From recent news reports, it would appear that Zimbabwe is about to introduce yet another currency – livestock!
With Zimbabwe in the midst of a dire cash availability crises, the ever-innovative Government has come up with another way to avoid dealing with the economic crises by encouraging its poverty-ridden citizenry to part with what is possibly their very last source of wealth – their livestock.
Education Minister Lazarus Dokora and a ministry official have been quoted as saying that schools must be “flexible” when demanding outstanding fees from parents.
“Parents of the concerned pupils can pay their fees using livestock,” education ministry permanent secretary Sylvia Utete-Masango was quoted as saying.
The announcement of the new fees deal (which also includes encouraging parents in towns and cities to offer free labour at schools in lieu of hard cash) follows Finance Minister Patrick Chinamasa announcement recently that banks could now accept goats, cattle, sheep and chickens as collateral for loans.
Cash shortages hit Zimbabwe last year after the government threatened to grab all foreign companies operating in the country under the Indigenisation and Empowerment Law.
The government, however, claims that the cash shortages are due to people “externalising” hard cash (taking it out of the country) and retailers who refuse to bank their cash.
But Zimbabweans are no strangers to new currencies.
Currently, there are at least nine legal currencies in circulation although not all are accepted by traders. First and foremost is the US dollar, probably followed by the South African rand and the Botswana pula. Other currencies include the British pound, the Chinese yuan, euro’s, Australian dollars, Japanese yen and Indian rupees.
And most recently, the Bond notes which were issued in an effort to compensate for the outflow of US dollars through imports and to try and boost cash flows.
So why all these different currencies and the shortage of cash?
The Zimbabwean dollar collapsed in the mid-2000s after decades of Mugabe’s mismanagement of the economy, with policies including the forced redistribution of land from white farmers to black Zimbabweans with little agricultural training.
Inflation reportedly topped 90 sextillion percent—or nine followed by 22 zeros—and the government redenominated the currency three times, lopping zeros off the end in a vain bid to stabilise the skyrocketing inflation.
“The price of daily essentials, such as a single egg or a loaf of bread, was north of 1 billion Zimbabwean dollars. Eventually, the government abandoned the currency in 2009, switching to the current multi-currency basket”. (Newsweek).
The currency was officially scrapped after it hit 35 quadrillions (that’s 35,000,000,000,000,000) Zim dollars against a single US dollar.
It appears as though the country is either unwilling or incapable of installing a viable economic recovery plan.
Zimbabwe is the 16th poorest country with a GDP per capita of just under US$ 2000. GDP Growth forecast ranges between 0.6 and 3% depending on whose opinion you interpret as the correct one.
A labour survey published in June 2011 by Zimbabwe’s agency for national statistics, Zimstat, put unemployment at just under 11% but then you have to take into consideration that around 84% of the population work in the informal sector and with only 11% (606,000) in formal employment. But only about a quarter of all those counted as employed received some form of financial compensation for their work.
Inflation sits at -2% and Government spending has amounted to 28.7 percent of total output (GDP) over the past three years, and budget deficits have averaged 1.5 percent of GDP. Public debt is equivalent to 53.0 percent of GDP. (Heritage).
And now the goats!
You really have to marvel at the ingenuity in coercing parents to put up livestock to cover their kid’s school fees, but there are some practical concerns, for example, how would the schools deal with the arrival of goats, cows and sheep in the principal’s office.
Do the principal and staff eat the proceeds? Can they use it to barter with other entities for essential needs such as stationery, repairs, etc.?
Head master Mugabe: Hello! Is that the government printers?
“Yes head master, what can we do for you?”
Head master Mugabe: I need exercise books for the school, what’s the going rate for one goat? How many books can I get for 5 goats?
And then, of course, you have to wonder where the Government Printers will store all this new bounty?
And it is not only a headache in the education sector.
The finance minister has regulated the acceptance of livestock as collateral for bank loans. This does raise the question as to who is setting the value of the livestock and will these assets be linked to some form of evaluation standards that will allow common benchmarks.
But in reality, not a bad idea, until someone defaults on their payments.
The one upside is that Government is going to need to hire a whole herd of herders to keep an eye on all this livestock. Which in turn should create further employment in the livestock stealing industry.
You also have to wonder whether the almost non-existent Zimbabwe Stock Exchange will be required to list this new form of trade.
I suppose you do have Company “stock”, so why not Live “stock”.
As one Zimbabwean lawyer and activist put it
“Cows and goats to secure bank loans. Cows and goats to pay school fees. Very soon we shall need a Reserve Kraal* of Zimbabwe.”
*Kraal (also spelled craal or kraul) is an Afrikaans and Dutch word (also used in South African English) for an enclosure for cattle or other livestock, located within an African settlement or village surrounded by a fence of thorn-bush branches, a palisade, mud wall, or other fencing, roughly circular in form.
Image courtesy of Flickr by Antti Kultanen