The Economist - USA (2022-05-14)

44 MiddleEast&Africa TheEconomistMay14th 2022

buythesedollarsforlessthanhalfwhat

theyareworth.Intheory,theygotoim­

portersofessential thingssuchasfuel,

medicine and farm supplies. But a fat

chunkgoestowell­connectedtypes.Alo­

calparliamentaryreportin 2019 foundthat

$3bndisbursedfora governmentagricul­

tureprogrammewasnotproperlyaccount­

ed for.Another reportby The Sentry,a

watchdoginWashington,dc, detailedhow

one of the prime movers of that pro­

gramme, a crony ofthe president, had

amasseda fortunefromprivilegedaccess

tohardcurrencyandstatecontracts.

ForordinaryZimbabweans,lifeisa fu­

riousscramble fordollars. PercyMsona

wasa mathsteacher,butfoundithardto

surviveontheequivalentof$30a month.

Nowhetradescurrencyinthestreet.“It’s

notgoodforZimbabwethatteacherslike

mearequitting,”hesighs.Perhapsa fifthof

thepopulationhasemigrated.Nurses,ac­

countants,waitersandfarmhandsflockto

BritainandSouthAfrica.

ShoppinginZimbabweisanobstacle

course. Informal street vendors display

pricesinusdollars.Anyonewhopaysin

localcurrencymustdosoattheblackmar­

ketrate.Formalshops,suchassupermar­

kets,mustpricegoodsinZimbabwedol­

larsandusetheofficialrateifcustomers

pay in greenbacks. Since no customer

wouldacceptsuchterms,theyoffera huge

“discount”forsuchpurchases.Petrolsta­

tionsareallowedtoinsistonusdollars.At­

tendantslaughatanyonewhoaskstopay

inlocalcurrency.

SavingZimdollarsispointless,since

theirvaluerapidlyshrinks(seebox).Sav­

inghardcurrencyisnotsimple,either.Ma­

nyZimbabweansreceiveremittancesfrom

relativesabroad,butfewfeelsafeputting

theirgreenbacksinbanks.Itisoftenhard

togetthemoutagain,andthegovernment

hasinthepastforciblyconverteddollarac­

countsintolocalmoneyata grabbyrate.

Hencetheproliferationofsafety­deposit­

boxfirms,whichletpeoplestoretheirsav­

ingsawayfromthestate’sgreedyeyes.Ma­

nypeoplestashcashunderthebed.“The

living roomis Barclays,thebedroom is

StandardChartered,”jokesa Zimbabwean

abouthermother’ssquirrellingofsavings

aroundthehouse.

Otherswhowanttosavemustbecre­

ative.Bricksarestackedinmanya back­

yard.Perchedontheroofofahalf­built

housenearHarare,thecapital,Munyaradzi

Dombojenaexplainswhy.Everytimehis

familyhassparecash,theybuybuilding

materials.Intime,theywillhavea house.

Zimbabwehasenormouspotential.Its

soilisfertileandstuddedwithgold,ata

timewhenbothfoodandmineralsfetch

highprices.Itspeoplewereuntilrecently

among the best educated in Africa. Yet

their rulerskeep themdown. A general

electionisduenextyear.Thegovernment

willsurelyprintmoremoneytobuyfood

for ruling­party supporters and trun­

cheonsforopposition­partyskulls.MrBiti

saystheoppositionwouldwina faircon­

test,butitwon’tbefair.“We’rerunbya

phalanxofthugsandgangsters,”hesays.n

Fantasy v reality

Zimbabwean dollar per US$

2022, inverted scale

Source:zimpricecheck.com

450

350

250

150

400

300

200

April May

Parallel rate

Ocial rate

K

elvin chamunorwa’smotherwasa

middle manager at a bank in Zimba­

bwe. She worked there for 25 years,

steadily contributing to a pension. But

horrendous inflation, which reached an

annual rate of 231,000,000% in

mid­2008, wiped out her savings. When

she retired, her pension was so small it

was barely worth collecting. 

So Mr Chamunorwa, an actuary

trained in Britain, started a company,

Nhaka Life Assurance, to sell inflation­

proof pensions to Zimbabweans. The

pensions are not denominated in Zimba­

bwe dollars, since they quickly evap­

orate, nor in American dollars, since

many Zimbabweans are struggling to

obtain any (see previous article). 

Instead, they are denominated in

cows, which the government can’t print.

Savers, typically wage­earners such as

teachers, chip in cash, which Nhaka

immediately turns into cattle. The assets

grow by breeding. When a policy ma­

tures, clients can demand payment in

cows or the cash equivalent. 

Zimbabweans have long seen cattle as

a store of wealth. Mr Chamunorwa jokes

that he has merely updated an old idea

and added livestock insurance. His

scheme is especially suited to a country

where savers have lost all confidence in

conventional finance. The only way to

rebuild trust is to offer people “things

they can touch and see”, he says. Nhaka

holdsviewingdayswhensome of its

70,000 clients can visit the cows. 

Mr Chamunorwa also likes to get

away from his office in Harare, the cap­

ital, and visit them. At Nhaka’s farm in

Selous, 75km away, he watches newly

weaned calves hungrily munching hay,

and offers his actuarial opinion. “Most of

these, we’ll be putting a bull on them in

12 months’ time,” he says. That will be “a

compounding of the investment return”. 

FinancialinnovationinZimbabwe

Heiferinflation

S ELOUS

Why Zimbabweans buy pensions denominated in cows

Milk those assets

Zambia

Copper-bottomed

promises

A

fter fiveunsuccessful attempts and a

spell in prison on trumped­up charges

of treason, Hakainde Hichilema was elect­

ed  president  of  Zambia  in  August.  The

businessman’s  victory  was  due  to  voters’

anger  at  the  corruption  and  collapsing

economy overseen by his predecessor, Ed­

gar  Lungu.  The  West  was  cock­a­hoop.  So

too  were  mining  firms,  which  had  all  but

stopped  investing  in  Africa’s  second­larg­

est copper producer because of high taxes

and threats of expropriation. 

Nine months later, is Mr Hichilema en­

joying the job he craved? “It’s not fun trying

C APE TOWN

President Hakainde Hichilema has a

model to resolve Africa’s debt crises