Today’s dollar worth 0.1 cents in 1990


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There was nothing extraordinary about the dark, striped suit that was displayed at a Bulawayo departmental store except its price. It cost $1 512 000.

I would not have gone for the dull and drab white shirt, even if it were for free. But what caught my attention was its price. $477 000.

The matching tie was going for $99 000, the black shoes for $722 000, and the grey socks for $32 000. The complete outfit cost a princely sum of $ 2 842 000.

But this was nothing compared to what I saw in a sister departmental store in Harare. A plain brown suit was going for $4.1 million while a matching shirt called for $677 000.

The Zimbabwe dollar has been playing yoyo since the introduction of the auction system in January, and even at the diaspora rate of $5 200 to the greenback, I just could not help asking myself, who the hell could afford these clothes?

But though the clothes are not for the average worker, or even middle manager, they reflect the erosion of the local currency and the widening gap between the rich and the poor.

According to the economics department of the Zimbabwe Congress of Trade Unions, a person now needs $1 000 to buy goods one bought for one dollar in 1990. Today’s dollar is less than 0.1 cents of the 1990 dollar.

The ZCTU says the national urban poverty line is now $72 515.76 per person or $362 580.88 for a family of five, which is the average family size in Zimbabwe. The average household is actually 4.8 persons but this is rounded off to five.

The ZCTU statistics also contradict the popular belief that Harare is more expensive than Bulawayo. The poverty line for Harare is $80 605.19 per person while that for Bulawayo is $87 096.55. The poverty line for Matebeleland South is the lowest at $62 798.34.

While currencies normally lose half their value every five years, the Zimbabwe dollar has been tumbling much faster. In 1992, for example, just a year after the government had introduced the Economic Structural Adjustment Programme and the country was facing one of the worst droughts in history, the dollar was only worth 57 cents of the1990 dollar.

Two years later it was down to 37 cents. It dropped to 6 cents in 2000 and had slipped to one cent by January last year.

The country experienced the biggest erosion of the local currency last year. While the poverty datum line for a family of five was $44 697.31 in January, it had nearly doubled to $88 963.25 by June. The second half was worse. The poverty datum line had slipped to $284 258.54 by December. It was down to $362 580.88 by March this year.

Though the government increased the tax threshold to $200 000 a month at the beginning of this year, the minimum wage has remained at $47 696 a month – just enough to buy 17 loaves of bread at current prices- since April last year.

The ZCTU poverty line is based on the consumer price index which the Central Statistics Office uses to calculate inflation. But the labour body says that while it uses official inflation figures to calculate the poverty line, “the CSO figures are not only out of date, they are also conservative in that they do not capture parallel market prices”.

Figures from the Consumer Council of Zimbabwe, for example, show that a family of six, just one more person that the ZCTU family, needs $968 485 a month to survive. It needs $475 525 a month for the food basket alone.

The food basket comprises 2kg of margarine, 40 kg of mealie meal, 6 kg of sugar, 500g of tea leaves, a pint of milk every day, 4.5 litres of cooking oil, a loaf of bread every day, 2 kg of flour, 4 kg of rice, 2kg of salt, a bundle of vegetables everyday and 8 kg of meat. This was before the recent price increases of bread, milk and sugar.

The ZCTU food poverty line, based on CSO inflation figures was, only $192 879.28 for a family of five at the end of March when inflation stood at 583.7 percent. Put another way a worker earning the minimum wage needs to work for four months to afford one month’s basic food requirement, and for 10 months to afford the Consumer Council food basket.

The same worker would have to starve for two months to afford the tie displayed in the Bulawayo departmental store and two years and eight months to buy the suit. The Harare suit would require 86 workers to pool their wages to buy it.

(65 VIEWS)

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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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