Zeronomics zeros heroes
One of the lesser known calamities of Gono's recent policy crunch is the plight of the ordinary Zimbabwean. In country where so many have given up on the formal economy and turned to "illicit" activities for the survival of their families, there is still a suprising number of Zimbabweans tryng to live by the book. Sadly, it is these, the law abiding citizens of our not so great country that are being squeezed to death by the new policy.
Not only did Gono slash zeros in his "Sunrise for Zimbabwe" pronouncement, he also silently devalued the dollar against the greenback by some 40 per cent to 1US$:250zW$ (250,000 in old currency). While the press missed this, business owners across the country gingerly raised prices citing the devaluation of the dollar as heard in a commuter omnibus in Harare,
Why did they do this? How could they get away with such murderous greed? Tarry and I'll tell you.
When people realized that they risked losing a lot of money if they tried to keep hoarding the "old currency" a stampede began as they hedged against inflation and the new currency by investing in goods. Of course store owners are more than happy to see the capital they have seen disappear into the "black" market willingly return. Besides, they know as long as they keep copies of receipts of sales, they will have no problem converting the old currency to the new currency as per the terms of exchange Gono stiputlated.
So for the past week, retailers in the formal economy have become transaction bankers for the informal market and Zimbabweans who were hoarding cash. They accept the cash for goods that they sell and deposit that into banks in exchange for the new currency. Meanwhile the informal traders who are buying the goods are hoarding them just like they did with the money waiting for the hyperinflationary environment to make them "millionaires" in the new currency once it's available and has become legal tender.
So in a sense the unjustified price increases can be viewed as a tax levied on Zimbabweans using the retail system to update their illegally held currency. Simply put, as demand for goods (not services) has increased due to the currency repartriation stampede, the price of said goods has increased. This a phenomenon you learned in basic economics.
So now we return to our by the books hardworking Zimbabwean.
Never having engaged in illicit trade, he's now seen his purchasing power parity (PPP) eroded overnight. His far stretched income is now tattered beyond reprieve as he will not be able to keep things together. While everything else has increased, wages have not. This is a reality that set in early last week but the government is only catching on this week. They can't even do anything to fend against it.
The reality is Gono's zeronomics are making zeros of our nation's true hereos.
Technorati Tags: Life+in+Zimbabwe, Zimbabwe, Zimbabwe+Economy
Not only did Gono slash zeros in his "Sunrise for Zimbabwe" pronouncement, he also silently devalued the dollar against the greenback by some 40 per cent to 1US$:250zW$ (250,000 in old currency). While the press missed this, business owners across the country gingerly raised prices citing the devaluation of the dollar as heard in a commuter omnibus in Harare,
Dhora rakadonha futi. Munofunga kuti mafuta anofambisa mota anotengwa nei? (The [Zim] dollar fell again. How do you think we pay for [imported] oil?Immediately after Gono announced the policy commuter omnibuses, the main mode of transportation within and between Zimbabwe's towns increased fares by 100 per cent blazing the trail for hundreds of other businesses to follow.
Why did they do this? How could they get away with such murderous greed? Tarry and I'll tell you.
When people realized that they risked losing a lot of money if they tried to keep hoarding the "old currency" a stampede began as they hedged against inflation and the new currency by investing in goods. Of course store owners are more than happy to see the capital they have seen disappear into the "black" market willingly return. Besides, they know as long as they keep copies of receipts of sales, they will have no problem converting the old currency to the new currency as per the terms of exchange Gono stiputlated.
So for the past week, retailers in the formal economy have become transaction bankers for the informal market and Zimbabweans who were hoarding cash. They accept the cash for goods that they sell and deposit that into banks in exchange for the new currency. Meanwhile the informal traders who are buying the goods are hoarding them just like they did with the money waiting for the hyperinflationary environment to make them "millionaires" in the new currency once it's available and has become legal tender.
So in a sense the unjustified price increases can be viewed as a tax levied on Zimbabweans using the retail system to update their illegally held currency. Simply put, as demand for goods (not services) has increased due to the currency repartriation stampede, the price of said goods has increased. This a phenomenon you learned in basic economics.
So now we return to our by the books hardworking Zimbabwean.
Never having engaged in illicit trade, he's now seen his purchasing power parity (PPP) eroded overnight. His far stretched income is now tattered beyond reprieve as he will not be able to keep things together. While everything else has increased, wages have not. This is a reality that set in early last week but the government is only catching on this week. They can't even do anything to fend against it.
The reality is Gono's zeronomics are making zeros of our nation's true hereos.
Technorati Tags: Life+in+Zimbabwe, Zimbabwe, Zimbabwe+Economy
