20 years on, how the Zimdollar died

2008 – This is the year Zimbabweans wish they could forget. Gono’s money printing presses are running overtime, so much that the RBZ runs out of ink and paper. Inflation is at its peak, which the World Bank put at 500 billion percent. The Zimdollar is now worthless, with an egg costing $50 billion.

On January 1, the $1 million, $5 million and $10 million denominations make their debut.

A few months later, in April, new $25 million and $50 million bills are printed. On May 2, the $100 million, $250 million and $500 million notes are released. Just two weeks later, on May 15, new notes in denominations of $5 billion, $25 billion and $50 billion notes debut.

The RBZ’s printing press, at this time, is failing to keep up. Ten zeroes are removed from the currency, and the $10 000 and $20 000 notes are released in September. Weeks later, on October 13, a new $50 000 bill is on the market. Before long, on November 5, new $100 000 and $500 000 bills appear.

Then, on December 4, Zimbabwe gets even more notes; $1 million, $10 million, $50 million and $100 million. Within two weeks, the $200 million and $500 million notes are released. These are soon followed by the $1 billion, $5 billion and $10 billion notes, just a week before Christmas.

Gono even puts old worthless coins, last used six years earlier, back into circulation. This sends many burrowing into wardrobes and in the back of sofas for old coins.

“Go back and look for those coins because we never demonetized them in the first place,” Gono says. Suddenly, an old one dollar coin is now worth 10 billion of the new dollars.

Already, retailers have been quoting in foreign currency, although the word “points” is used to denote one US dollar.

Clearly, something has to give. Grudgingly, that April, RBZ finally begin to let go, forced by the market.

On September 13, Gono introduces the Foreign Exchange Licensed Warehouses and Retail Shops (Foliwars), Foreign Exchange Licence Oil Companies (Felocs) and Foreign Exchange Licensed Outlets for Petrol and Diesel (Felopads). The grandiose abbreviations, typical of the Gono era, are just big words announcing the legalisation of the widespread use of forex. Some 1 000 retailers and 250 wholesalers are now allowed to freely trade in forex.

Still, Gono insists that this was not dollarisation. “It is imperative to note that the current measures are neither a condonation nor a direct introduction of the dollarisation of the economy,” Gono says. He admits, though, that the change is a “pragmatic response to the realities obtaining in the economy.”

At the time, as was to happen almost a decade later, there are three prices for goods and services; cheque, RTGS and cash. A catalogue from that era shows a 6-pack carton of Mazoe trading at $15 000 for cash, $175 000 by RTGS and $30 000 via cheque.

On the last day of that year, one US dollar was trading at $4 million on the official market. In reality, the rate was far higher.

An RBZ statement reports that bank computer systems are now “failing to cope with the number of digits arising from large transaction values”. Gono tells a meeting that the RBZ will now buy forex at the UN rate, really an informal rate used by NGOs.

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