Cash shortage hits Zimbabwe

• US President has directed more US sanctions against Mugabe's government.
• Daily bank withdrawal limit of US$1 is hardly enough to buy 10 kgs of the staple maize-meal.
• Hyper-inflation has passed the nine million per cent mark.
• Many Zimbabweans have survived the crisis through foreign currency remittances from relatives who fled to Western and neighbouring countries.

HARARE, Friday

Cash shortages have become the latest manifestation of Zimbabwe’s multi-faceted economic and political crises, with banks restricting daily withdrawals for individuals and businesses to slightly more than US$1.

Even as life gets tougher, President George W. Bush on Friday signed an order expanding US sanctions against the “illegitimate” Zimbabwe government of President Robert Mugabe.

“This action is a direct result of the Mugabe regime’s continued politically-motivated violence,” Bush said in a statement.

US$1 is hardly enough to buy 10 kilogrammes of the staple maize-meal, available only on the parallel market due to widespread food shortages.

Jonathan Shoko, a father of three from the capital, Harare, was shocked when, after spending two days in a bank queue, he could not buy 10kg of mealie-meal worth Z$200 billion (US2,22).

“My children had gone for three days without a decent meal when I saw 10kg of maize- meal going for $190 billion at Mbare Msika (a popular market in a poor Harare suburb),” he said.

He had just received his July salary of $2 trillion and had hoped he could do something useful with the money before it lost value.

“At the bank, they were only allowing withdrawals of $100 billion, which meant I had to wait another day before buying the maize-meal but when I came back, it had gone up to $200 billion. I had used part of the money thinking the price wouldn’t change and for a moment I was angry and thought of reporting them to the police,” he explained.

But he decided to continue scouting for food for his children.

Hyper-inflation, which has passed the nine million per cent mark, has meant that the Zimbabwe dollar is losing value daily.

The cash crisis has been aggravated by tight sanctions imposed by the West on President Robert Mugabe’s regime following the veteran leader’s controversial victory in last month’s one-candidate presidential run-off election.

This forced German firm Giesecke & Devrient, which had been supplying Zimbabwe with more than half of its note paper requirements for the past 40 years, to halt its deliveries to the central bank.

The Reserve Bank of Zimbabwe (RBZ), like many government institutions, has been paralysed by the political stalemate caused by Mr Mugabe’s disputed re-election. Gideon Gono, the central bank governor, said he had taken measures to mitigate the effects of the German firms’ decision.

However, the bank’s failure to review the cash withdrawal limits to match the hyperinflation is fuelling a great deal of anxiety among Zimbabweans.

On Monday, a $100 billion noted was introduced, but while acknowledging that the withdrawal limits had become unsustainable for businesses and ordinary people, the authorities remained mum on when they would be reviewed.

For a long time, many Zimbabweans have survived the crisis thanks to foreign currency remittances from relatives who fled to Western and neighbouring countries.

Abigail Mvundla, who has been trying to access US$4O sent by her sister in Canada through Western Union a fortnight ago, embodies the suffering many people in her situation have to go through these days.

“They keep telling us that the money has run out and sometimes they tell you that they only have US$100 notes, so they cannot serve those with smaller amounts,” she said.

Economic crisis

At least five million Zimbabweans have left the country since 2000, when the political and economic crisis began and they remit money to sustain relatives back home.

Many now place their hopes on the dialogue between the ruling Zanu PF and the opposition Movement for Democratic Change (MDC).

“We are tired of this suffering,” said Ms Muchaneta Muchenje, a vendor. “MDC and Zanu PF should just get on with the talks because it is clear that our economic problems are linked to their political differences.”

The two parties on Monday signed a memorandum of understanding (MOU) and undertook to conclude talks for a government of national unity within a fortnight.

President Mugabe said he hoped a positive outcome would end the suffering caused by the sanctions.

If an agreement is reached, Zanu PF and the two MDC factions are likely to form a government of national unity that might see Mr Morgan Tsvangirai becoming the new head of government while Mr Mugabe becomes a ceremonial head of state.