.
Unusual colours for an orchid – yes it is a hybrid
Three of a kind
Small but colourful display
“It’s one of the best shows we’ve had for a very long time” commented Merv as we walked into the show. He should know; he’s bee a stalwart of the Zimbabwe Orchid Society for many years. I had to agree. I do like to visit the biannual orchid show at the Mukuvisi Woodlands park in eastern Harare when I can and in the few years that I’ve been a regular visitor it’s the most spectacular show I’ve seen. It’s also nice to escape the depressing state of the nation for an hour or so and pretend that in some respects at least – we are normal.
Not much has happened since the election and in fact some aspects of the new government led by ED Mnangagwa are decidedly familiar. There a lots of new faces in the cabinet. The minister of finance really is an economist, the Minister of Sport is Olympic medalist Kirsty Coventry and the Minister of Health does not have the medical qualifications that he claims.
Professor Mtuli Ncube (a graduate of Oxford no less), the finance minister, is on record as saying he wants to clear Zimbabwe’s foreign debt as quickly as possible and wants to reintroduce the Zimbabwe dollar. There is no time limit specified for the latter – a wise decision. The last version of the Zimbabwe dollar was officially abandoned in February 2009 in favor of the US dollar when the former became worthless due to the second highest inflation in history. I really don’t see the point of this; it will simply replace our infamous bond dollar with another of a different name. The black market will still exist and nobody will trust the new currency such is the level of distrust in the system. Some say we should adopt the South African rand being that South Africa is our neighbor and biggest trading partner. However, there are simply enough rands to support the Zimbabwe economy and it is by no means clear that South Africa will agree. Of course a currency must be based on something which in our case is our exports as the manufacturing base collapsed with the Zimbabwe dollar and is still moribund. Export horticulture is the hot ticket to get into but takes some years to build up export crops and recover the farms neglected under ex-president Mugabe’s ruinous land redistribution policy. No quick fix there. Mining, another mainstay of the economy is also down and will take some time to build up pending investment from outside the country. It was also not immune from Mugabe’s policies – one of my foreman’s sons did his accounting attachment at a German run graphite mine in the north east of the country which was shut down for some time last year because of political “issues”.
At the last count 28 people have died from the current cholera outbreak – mainly in Harare. Such is the state of the economy that the finance minister has launched a crowd funding exercise to raise money to treat the outbreak. It is unlikely to have a lot of success given the controversy over new vehicles for ministers and the public’s mistrust of all things governmental.
Obadiah Moyo, the new health minister, whose claims to various medical qualifications have been questioned has certainly got his work cut out with the new cholera outbreak. What is certain is that he did successfully run the Chitungwiza Hospital for several years. Someone I know went there last year and said that although it was threadbare it was clean and functional. Perhaps we should give him the chance to prove himself. Good luck to him – he’ll need it.
Kirsty Coventry has several Olympic swimming medals to her name but I’m not sure how that qualifies her to be the Minister of Sport. Cricket, once a source of national pride, is in disarray after the recent firing of the entire coaching team for not getting the playing team into the World Cup. A crucial match was lost due to rain causing a complicated, and some say unfair, formula being implemented to calculate the winner. Corruption is rife and players are demoralized. And that’s just cricket. Good luck to her too.
Droughts are a perennial problem in southern Africa and it looks like the coming rainy season (November to March) is at best going to be erratic. An el Niño weather condition is nearly a 70% likelihood for our summer – not a good sign. At our house in the suburb of Mt Pleasant we have not had municipal water since we moved in just over 18 months ago. We had our borehole tested earlier in the year and were told it could handle 900 litres an hour – adequate for domestic purposes. A tank have been installed to catch water from the washing machine and another 5,000 litre rainwater tank is planned to add to the two others we already have. The borehole is only 40m deep which is shallow by Harare standards so we are not confidant it will last especially as I see a lot of green verges being heavily irrigated further up our road. Fortunately our hole is 180mm diameter, large enough to get a drill down if we need to go deeper assuming there is water to be found by drilling deep.
We visited my sister in June in the USA – She lives in Spokane in Washington State. A friend of hers asked me if we in Zimbabwe thought the USA “crazy” – she was referring to the Trump administration. I replied that we were just to busy trying to survive in Zimbabwe to view the Trump administration as anything more than entertainment. No, we are in this for the long term – no quick fix to this particular mess.
We have a habit in this country of not throwing things away “just in case they might be useful one day”. It’s not without good reason but it can be taken to extremes.
In the days when Zimbabwe was Rhodesia and the country was under blanket sanctions for it’s persistent colonial ways ingenuity ruled. Getting fuel was difficult and just about everything else close to impossible. Car spares were horded and years after we got rid of an old car I still found spares squirreled away “just in case”.
Now that Rhodesia is Zimbabwe and we still have sanctions (but this time targeted against certain odious individuals) spares are once again becoming difficult. In this case it’s spares for a Husqvarna hedge trimmer we use to trim tobacco and gum tree seedlings – so of course I feel somewhat smug that I kept the remains of a previous hedge trimmer. Just in case.
The shortages this time around are nothing to do with the sanctions but gross incompetence and greed by the ruling regime; the nation has simply run out of money. The bond notes alluded to in other posts are proving to be exactly what everyone feared them to be – a return to the defunct Zimbabwe dollar under another guise. There was never a bond/loan backing them (the Reserve Bank governor simply lied) and now the government has announced that it wants to release another 300m of them backed by precisely nothing.
Inflation has also made a return. I priced a gum wooden door last week that has increased 50% over the last 4 months despite being made entirely of local products. It is priced in US$ but I’m almost certain that if I asked I could get a discount for “cash” i.e. real US$ notes of around 20% (most people use debit cards or similar devices to pay for items). A potential customer asked me if he could get a discount for bond notes and was told most definitely no. He did not ask if he could get a discount for real cash – US dollars.
So tomorrow I will start making a plan (something else for which Zimbabweans are notorious) and see if I can assemble the 1½ hedge trimmers in the picture into one functioning one. After all adversity is the mother of invention and we’ve been here before. Once as Rhodesia and again in the years when the Zimbabwe dollar was real if completely useless. It’s a sense of déjà-vu and I don’t like it one bit.
There is one positive aspect to this. In the carnage of the demise of the Zimbabwe dollar in 2008/9 when inflation was running in six figures per month, people who’d taken out housing mortgages paid them off with one note or less. Yes, that happens when the largest note is 100 trillion Zimbabwean dollars. Now if the government floods the country with bond notes we should be able to pick them up cheaply enough by paying in real dollars to pay off our mortgage really cheaply. There will of course be collateral damage as they say – territory we visited back in 2008/9. I don’t think I want to go there at any price.
P.S. (a day later). I was called this morning by a company that sells irrigation equipment – a part that I’d ordered had arrived. On asking the cost I was told $78 “… but we are offering a discount of 25% for US$ cash or 10% for bond notes.” So apparently the bond notes, based on nothing, are actually in demand.
It was quite simple really. All I had to do was open the “Labour”
folder in Microsoft Word, look for a file with “wages request” in the title and change the date and the bank on the existing letter (above). Back in 2008 the hyper inflation was raging, shop shelves were empty, money was being printed and the money changers were making small fortunes.
Now we are in 2016 and money is about to be printed, shop shelves are full for the time being and money changers are making small fortunes if they have access to cash. And I have to make an application to the bank to withdraw my own money as cash for wages.
Last Friday I’d called in at my local bank to check on cash withdrawal limits; $300 per day for small businesses. The bank manager suggested I get my staff to open accounts so that they could use debit cards. I pointed out that a number of my labour force signed their name with an X. They were pretty much illiterate. How was I going to explain that a piece of plastic now represented cash and the actual money was held at an institution which they didn’t trust in the first place. Well then, she suggested, I should make an application to withdraw cash but they couldn’t promise anything.
So here I was, a little over 8 years later, changing minor details on a letter so that once again, I might get access to my own money to pay wages. Yes, they are US dollars now but I couldn’t help but feel a strong sense of déjà vu. (I did also have to change the phone numbers and email address on the footer.)
Zimbabwe Absurdity 
A letter to America
5 02 2023Hi Robin,
Our weather has become increasingly erratic over the last 15 years or so. I put it down to climate change. Right now we are in the middle of a relatively normal rainy season. That means that the ITCZ (Inter-Tropical Convergence Zone) moves over the country and it rains – quite a lot. Most of our rains happen from mid November to the end of March which in Harare means some 700 to 800mm. The rain can be quite intense – we had 75mm (3 inches) in several hours last week which meant all the rivers around town were up and one of the reservoirs that supplies town was spilling. As a country we’ve had good rain for the last 3 years due to the la Niña effect though it has been quite variable over the country and Harare, which is in a high rainfall area, received less than average. We are due for a drought and I see that there is a el Niño predicted later in the year which is a reliable indicator.
There’s rain around as I type this and yesterday afternoon we had quite a storm with high winds and hail and of course the power went off. It’s still off but we are geared for this eventuality and have solar panels and two lithium batteries to get us through the night. Power outages for other reasons, mainly incompetence and over-use of Lake Kariba as a hydro source, are common so everyone who can has a solar backup plan. Solar water heating makes a lot of sense in our climate so we have three solar heaters, one for us, one for the cottage tenants and one on the domestic employee’s rooms. In the cloudless, hot days of August and September the water can easily boil.
I see your weather has been erratic too. Mt Washington in the north-east of the USA hit a record -70C a few days back and Europe had an unseasonably warm Christmas. It seems that California has had some heavy rains too; the default weather app on my new iPad is set to the Apple headquarters in Cupertino and they had flood warnings out recently.
Planned, and I use that word loosely, power outages are called “load shedding” in this part of the world. Towards the end of last year it was announced that Lake Kariba, which is our major source of hydro power, had got to it’s minimum level permitted for generation due to over-use by the Zimbabwe power authority and load shedding would become a daily occurrence. We have another major thermal power station at Hwange in the west of the country but it has become a byword for mismanagement and cannot take up the shortfall. We also import a lot of power from Mozambique and South Africa but have managed to get into a lot of debt so the aforementioned countries are fed-up and restricting our supply. South Africa has its own power supply issues (again due to mismanagement by the state-run utility) and is also imposing load shedding but at least it sticks to a schedule. In Zimbabwe the power generally goes off in the suburbs about 6.30 a.m. and comes back on around 10 p.m. Businesses are not exempt either and incur heavy costs due to diesel generators. It’s not unusual for some to run just on night shifts.
Our swimming pool was an early casualty of the power cuts. It’s essential to keep the filter running which the solar panels can do on a sunny day but those are rare in the rainy season so it’s more green than clear these days. Marianne was muttering about the cost of more chemicals to try and clear it. I pointed out that we could always fill it in but it wouldn’t be a cheap procedure and then we’d lose some 70,000 litres of stored water that would be very useful in a drought. We have decided to live with it being more green than not (it is covered over in winter when not in use).
The book you asked about is, I think, “The Shackled Continent” by Robert Guest who was an Africa correspondent for The Economist for a number of years. I found it fascinating and very insightful. Maybe I should read it again.
My business muddles along. I have a lot of outstanding debtors and it’s not so simple as insisting that they pay up front for their orders. I hate having to get nasty but it may eventually come to getting professional debt collectors in as I need to get the money to pay for imports of the coir “peat” raw material that we use to grow the seedlings. I obviously cannot use Zimbabwe dollars but fortunately I did invoice in US dollars which once again is becoming the currency du jour. The government is still trying desperately to keep the local dollar alive but with an official exchange rate of 740 to the US dollar compared with a “parallel”, i.e. street, rate of 1,100 to the dollar, it doesn’t have much of a chance. The local currency is still used, and has to be offered, as a payment method but most outlets make it very attractive to use the US$ by offering massive discounts . Government departments don’t do this so get paid almost entirely in local currency which means they are perpetually in financial difficulties – hence the disastrous state of the power supply, roads, rail links and anything else they are involved in. Am I making sense?
The government is also trying to stifle speculation on the currency markets by lending money at vast interest rates, 110% in November 2022, which makes doing business very difficult and one of the reasons that I use to explain why my business is so flat. The other is the proliferation of competition, often informal, which cut lots of corners allowing them to undercut my prices. Their quality is dismal but people either don’t care or see it as an acceptable consequence of the cheap prices. My prices haven’t changed in four years despite the rising costs of inputs in real (US dollar) terms. It doesn’t make for attractive business. Curiously the construction business is booming with cluster homes (small, single level apartments – several to a property) and other developments being built throughout the suburbs. Quite where the money is coming from I cannot ascertain – but in an economy as moribund as ours it’s almost certainly dirty.
Yes, us Zimbabweans are a resourceful lot and I guess in that respect Diana remained true to her heritage. My workroom/office is full of junk that I cannot throw away just in case I find a use for it in years to come. It must be a hold-over from the days when Zimbabwe was Rhodesia and under sanctions so nearly everything that could be was recycled. It’s probably an attitude of my generation rather than today’s “youngsters” – I drive past a municipal rubbish tip on the way to work and there’s never a shortage of trucks pulling in to offload. I suppose people do make a living out of recycling here though it’s not as fashionable as in the developed world. An elution plant (recycling gold from electronics) has recently been constructed at the former rubbish dump. It’s also not unusual to see carts being pushed around the suburbs and having one’s gate bell being rung by the owners looking for scrap metal.
I guess our “big” news for this year is that we’re going over to the UK in May to attend a rock concert! I’ve never been to one as standing for a long time in rowdy crowds is obviously not possible for me but this is Mike & The Mechanics who are not as popular as they used to be so seating is an option. Time to tick off the bucket list.
Then we are going to stay on the Cote d’Azur with an old girlfriend and her husband for four days. Apparently we’ll be quite close to St Tropez. Marianne is keen to go and see how the ultra-rich live but I may give it a miss. Really looking forward to it and we’re brushing up our rudimentary French in anticipation.
Well, on that positive note I’ll sign off and wish you all the best for this year. Forget the snow shoveling, go skiing and may it be exceptional.
Ciao
Andrew
Note: this is a genuine reply to a friend in Washington State U.S.A. who was a good friend to my sister Diana, and helped look after her in the terminal stage of her cancer three years ago.
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Tags: el Nino, load shedding, power cuts, solar power, Zimbabwe, zimbabwe dollar
Categories : Business, Economics, Social commentary