It’s mad to think that what we know of as Zimbabwe (one of the worst run countries on the planet) was once Rhodesia, probably the most prosperous country in Africa, bordering on first world status. In fact, at one time it was known as the “Breadbasket of Africa” because its well run farms produced such a huge surplus of crops, that they were able to export this surplus to the rest of the continent, generating enormous wealth for the country in the process. The problem however was that these farms were in the vast majority of cases owned by the white minority. The black majority were treated as second class citizens. Sure, they still enjoyed a standard of living higher than that of any other black person in Africa, but ultimately, this injustice couldn’t stand. Eventually, Mugabe took power and what has since become known as Zimbabwe has seen its living standards plummet. Some of the worst hyperinflation in world history has occurred in Zimbabwe because the once productive nation is no longer producing enough goods and services. It has gotten to the point where they have finally decided to just abandon their worthless currency altogether.
Zimbabwe is phasing out its local currency, the central bank says, formalising a multi-currency system introduced during hyper-inflation.
Foreign currencies like the US dollar and South African rand have been used for most transactions since 2009.
Local dollars are not used except high-denomination notes sold as souvenirs.
But from Monday, Zimbabweans can exchange bank accounts of up to 175 quadrillion (175,000,000,000,000,000) Zimbabwean dollars for five US dollars.
Higher balances will be exchanged at a rate of Z$35 quadrillion to US$1.
The move has been “pending and long outstanding,” central bank Governor John Mangudya said, quoted by Bloomberg.
“We cannot have two legal currency systems. We need therefore to safeguard the integrity of the multiple-currency system or dollarization in Zimbabwe.”
Zimbabweans have until the end of September to exchange their local dollars.
Correspondents say this is likely to only affect those with savings accounts.
Hyper-inflation saw prices in shops change several times a day, severe shortages of basic goods and Zimbabweans taking their money to market in wheelbarrows.
Ahead of the abandonment of the Zimbabwean dollar in January 2009, officials gave up on reporting official inflation statistics.
Towards the end of 2008, annual inflation had reached 231m%, pensions, wages and investments were worthless, most schools and hospitals were closed and at least eight in 10 people were out of work.
None of this happened when the country was Rhodesia. Of course I’m sure it’s pure coincidence that it just so happened to be that Mugabe was unlucky enough to be in charge when everything went wrong. I’m sure it all would have happened exactly the same way if the old regime was still in power.
The highest denomination was a $100 trillion Zimbabwean dollar note.
So you would need to carry 350 of those notes just to exchange for $1US
A four-year unity government, that ended in 2013 with President Robert Mugabe’s re-election, helped stabilise the economy but it still faces huge challenges.
One of the problems has been the shortage of coins that kept prices high as retailers often rounded them up and shoppers were given change in sweets or pens.
The metal they were made of was probably worth significantly more than the actual face value of the coins, that’s how bad the inflation got. It would be like the equivalent for us if the €1 coin was actually made of gold and silver instead of just being coloured that way. Why would you use it to buy €1 worth of goods when you could save the gold and silver and sell it at a higher value?
Over the last six months, the central bank has introduced about $10m (£6.4m) worth of “bond coins” into circulation, but they have not been popular with consumers who fear that it is the first step in the re-introduction of the Zimbabwe dollar.
During campaigning ahead of the last election, some ruling Zanu-PF party supporters had suggested this could happen, but the central bank governor has since ruled that out.
Zimbabwe’s economy has struggled since a government programme seized most white-owned farms in 2000, causing exports to tumble.
Mr Mugabe has always blamed the economic problems on a Western plot to oust him.
Why am I not surprised. When something bad happens, whose fault is it?
Yep, just as I thought. It’s all white people’s fault.