In 1980, it took two Zimbabwean dollars to equal one U.S. dollar in value. Today, it takes about 99,000. Zimbabwe was once an exporter of food. Today, a United Nations report conservatively estimates that one in four Zimbabweans depends on food aid from abroad. The nation's unemployment rate, meanwhile, stands at about 80 percent.
Zimbabwe is a nation in free fall. Its economy has been in a nosedive for six years, and the problems are growing worse by the month. The country's Central Statistical Office reported last week that the annual inflation rate hit 782 percent at the end of February, a record for the southern African country. Prices for food and non-alcoholic beverages have risen even faster, 824 percent over the last 12 months.
As with many economic problems, Zimbabwe's financial crisis stems from political machinations. As part of a campaign to intimidate political opponents and reward political allies, President Robert Mugabe six years ago seized thousands of white-owned farms and turned them over to "war veterans" (see "From breadbasket to basket case," Feb. 19, 2005). Those farms, which used to employ hundreds of thousands of Zimbabweans, now produce only a fraction of what they once did.
Then last summer, Mr. Mugabe began Operation Murambatsvina ("drive out the trash"), which displaced hundreds of thousands of political opponents by destroying tens of thousands of urban homes and business structures. The ostensible purpose of the campaign was to clean up urban areas, but the effect was to make homeless or disrupt the livelihoods of 2.4 million Zimbabweans-about 18 percent of the country's population-according to the United Nations. "[T]here are few, if any precedents of a government so forcibly and brutally displacing so many of its own citizens in peacetime," concluded a report from Human Rights Watch.
Facing diplomatic pressure from the West, Mr. Mugabe has forged closer military and economic ties with China, which hopes to use commodities from Africa to bolster its growing economy. (Chinese Communist Party official An Yongyua has hailed Mr. Mugabe as a "man of strong convictions, a man of great achievements, a man devoted to preserving world peace [and] a good friend of the Chinese people.") But help from China has not stopped the economic tailspin.
For the typical Zimbabwean, the biggest economic problem is the incessant price increases fueled by a politicized central bank: "The things that we buy-the groceries at home, the things we get for our two children-we have to buy immediately, as soon as we get the money," one desperate mother told the BBC earlier this year. "We know that if we wait a bit, the prices are going to go up again. If we wait another week, we will not be able to afford anything."
"It is quite interesting to see people going in banks with bags and sometimes even suitcases," added a Zimbabwean businessman. "You know that there are large amounts of money in there, which unfortunately are not going to buy much."
Sadly, no relief seems to be in sight. Some economists are predicting that the annual inflation rate could top 1,000 percent as early as next month.