Zimbabwe is facing its worst economic crisis in a decade, with prices soaring, limits on bread purchases, and long queues for fuel. This followed Finance Minister Mthuli Ncube’s decision to introduce a tax increase on money transfers last week to try and stabilise the government’s finances. The announcement triggered a rise in basic-commodity prices, stoking fears of an inflationary spiral and leading to long queues forming at petrol stations.
Many shops, under pressure from the government, are restricting customers’ purchases to prevent hoarding. Others have gone further: Yum! Brands Inc. temporarily shut some of its KFC outlets this week, saying it couldn’t find enough dollars to pay suppliers. Last Thursday, police arrested and beat two leaders of the country’s main trade union at protests over the increasing cost of living, the labor group said in a statement.
The country’s quasi-currency, known as bond notes (introduced two years ago and were meant to represent the value of one dollar), have plunged in value. It now takes 4.3 of them to buy one U.S. dollar – the weakest exchange rate on record, according to the Zim Dollar Index. In early September, the rate was 1.75. Some businesses have now stopped accepting bonds notes or electronic payments – which are even less valuable than the notes – altogether, and will only take hard cash. Zimbabwe, having scrapped its own worthless Zimbabwe dollar to end 500 billion-percent inflation in 2009, accepts them and the US dollar, Euro and rand, among others, as legal tender.