See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/348562579

DEPRECIATION OF THE ZIMBABWE DOLLAR

Preprint · January 2019

DOI: 10.13140/RG.2.2.11766.01608

CITATIONS READS
0 407

1 author:

Tirivashe Madondo
University of Zimbabwe
2 PUBLICATIONS   0 CITATIONS   

SEE PROFILE

Some of the authors of this publication are also working on these related projects:

Depreciation of Exchange Rates in Third World Nationss View project

Depreciation of Currencies in Third World Nations View project

All content following this page was uploaded by Tirivashe Madondo on 18 January 2021.

The user has requested enhancement of the downloaded file.

 UNIVERSITY OF ZIMBABWE

DEPARTMENT OF ECONOMIC HISTORY

DEPRECIATION OF THE ZIMBABWE

DOLLAR, 1980 -2009.

BY

TIRIVASHE MADONDO
[email protected]

A DISSERTATION SUBMITTED IN PARTIAL FULFILMENT OF THE

REQUIREMENTS FOR THE HONOURS DEGREE IN ECONOMIC HISTORY AT THE
UNIVERSITY OF ZIMBABWE
JUNE 2019
1
DEDICATION

I dedicate this dissertation to my fellow Zimbabwean compatriots who beared this horrendous

nightmarish depreciation of the Zimbabwean dollar.

2
ACKNOWLEDGEMENTS

I have this personal affinity to my beloved father’s adage borrowed from Malcolm which says,

‘Education is our passport to the future, for tomorrow belongs to the people who prepare for it

today.’ I like that, from my kindergarten stage, I kept up ruminating this expression up to this

particular day when it bears a lot in my academic achievements. Nevertheless, sometimes these

academic achievements could have simply remained a hallucination without others who supplied

their resources, time and love to transform them into a reality. Without such people in my

academic journey, I agree, the execution of this dissertation could have been a mirage.

I am convinced to thank those people who devoted their resources, attention, time, and love for

me to complete my research. In this gratitude, I salute the contribution of Tanyaradzwa

Madondo, Tinashe Madondo, Sister Beulah Madondo, and my parents who supplied the

resources for this research to be successful. I am grateful to acknowledge the participation of my

supervisor, chairman of the U.Z Economic History Department, Dr. Ushehwedu Kufakurinani. I

would like express gratitude to the work done by the Reserve Bank of Zimbabwe companions,

both from the Exchange Rate Control Division and Economics Department for material support

without which this study would not have materialised. I extend my sincere gratitude to the

Herald House Librarians especially Mr Mazuru, of his tireless effort for going up and down in

the dusty Herald House stake rooms to find me the folders of newspapers I required for this

study. My outstanding thanks finally goes to Professor Albert Makochekanwa, Dr Godfrey

Kanyenze and Br. Deprose Muchena for amplification of this dissertation into a better academic

depiction.

3
LIST OF ACRONYMS

BBC-British Broadcasting Cooperation

BOP-Balance of Payments

DRC-Democratic Republic of Congo

ESAP- Economic Structural Adjustment Policy

FCA-Foreign Currency Accounts

FTLRP-Fast Track Land Reform Programme

FFYNDP- First Five Year National Development Plan

GDP-Gross Domestic Product

IFI-International Financial Institutions

IMF- International Monetary Fund

MDC-Movement for Democratic Change

MP-Member of Parliament

QFAs-Quasi-Fiscal Activities

QTM- Quantity Theory of Money

RBZ-Reserve Bank of Zimbabwe

TNDP-Transitional National Development Plan

UDI-Unilateral Declaration of Independence

UN-United Nations

USD-United States Dollar

WB-World Bank

ZANU PF- Zimbabwe African National Union-Patriotic Front

ZEDERA-Zimbabwe Democracy and Economic Recovery Act

ZIMPREST- Zimbabwe Programme for Economic and Social Transformation

4
TABLES

Table 1.1........................................................................................................................................50

5
TABLE OF CONTENTS

Introduction……….......................................................................................................................7

Aim and objectives……..............................................................................................................10

Justification…………….............................................................................................................11

Literature review…....................................................................................................................11

Methodology................................................................................................................................14

Dissertation layout……..............................................................................................................15

SECTION 1

A PERIOD OF GRADUAL DEPRECIATION OF THE ZIMBABWE DOLLAR, 1980-

1997.

INTRODUCTION……………...............................................................................................16

INDEPENDENCE AND THE “HONEYMOON” DAYS…................................................16

SOCIALIST DECADE (1980-1990)…..................................................................................21

ESAP TO BLACK FRIDAY………......................................................................................28

SECTION 2

A PERIOD OF RAPID DEPRECIATION OF THE ZIMBABWE DOLLAR, 1997-2009.

INTRODUCTION…...............................................................................................................33

DRC ADVENTURE, ZANU PF POLICY GYRATIONS AND TARGETED

SANCTIONS……...................................................................................................................33

QUASI FISCAL ACTIVITIES………………………………………………..........………44

SLASHING OF ZEROES AND CURRENCY REDEMPTION…....................................47

MULTI-CURRENCY SYSTEM….......................................................................................52

CONCLUSION…........................................................................................................................54

6
Introduction

Once upon a time, Peter Schiff, a famous American stock-broker who is well renowned for

predicting the global 2008 economic shock said, “...printing money creates inflation, which

weakens an economy. Unfortunately, this kind of common-sense thinking never seems to

penetrate academic circles.”1 This saying pragmatically dovetails with the circumstance of the

Reserve Bank of Zimbabwe2 over the previous years that navigated on printing money to finance

budget deficits through quasi-fiscal activities in the national fiscus of Zimbabwe post 1997. 3

Despite the fact that most developing countries in Africa have the ‘fiscalitise syndrome’ 4, that is

the tendency of printing money to finance flamboyant consumption and budget deficits, the

experience of Zimbabwe within three decades of its independence is more fascinating especially

when one is tracing the depreciation of the Zimbabwe dollar.5

The 12th of April 2009 appears as a watershed in the economic history of Zimbabwe when the

Zimbabwe dollar was discarded as currency after it depreciated to 35 quadrillion dollars per 1

US dollar.6 What is a nightmare to economists is that Zimbabwe gained its independence in

1980, with the Zimbabwe dollar equals to 1.67 US dollars [Z$1=US$1.67]. Yet in 2009, one US
1
Printing Money Creates Inflation, https://steemit.com/economics/@misesandrothbard/printing-money-creates-
inflation, Accessed on 04.12.2018 08:50.
2
In this current research the name Reserve Bank of Zimbabwe (RBZ), the Central Bank, or just the Reserve Bank
are being used synonymously.
3
Geraldine Sibanda, Institutional responses to the Zimbabwe economic crisis: The case of the Reserve Bank of
Zimbabwe’s Quasi-fiscal Activities, 1997-2009, Unpublished Dissertation, Masters of Arts in Africa Economic
History, University of Zimbabwe, 2017.

4
The term ‘fiscalitise’ is coined by former Finance Minister of Zimbabwe Hon Tendai Biti. It refers to a syndrome or
an anaemia of printing money to sponsor budget deficit.
5
The name Zimbabwe dollar, Zim-dollar, local or Zimbabwean currency are synonymously used.

6
Fox News, “One US dollar = Z$35 Quadrillion as Zimbabwe phases out old currency,” 2015,
https://www.foxnews.com/world/one-us-dollar-z35-quadrillion-as-zimbabwe-phases-out-old-currency, Accessed on
10.09.2018 14:43, Zimbabwe Dollar OANDA Currency Facts, https://www.oanda.com/currency/iso-currency-
codes/ZWD, Accessed on 04.12.2018 09:48.
7
dollar which had been less than one Zimbabwe dollar was equal to 35 quadrillion Zimbabwe

dollars [US$1=Z$35 000 000 000 000 000]. It is significant to note that the “35 quadrillion

figure” is the official exchange rate figure collected from RBZ Exchange Rate Control Division

by this researcher.7 Non-official figures by UN on the Zimbabwe Black Exchange rate market of

2009,8 was one US dollar for 350 octillion of Zimbabwe dollars. (N.B zeroes of an octillion are

encrypted in the footnote).9

The aim of this study derive from the fact that what has been once a powerful currency worth to

more than 1 US dollar in 1980, was rendered worthless by 2009, less equivalent to a paper it has

been printed on.10 At the currency doom of 2009, the Zimbabwe dollar as a legal tender lost

99.9% of its exchange rate face value in a local exchange rate market to an extent that even the

parliamentarians, ministers, civil servants and the rest of ordinary Zimbabweans could not accept

Zimbabwe dollar for payment of their remuneration on the precept that it was worth nothing.

This depreciation unprecedentedly ushered the official abandonment of the Zimbabwe dollar

(Zim-dollar) as a local currency replacing it with ‘multi-currency basket system’. 11 Then from

the 12th of April 2009, up to this current juncture Zimbabwe as a country has no currency, it is

7
RBZ Official Statistics from Exchange Rate Control Division, see table no.1.1.

8
See UN Exchange Rate Figures on Zimbabwean Parallel Market of 2009 gathered by Jayson; Jayson Coomer,
Zimbabwe’s Economic Crisis & Hyperinflation 1997-2009, Unpublished Masters Thesis, Masters in Financial
Management, University of Cape Town, p.39.
9
One thousand has 3 zeros, one million has 6 zeros, one billion has 9 zeros, one trillion has 12 zeros, one quadrillion
has 15 zeros, one quintillion has 18 zeros, one sextillion has 21 zeros and one septillion has 24 zeros, whilst one
octillion has 27 zeroes.
10
Tinashe Mushakavanhu, “I was a quadrillionaire in Zimbabwe, but could barely afford to buy bread,” Quartz
Africa, 12 June 2015, https://qz.com/africa/426925/i-was-a-quadrillionaire-in-zimbabwe-but-could-barely-afford-to-
buy-bread/, Accessed on 10.09.2018 15:00.
11
Bonga Wellington Garikai and Netsai Lizy Dhoro, Currency Substitution, Dollarisation and Possibility of De-
Dollarisation in Zimbabwe, Journal of Economics and Finance, Volume 6, Issue 1, 2015.
8
currently surviving by the use of a basket of multi-currency system and a pseudo currency (bond

note) which is a subordination of its full sovereignty.12

This study entails an analysis of the depreciation of the Zimbabwean dollar. Throughout the

entire history of economies of global currencies, countries that had such tremendous currency

depreciation similar to the scenario of Zimbabwe are Hungary (1946), Germany (1923),

Yugoslavia (1994) and Greece (1944).13 It can be discerned that these countries underwent their

depreciation in the conditions of war, whilst Zimbabwe experienced this without being

necessarily involved in a condition of war. Therefore the dissertation seeks to inquire what

genuinely caused depreciation of the Zim-dollar.

Scholarship have been mute on causes of the depreciation of Zim-dollar to a point that this

subject has almost escaped academic scrutiny. However, this current study dwells to capture

these issues. The study seeks to unearth factors and events which triggered the depreciation or

“fall” of the Zimbabwe dollar vis-à-vis the US dollar. A number of root-causes to be evaluated in

the opus of the study include speculation, capital flight, affiliation to ‘socialism,’ adoption of

ESAP neo-liberal policies, amongst other key points, that encompass payment of war veterans

for gratuity, involvement in the Democratic Republic of Congo war, fiscal delinquency, printing

of money, unscrupulous activities of the RBZ’s runners, and post-2000 policy gyrations by

Robert Mugabe and the ruling ZANU PF just to mention the chaotic land reform policy, Look

12
John P. Mangudya, Press Statement: Measures to deal with cash shortages whilst simultaneously stabilising and
stimulating the economy, Reserve Bank of Zimbabwe, May 4, 2016, The Independent in Economy, Politics, ‘Zim
uprisings against useless bond notes’, The Independent, 23 August 2016,
https://www.theindependent.co.zw/2016/08/03/zim-uprisings-useless-bond-notes/, Accessed 25.10.2018 13:31
13
The Worst Hyperinflation Situations of All Time, https://www.cnbc.com/2011/02/14/The-Worst-Hyperinflation-
Situations-of-All-Time.html, Accessed on 12.03.2019 09:48.
9
East Policy as well as a withdrawal from the British common-market. 14 The study arrives at a

conclusion that a combination of these factors relegated the Zim-dollar to be on the headlines as

the world’s weakest currency by 2009.

Aim

The aim of the study is to investigate the causes for the depreciation of the Zimbabwe dollar

against the US dollar from 1980 to 2009.

Objectives

The study is predicated on two main objectives:

1. Determining whether these causes for the depreciation of Zim-dollar were exogenous or

endogenous causes.

2. Analysing the Zimbabwean exchange rate policy, monetary policy and the political

economy from the purview of depreciation of Zim-dollar that dramatically occurred from

1980 to 2009.

14
James Muzondidya, “From Buoyancy to Crisis, 1980-1997,” in Raftopoulos B and Mlambo A, Becoming
Zimbabwe, A History from the Pre-colonial Period to 2008, Harare, Weaver Press, 2009, p 188-200; Brian
Raftopoulos, “Crisis in Zimbabwe, 1998-2008,” in Raftopoulos B and Mlambo A, Becoming Zimbabwe, A History
from the Pre-colonial Period to 2008, Harare, Weaver Press, 2009, p 201-232; RBZ, Quarterly Economic and
Statistical Review, Sept/Dec 1991, Vol.12 Nos.3 & 4, 1991, p 10; RBZ, Annual Report, 2003 p 37-41; RBZ,
Quarterly Economic Review, December 1980, Vol.1 No.2, 1980, p 5-17, RBZ, Quarterly Economic and Statistical
Review, September/December 1997, Vol. 18 Number 3/4, 1997; Lloyd Sachikonye, Zimbabwe's Lost Decade:
Politics, Development and Society, Oxford: African Books Collective, 2012 p 85-107; Godfrey Kanyenze,
“Economic Structural Adjustment Programme (ESAP): Precursor to the Fast Track Resettlement?,” in Masiiwa M
(Ed), Post-Independence Land Reform in Zimbabwe: Controversies and Impact on the Economy, Harare, Friedrich
Ebert Stiftung and Institute of Development Studies, 2004, p 90-120; Lionel Nkomazana, ‘An Overview of the
Economic Causes and Effects of Dollarisation: Case of Zimbabwe’, Mediterranean Journal of Social Sciences, Vol 5
No. 7, 2014, p 72.
10
Justification of Study

Whilst Zimbabwean citizens are waiting for the pending return of the Zimbabwe dollar, this

dissertation has enough justification as it proffer reasons on how Zimbabwe got to its current

pertinent conundrum of currency crisis. Zimbabwe’s incumbent Finance Minister, Professor

Mtuli Ncube on his assumption of office personally acknowledges that Zimbabwe is under a

national conundrum emanating from the loss of its national currency due to depreciation. The

dissertation gives steps to how Zimbabwe experienced this depreciation to an extent of losing its

currency and consequently its national pride of ‘currency sovereignty,’ and why Zimbabwe alone

in just less than 30 years of independence uncommon to any of African countries.

On the timeframe justification of this dissertation, the study commences in the year 1980 and

ends in 2009. A justification for commencing in 1980, is that 1980, was the year when the

Zimbabwean dollar was issued replacing the Rhodesian dollar. The study ends in 2009 on 12 th of

April on the justification that it is when the Zimbabwean dollar was officially discarded as a

currency in adoption of the multi-currency system.

Literature Review

Globally, much literature has been written on depreciation and crashes of currencies. Economist

Paul R. Krugman et al ague that depreciation is the fall, collapse or flopping of the intrinsic face-

value of a currency vis-à-vis other currencies.15 In their definition, Krugman et al differentiated

depreciation from inflation or hyperinflation though the definition of these three seem to be

intertwined. (N.B In summary, Krugman et al opine that depreciation is the fall of the value of

currency against other currencies [as shown by the exchange rate], whilst inflation is the fall of

15
Paul Krugman et al, International Economics: Theory and Policy, Boston, Pearson, 2012, p 6.
11
the value of a currency against goods and services, whilst hyperinflation is when the inflation

slides into supersonic percentages characteristically after it exceeds 50 percent).16 In a

Zimbabwean scenario there is a considerable paucity of literature on depreciation of currency,

unlike literature on inflation and hyperinflation. On the existing Zimbabwean currency

historiography, there is no a substantial copy that talks of currency depreciation of the Zim-

dollar. It is crucial to note that even the literature that unpacks the saga of Zimbabwean

hyperinflation have just perused depreciation of the Zim-dollar exchange rate in passing and in

doing so, they inclined to omit a lot of information on depreciation of Zim-dollar leaving more

questions than answers in this arena of study. Limitation of literature on this topic inspired the

researcher to review a German book which is central on depreciation. A copy on the depreciation

of the German mark by Costantino Bresciani-Turroni entitled, “The Economics of Inflation: A

Study of Currency Depreciation in Post-War Germany” accounts for the role of the external

factors including confiscation of gold reserves, scotched earth policy against the central bank,

commerce embargo against Germany, impelling payment of reparations and First World War

lingering debts as basic reasons for depreciation of the German currency. 17 Despite that the book

is a narration on depreciation of the German mark that was spectacular in Germany from 1920 to

1923, in reviewing this book the researcher drew parallels from this book to work on

depreciation of Zim-dollar.

Though currency literature on Zim-dollar’s depreciation is limited, it is fascinating to notice a

body of crisis literature called crisis historiography. This crisis historiography although not

inherent and exhaustive in narrating the trending dynamics of the Zim-dollar depreciation, but

16
Ibid, p. 320-323.

17
Costantino Bresciani-Turroni, The Economics of Inflation: A Study of Currency Depreciation in Post-War
Germany, Milan, Universita Bocconi, 1931.
12
they give a niche and a probing clue of the declining Zimbabwe dollar relative to other

surrounding global currencies (caused mainly by government’s policy gyrations and abuse of the

printing machine) leading to the ‘crisis’ or ‘crises’ that then characterised the Zimbabwean

economy. Prominent examples of these texts are When Money Destroys Nations: How

Hyperinflation Ruined Zimbabwe, How Ordinary People Survived, and Warnings for Nations

that Print Money;18 Zimbabwe Hyperinflation: The House is on Fire –But Does the Government

Know it is Dousing the Flames with Petrol?;19 Zimbabwe's Casino Economy: Extraordinary

Measures For Extraordinary Challenges;20 the forthcoming and yet unpublished book Zimboes

Never Die? Negotiating Survival in a Challenged Economy; 21 Zimbabwe’s Plunge:Exhausted

Nationalism, Neoliberalism and the Search for Social Justice;22 A Predictable Tragedy: Robert

Mugabe and the collapse of Zimbabwe;23 Crisis! What Crisis? The Multiple Dimension of the

Zimbabwean Crisis24 as well as R. Bourne’s Catastrophe-What Went Wrong In Zimbabwe?

amongst others25. For instance on the book Catastrophe-What Went Wrong In Zimbabwe?,

Bourne from chapter six, ‘Disaster years and the Third Chimurenga’, to chapter seven, ‘From
18
Philip Haslam and Russell Lamberti, When Money Destroys Nations: How Hyperinflation Ruined Zimbabwe,
How Ordinary People Survived, and Warnings for Nations that Print Money, Paperback, London, 2015.

19
Peter Robinson, “Zimbabwe Hyperinflation: The House is on Fire –But Does the Government Know it is Dousing
the Flames with Petrol?”, Bonn: Friedrich-Ebert-Stiftung, 2006.

20
Gideon Gono, Zimbabwe’s Casino Economy: Extraordinary Measures for Extraordinary Challenges, Harare,
ZPH Publishers, 2008.

21
Ushehwedu Kufakurinani et al (Editors), Zimboes Never Die? Negotiating Survival in a Challenged Economy,
c1990s to 2015.

22
Patrick Bond and Masimba Manyanya, Zimbabwe’s Plunge Exhausted Nationalism, Neoliberalism and the
Search for Social Justice, Weaver Press, 2003.

23
Daniel Compagnon, A Predictable Tragedy: Robert Mugabe and the collapse of Zimbabwe, Philadelphia, PA:
University of Pennsylvania Press, 2011.

24
Sarah Chiumbu and Muchaparara Muchemwa, Crisis! What Crisis? The Multiple Dimension of the Zimbabwean
Crisis, Cape Town: HSRC, 2012.

25
Richard Bourne, Catastrophe: What Went Wrong in Zimbabwe?, London, Zed Books, 2011.
13
Operation Murambatsvina to an Inclusive government,’ tries to trace the up-side-down economic

policies that have led Zimbabwe to the crisis economy and to the fall of Zim-dollar centrally

being triggered by ZANU PF’s policy disaster.26 Zimbabwe’s road to crisis is explained in similar

scholarship style of crisis historiography in the texts including Kanyenze’s et al Beyond The

Enclave: Towards a Pro-Poor and Inclusive Development Strategy for Zimbabwe, (see from page

35 to 46) when Godfrey Kanyanze and his team drop a nuance thrust from the independence to

the crisis period of 1997-2008, due to what is termed by other scholars to be economic

delinquency.27

Methodology

This is a qualitative research method which utilised primary material from the RBZ in form of

official RBZ’s Weekly, Monthly, Quarterly and Annual Reports, Monetary and Fiscal Policy

Statements, Statistical Statements, Economic Review Statements and other currency-related

documents from the RBZ library. These primary documents were very quintessential in

providing raw data, graphs, statistics and explanations for the depreciation of Zim-dollar.

The study also engaged other primary material like Parliamentary Debates, Ministry of Finance

and Economic Development documents. These gave the researcher the opportunity to test the

presentation of depreciation from another angle apart from the RBZ. Parliamentary Debates gave

the researcher the chance to analyse sentiments from different political parties in parliament i.e.

ZANU PF and the MDC on fundamental causes for the depreciation of the Zim-dollar.

26
Ibid.

27
Godfrey Kanyenze et al (editors), Beyond The Enclave: Towards a Pro-Poor and Inclusive Development Strategy
for Zimbabwe, Harare, Weaver Press, 2011.
14
Secondary sources like the IMF and W.B Working Papers, Reports and Strategy Papers were

engaged for this study. These was useful to juxtapose the official IMF exchange rate to Zim-

dollar against the rate fixed by the RBZ. These papers also helped in revealing the impact of

sanctions on the fall of Zim-dollar contrary to the famous mantra of ‘sanction set-back’ as

propaganda for the depreciation of Zim-dollar such as propagated by ZANU PF.

Other secondary material included broadcasting media like the Voice Of America (Studio Seven)

and newspapers. These provided nuance analysis of ordinary citizens, economists and other

players toward the depreciation of Zim-dollar. This was very important as the researcher had not

have the opportunity of interviewing some of these stakeholders, thus media filled that loophole.

Other sources in form of books, book chapters and journal articles were also useful for this study.

These initially sharpened the analytical skills of the researcher, to build his own argument from

their existing debates. Though there is still a research gap between these sources of information

on the depreciation of Zim-dollar, it is my anticipation that this study is contributory in filling

this existing gap.

Dissertation layout

The dissertation is structured into two sections. The first section engages a period of gradual

depreciation of the Zimbabwe dollar that stretches from independence in 1980 to 1997. The last

section examines a period of rapid depreciation of the Zimbabwe dollar that stretches from a

period of 1997 up to 2009 abandonment of the use of Zim-dollar as currency.

15
SECTION 1

A PERIOD OF GRADUAL DEPRECIATION OF THE ZIMBABWE DOLLAR

Introduction

This section discusses a period of gradual depreciation of Zimbabwe dollar against the US dollar

that stretches from 1980 to 1997. The overall argument of this section is that a period of gradual

depreciation of Zim-dollar was primarily caused by a neophyte capital flight at independence, 28

speculation, a lost decade in socialist commitment, adoption of ESAP, confidence deficit to

ZANU PF and payment of gratuity to war veterans. These factors precipitated the Zimbabwe

dollar to a stock market crash of November 14, 1997, a day referred to as “Black Friday”, where

the Zimbabwe dollar lost 71,5% of its market value in exchange rate in less than four hours of

business against the United States dollar, depreciating to 16.77 per 1 US dollar.29

INDEPENDENCE AND THE “HONEYMOON” DAYS

Zimbabwe attained independence in 1980. In the revolutionary zeal of just having attained its

independence the Zimbabwean government started the process of re-naming roads, towns, etc. to

effectuate a change from the then Rhodesia days, and in that process it re-branded the name of its

biggest central bank from the ‘Reserve Bank of Rhodesia’ (RBR) to the ‘Reserve Bank of

Zimbabwe’ (RBZ).30 This happened simultaneously by demonetising the Rhodesian dollar as

currency via substitution by the newly issued Zim-dollar at parity value. 31 According to RBZ

28
This refers to capital emitted out of Zimbabwe by pessimistic whites who were sceptical with the new black
majority rule after Mugabe’s ZANU PF came to power in 1980.
29
See table 1.1

30
RBZ, Quarterly Economic and Statistical Review, Dec 1981, p 6.

31
A. Makochekanwa, Zimbabwe’s Black Market for Foreign Exchange, p 10.
16
sources, the Rhodesian dollar was demonetised on 1981 under Statutory Instrument 378 (SI 378)

of the Government of Zimbabwe.32

In most contemporary literature the first Zim-dollar is dated 1980, but in actual fact empirical

evidence authenticate that it was issued in the year 1981, with the signature of Desmond C.

Crough, a former governor of the Reserve Bank of Rhodesia and the then first governor of the

RBZ.33 In 1981, Zim-dollar had only three denominations issued in circulation of the economy.

These denominations were printed in $2, $5 and $10 as legal tenders. 34 In supplementation of

these three denominations in 1982, a $20 note was issued. As of 1982 the $20 note was the

largest denomination of Zim-dollar and it was scarce to see it everywhere whilst circulating in an

economy due to its precious value as boasted at the budget presentation of 1982 fiscal year.35 Just

three decades down the line, denominations of Zim-dollar had swiftly shifted in printing from

two-digit notes of twenty dollars to hundreds, to thousands, to millions, to billions, and to

hundred trillion to an extent that even when a top Zimbabwe leading economist gripped by these

changes in 2008, he remarked that, ‘…next time we won’t be able to pronounce our money.’36

At independence, the official exchange rate of the Rhodesian dollar to US dollar was $1.67 US. 37

When the Rhodesian dollar was demonetised as currency and replaced with the Zimbabwe dollar

under SI 378, the Zim-dollar simply inherited the same exchange rate value of $1.67 to US

32
Reserve Bank of Zimbabwe, Unpublished Source.

33
Ibid.
34
Ibid.
35
Government of Zimbabwe, Budget Statement, Harare, Printflow, 1982, p6.
36
The Standard, 01 February 2008.
37
Table 1.1, RBZ Quarterly Economic Review, December 1980 Vol.1 No.2, p17.
17
dollar.38 This automatically made the Zim-dollar a powerful currency in world. 39 Through SI 378

the strength of the Zim-dollar acceded to the legacy of the Rhodesia dollar, since the legacy

value of the Rhodesian dollar gave strength to the infant Zim-dollar.40 Though it was at its

infancy, by inheriting the value of the Rhodesian dollar the Zim-dollar emerged stronger than

older currencies such as the rupee and the US dollar that have had many years circulating in

economies.

A number of prominent economists expected the strength of the Zim-dollar to last. However, this

did not happen. It disappointed many economists and ordinary citizens too because the

expectation was emotive, mounting from the fact that Zimbabwe went on an upward spiral of

rapid economic growth during the first two years of its independence. 41 This has been famously

referred to as the ‘honeymoon days’ as independence economy started with buoyance when

Zimbabwe resembled an eminence of a rainbow nation.

Economic honeymoon days of the nation started with excellent two successive agricultural years

that set the 1980 to 1982 harvests ‘bumper harvests’ that by 1982, Zimbabwe have been a net

food exporter to its surrounding neighbours that apart from earning foreign currency it earned

itself the title a ‘bread basket of Africa’.42 Statistics highlighted on motions of the first parliament

session after independence on 15th of May 1980, aptly symbolised these nation’s honeymoon

38
RBZ, Quarterly Economic and Statistical Review, Sept/Dec, 1981.

39
Ibid.
40
The Value of Zimbabwean Dollar, https://www.xe.com/currency/zwd-zimbabwean-dollar#additionalinfo,
Accessed on 04.12.2018 09:56; Patrick Bond, Uneven Zimbabwe: A Study of Finance, Development and
Underdevelopment, Trenton, Africa World Press, 1998, p.186 and 244.
41
RBZ, Quarterly Economic Review, Dec 1980, p 15.
42
Godfrey Kanyenze et al (editors), Beyond The Enclave, p79.
18
days.43 Even to the international platform Zimbabwe attained a star status when internationally

Zimbabwe become ‘open for business.’ As what is noted by Chidzero, from 1980 to 1982 the

Zim-dollar was above the US dollar.44 Chidzero on his parliamentary presentation in 1981 runs

out his motion through surplus indices of these honeymoon days when he cites in his 1982

budget script that from 1980 annual inflation rate was 11.8%, unemployment rate was less than

30%, the exchange rate was at US$1.67, and the GDP was 5354.8 million which was the most

highest in Sub-Saharan African nations.45 It is on this account that Zimbabwe was classed a

‘middle income’ country by the World Bank,46 and eyed to compete for development with Asian

Giants since per capita GDP levels of China (now the second global economy after US) and

India, and the Chinese renminbi and the Indian rupee were well right below the value of the Zim-

dollar.47

It has been gazetted in previous ZANU PF election manifestos that ZANU PF party is

synonymous with floating the value of Zim-dollar above the US dollar during post-independence

economic buoyance.48 However, it is not prejudice that the strength of the Zim-dollar at the

immediate post-independence honeymoon days was materialised by a coincidence of factors

beyond ZANU PF’s own abilities and electoral promises of a land flowing with milk and ‘honey’

or its myth-making repertoire of patriotic history. Coincidence of these factors beyond ZANU PF

abilities to deliver included end of war, lifting of UN sanctions, inheritance of reserves,

43
Bernard Chidzero, p 2148.
44
Ibid.
45
Bernard Chidzero, Hansard Parliamentary Debates, Report by Minister of Economic Planning, 4th March 1981, p
2148.
46
World Bank, http://data.worldbank.org/indicator/ny.gdp.cp, 2011, p 5.
47
Godfrey Kanyenze et al (editors), Beyond The Enclave, p 3.
48
ZANU-PF Election Manifesto, Harare, The National Commissariat and Publicity, 2002.
19
(‘massive reserves’) from the coffers of Reserve Bank of Rhodesia acquired by a rigorous UDI

exchange rate regulations to bust sanctions. Inheriting of reserves in mass stocks of gold

reserves, foreign exchange reserves and treasury bills, in fact, made Zimbabwe inheriting ‘the

jewel economy of Africa.’ What is side-lined in ZANU PF electoral manifestos is the fact that

independence saw Zimbabwe inheriting ‘the jewel economy of Africa’ which could be the

fundamental basis for the strength of Zim-dollar.

Two IMF chief superintendents, Enoch and Gulde49 maintain that competitiveness of any

currency has an anchor of either reserves and/or a viable economic base or both fundamentals. 50

From the issuance of the Zim-dollar, data findings are that the value of Zim-dollar was anchored

by this inherited ‘jewel economy of Africa,’ which is a viable economic base according to two

IMF monetary experts Enoch and Gulde.51 In a socialist decade it is regrettable that “the jewel

economy of Africa,” an anchor that backed the value of Zim-dollar against the US dollar had

become a contemptuous example of a crumbling economy, despite that Zimbabwe unlike other

countries had inherited the most developed economy in Sub-Saharan Africa that was developed

in a fashionable manner by colonialists with a vision to create a Whiteman’s country.

49
Charles Enoch is an Assistant Director and senior Chief of the Banking Supervision and Regulation Division of
the IMF's Monetary and Exchange Affairs Department, whilst Anne-Marie Gulde is a Senior Economist in the
Monetary and Exchange Policy Review Division of the IMF's Monetary and Exchange Affairs Department.
50
There are many publications of Enoch and Gulde in the subject of currency backup to guarantee its value. For
further detail follow IMF online catalogue https://www.imf.org/external/pubs/ft/fandd/1998/12/enoch.htm, Accessed
on 04.12.2018 09:48.
51
RBZ Bulletins, Unpublished source. This was reiterated by L. Sachikonye, Zimbabwe's Lost Decades and G.
Kanyenze et al, Beyond the Enclave, p1-2.
20
SOCIALIST DECADE (1980-1990)

Soon after decolonisation, it is a fact that most African countries adopted socialism though by

different versions.52 Drawing from empirical case studies of these pro-socialist nations, central

banks of socialist nations almost all failed, and currencies of socialist countries drop in value

except the Cape Verdean currency.53 Despite that Zimbabwe adopted socialism latter after many

African countries had failed with socialism, Zimbabwe dismally failed to learn from other

countries’ experiences.

Adoption of socialism in Zimbabwe in 1980, under the “Growth with Equity” blueprint in the

Marxist-Leninist dictum heralded the initial depreciation of the Zim-dollar.54 According to RBZ

Economics Department this depreciation was due to unquantifiable microeconomic variables

chiefly being scepticism and speculation.55 Given a backdrop that the majority demographic

dividend of both foreign and domestic investors were capitalists, the rhetoric shift of ZANU PF

to the Soviet aligned Cold War bloc with radical Marxist-Leninist postulations incurred

scepticism, speculation and confidence deficit to investors on ideological disparity basis with the

tenets of socialism. To numeracy of white investors, 56 the advent of Marxist-Leninist oriented

government in 1980 was a nemesis which they could not swallow and due to culmination of

confidence deficit, capital flight began, initially to South Africa a safe haven for investment. 57
52
Versions of African socialism varied from Ujamaa, Leninist, Autojestion, Zambianisation, Marxist, Jamahiriya etc.

53
Hans Cohn, African socialism-success or failure, Springer-Verlag Publishers, Volume 6, Issue 11, 1971, pp 353–
354; Patrick Chabal, The Socialist Ideal in Africa(Review Article), Africa, 1990, p1.
54
Most sources linked this to White speculative behavioural; Government of Zimbabwe, Growth With Equity An
Economic Policy Statement, Harare, Zimbabwe, 1981, p3-4.
55
Reserve Bank of Zimbabwe, Unpublished Source; RBZ, Quarterly Economic and Statistical Review, Dec 1981.

56
95 % of investors were capitalists, according to B. Chidzero, p 2149.

57
For more detail on Zimbabwe capital flight read Albert Makochekanwa, An Empirical Investigation of Capital
Flight from Zimbabwe, Pretoria, Department of Economics University of Pretoria, 2007.
21
Then after socialism investors repudiated investment in Zim-dollar therefore menacing its

value.58 Only during 1980, about 17 000 investors, one-tenth of the total number of white

investors have gone.59 By 2005 Makochekanwa argues that Zimbabwean capital flight since

1980 exceeded US $10 billion automatically weakening the Zim-dollar.60

The RBZ seeing these unprecedented capital flight and divestment after Zimbabwe’s adoption of

socialism, it had to avoid capital flight. To avoid capital flight, in 1980, the RBZ at government’s

behest tightened all repatriation, externalisation and outward transfers of capital. That is all

investments (foreign or domestic) irrespective of their source, that have been undertaken through

normal banking channels into Zimbabwe since September 1, 1979 was prohibited to be

transferred out of the country after declaration of socialism.61 Thus how regulation on

repatriation was monitored by the new socialist government but this did not restore the value of

Zim-dollar since RBZ dealt with symptoms not causes of capital flight. Only from 1980 to 1981,

Zim-dollar had depreciated to 0.72 visa vis 1 US Dollar.62 This study gathered that nothing

haunted the value of Zim-dollar than this intense speculative atmosphere of business panic

reverberating from an adoption of socialism. The study deduces that the depreciation of Zim-

dollar that occurred in 1980s63 emanated from scepticism, speculation and confidence deficit

from a socialist road policy.

58
Ibid p.6

59
Martin Meredith, Mugabe: Power, Plunder, and the Struggle for Zimbabwe, Washington D.C, Perseus Books
Group, 2003, p47.
60
A. Makochekanwa, An Empirical Investigation of Capital Flight from Zimbabwe, p1.
61
Gail Berre and Martha Bonillar(Ed) , IMF Annual Report 1996, Washington D.C, 1996.
62
See Table 1.1
63
Table 1.1
22
However, it implies that even President Robert Mugabe have not acknowledged the impact of

socialism to the initial fall of Zim-dollar between 1980 and 1981. President Mugabe was busy

blaming the backlog of the inherited debt to have ‘slump’ the Zim-dollar at the initial era of

independence.64 For, at independence, Zimbabwe inherited a debt of US$700 million from the

Rhodesia government. The debt emanated from loans to bust UN sanctions and to finance the

civil war.65 To save the value of Zim-dollar, Mugabe once approached the creditors to issue a

debt cancellation programme, nevertheless, his efforts was not fruitful. 66 To him the inherited

debt appeared unjust because it had a huge interest (of 15 % of GDP) imposing a large

repayment burden to an infant country.67 Even though the inherited debt was low as compared to

the escalating figures in billions of debt reached later in Zimbabwe’s history, the debt had an

impact to the depreciation, as the government claimed to sell some coffers of reserves from the

RBZ to service the debt despite some backlash narratives saying that the debt was never paid

back.

By the fiscal budget presentation in 1982, the Zim-dollar had depreciated to be equivalent to 1

US dollar.68 The 1982 Zim-dollar depreciation forced the government to embark on a

stabilisation programme by launching a blueprint called the Transitional National Development

Plan (TNDP), to be implemented from 1982 to 1985.69 It is crucial to note that the TNDP

blueprint introduced wage freezes to contain depreciation of Zim-dollar.

64
Tim Jones, Uncovering Zimbabwe’s Debt: Jubilee Debt Campaign, London, Grayston Centre, 2011, p 6.
65
Ibid, p 6.
66
Ibid, p 11.
67
Ibid, p 6.
68
See Table 1.1.
69
Government of Zimbabwe, Transitional National Development Plan 1982-85, Harare, Government Printers, 1982.
23
After the 1982 Zim-dollar depreciation to be equivalent to 1 US dollar, to monitor the

depreciation the RBZ adopted a new exchange rate policy from a dual-currency fixed exchange

rate system to a multi-currency fixed exchange rate policy. 70 This multi-currency exchange rate

policy comprised pegging the value of Zim-dollar to 6 currencies that consisted the US dollar,

British pound, the Zambian kwacha, the South African rand, Botswana pula and the Italian lira to

control further depreciation of Zim-dollar.

What fascinates is that the government has been putting effort to monitor depreciation of the

dollar. In the 1982 Quarterly Economic and Statistical Review, the RBZ addresses depreciation

of Zim-dollar against the US-dollar by a gamut of measures that included an increase in interest

rates to money lended from the RBZ, reduction of the current account deficits and the setting up

of an export revolving fund for forex supply to manufacturing companies to secure their raw

materials.

Despite government’s effort to reverse the Zim-dollar depreciation, in 1983, however, geopolitics

between the Ndebele and Shona erupted intercepting this effort. The episode of Gukurahundi

affected the Zim-dollar. Drawing from an account of the conflict by the Catholic Commission for

Justice and Peace and the Legal Resources Foundation published in 1997, Gukurahundi ravaged

the value of Zim-dollar in many facets, including security threats to tourists and the resurging of

70
At independence in 1980, Zimbabwe proceeded with the dual-currency fixed exchange rate policy which was
issued by the UDI in 1979. From 1979 to 1982, Zimbabwe had to change its dual-currency exchange rate policy
which started by fixing the Rhodesian dollar to the South African rand (since South Africa was a major trading
country during sanctions). In 1982, the dual exchange rate was dumped. A change was due to improvement of trade
after the removal of sanctions on independence, therefore RBZ has to fix value of Zim-dollar to other new trading
countries.
24
sudden capital flight.71 This left a huge deterioration of Zim-dollar ever heard since

independence, and the Zim-dollar become less than 1 US dollar, for the first time, by end of

1983.72 To control a free-fall depreciation the RBZ shifted from fixing Zim-dollar to 6

currencies and peg the Zim-dollar to fourteen currencies using a pegged multi-currency exchange

rate policy which continued to operate until liberalisation of exchange rate by ESAP.73

In whatever economy, neoliberals argue, it is common that any political instability drive

investors away, insinuates capital flight and allows divestment. This happened to Zimbabwe

during the Gukurahundi era, and no immediate measures was taken as the Zim-dollar remained

susceptible, as the absence of tranquillity was a catalyst to 1983 sheer depreciation.

Following this depreciation to be less than the US dollar, drought struck in 1983. The 1983,

drought drove Zimbabwe into a recession. On a spelt of drought, also at the world market on

mid-1983 prices of export commodities began to slump due to an international shock of

commodity bust cycle thereby reducing the amount of foreign currency received from exports.

By 1983, Jones said gone were the ‘honeymoon days’ of the Zimbabwe as the country instead of

exporting food, had now been begging food. 74 Struck by 1983 drought, and acute lack of foreign

currency, the government resorted to borrowing for drought relief. Balance of payments deficit

rose to $185 million only from 1982 to 1983, further jeopardising the value of Zim-dollar. 75 The

1984 budget was the largest deficit ever heard since 1980 independence, as it shocked the
71
Breaking the Silence, Building True Peace: A Report on the Disturbances in Matabeleland and the Midlands, 1980
to 1988, Harare, Catholic Commission for Justice and Peace, Legal Resources Foundation, 1997.
72
See Table 1.1.
73
RBZ, Quarterly Economic and Statistical Review, September/December 1997, Vol. 18 Number 3/4, p33-39.
74
T. Jones, Uncovering Zimbabwe’s Debt, p12.
75
Ibid, p12.
25
Cabinet when it was presented in parliament by Minister Chidzero. 76 From then, the government

developed an audacity of budget deficits and implied to finance the deficits by foreign

borrowing.77 When foreign borrowing clocked ceiling levels, the government then turned to the

RBZ printing press to finance budget deficits.

It is also noted that throughout the 1980s, the value of Zim-dollar was destabilised by apartheid

South Africa with restrictions on trade, as Zimbabwe’s main access to the sea at this time was

through Mozambique.78 At one point in time repeated attacks led to the closure of the railway

line to Maputo and oil pipeline to the port of Beira. 79 This ultimately led Zimbabwe to station 12

500 troops in Mozambique exerting pressure to the budget which was on deficit. 80

Destabilisation policies by South Africa substantially added Zim-dollar depreciation by forcing

the government to borrow to finance persistent deficit. According to a study conducted for

Jubilee South Africa, apartheid caused a debt for Zimbabwe accounting to US$400 million at an

estimated cost of US$10 billion.81 In summary, Apartheid destabilisation policy, droughts and the

1983 external commodity bust on international market precipitated the government to propagate

that the fall of Zim-dollar was due to ‘exogenous factors beyond their capacity as government to

unravel.’82

76
Government of Zimbabwe, Budget Statement, Harare, Printflow, 1983.
77
T. Jones, Uncovering Zimbabwe’s Debt, p12.
78
Dylan Yanano Mangani, Zimbabwe’s Foreign Policy in Southern Africa, 1980-2013, Beau Bassin, LAP
LAMBERT Academic Publishing, 2017, p.33, p35-36.
79
P Bond and M Manyanya, Zimbabwe’s Plunge, p 36.
80
R. Bourne, Catastrophe: What Went Wrong in Zimbabwe?, p 105.
81
P. Bond and M. Manyanya, Zimbabwe’s Plunge, p.36.
82
The argument of external forces is littered in literature read, Kanyenze p 42 and 43, The South African Institute of
International Affairs, Report No. 30, The Zimbabwe Economy: How has it survived and how will it recover? p 56.
26
After 1985, then the TNDP blueprint was largely a failure as the depreciation of Zim-dollar

reached 1.64 to US dollar. The blueprint failed to maintain a 1 as to 1 exchange rate which was

the exchange rate at its inception. Due to the failure of the TNDP, the government embarked on

another blueprint in 1985, to try and remedy the TNDP failures. It is on this background that

government implemented the First Five Year National Development Plan (FFYNDP) targeting an

exchange rate of 1 as to 1 against the US dollar during the life span of 5 years (from 1986-1990).

The FFYNDP, however, was a failure by 1990, as the exchange rate stood at 2.64.

This ushered a period leading to 1991, the most difficult one. The economy had been on shrink,

and it required urgency. Socialism was associated with tremendous expenditures incorrespondent

to the amounts of revenue. Finance minister Chidzero suggested borrowing from IMF and World

Bank (WB). Despite a fact that, debts remain matters of nagging concern in depreciating

currencies,83 however, the government of Zimbabwe, borrowed heavily by the end of socialism.

Borrowing went on an uncontrolled spree. What concerns economists was that depreciation

could entrench Zimbabwe to be unable to pay back debts putting the nation into a debt overhang

since the overall balance of payment have already stood at a deficit of Z$52, 3 million in 1990.

But Mugabe replied saying that “Have you ever heard of a country that collapsed because of

borrowing?”84

On 15 June 1991, President Mugabe stated that he will be sending finance minister to approach

the World Bank and IMF for a borrowing scheme.85 Whilst addressing the Politburo in Harare

83
Gideon Zhou, Fiscal Management in Zimbabwe, International Journal of Economics and Business Modeling, Vol.
3, Issue 1, Department of Political and Administrative Studies, University of Zimbabwe, 2012, p 154.
84
M. Meredith, Mugabe: Power, Plunder, and the Struggle for Zimbabwe, p.115.
85
“President Speaks out on Socialism”, The Herald, 16 June 1991.
27
Mugabe cited that the first decade of independence, ‘the socialist decade,’ was a “lost decade,” 86

as it failed to keep the $1.67 exchange rate against the US dollar.87

ESAP TO BLACK FRIDAY

In March 1991, Finance Minister Bernard Chidzero went to the Paris Donors’ Conference with

his begging bowl to borrow funds from the IMF and World Bank.88 IMF and WB sympathised to

assist Zimbabwe’s fiscal situation but on the conditionality of adopting Economic Structural

Adjustment Programme (ESAP). ESAP is a neo-liberal market-oriented policy of deregulation

and exchange rate liberalisation.89 Due to the fact that government and the RBZ freely enjoyed

regulating foreign exchanges and pegging the exchange rate, however, neo-liberal

conditionalities by ESAP which Zimbabwe was impelled to meet, 90was a bitter pill to swallow.91

The Herald of 08 December 1991, debated this question, “…will the bitter pill ingested be

sweeter?”

What was bitter was a pragmatic shift from a socialist bureaucracy at the end of Cold War to

neoliberal benchmarks featured by exchange rate liberalisation (see footnote 91).92 This meant a
86
Ibid; P. Bond and M. Manyanya, Zimbabwe’s Plunge, p 20.
87
“President Speaks out on Socialism”, The Herald, 16 June 1991.
88
Ibid, p1.
89
Chiratidzo Moyo, ‘ESAP was never ideal for Zim’, The Patriot, November 17, 2017.
90
Austin M. Chakaodza, Structural Adjustment in Zambia and Zimbabwe Reconstructive or Destructive?, Third
World Publishing House, 1993, p 1-20.
91
A set of conditionalities of ESAP included minimal role for the state, financial liberalisation, trade liberalisation,
privatisation, deregulation and exchange rate liberalisation; Government of Zimbabwe, ESAP:A Framework of
Economic Reform 1991-95, Harare, Government Printers, 1991.
92
Rangarirai Machemedze, Zimbabwe And The IMF:Time For Shifting From Neo-Liberal Paradigm To People
Centered Development Alternatives, https://sarpn.org/documents/d0000758/P852-Zimbabwe_IMF.pdf, Accessed on
05.03.2019 12:57
28
shift of RBZ from pegging or fixing the Zim-dollar exchange rate (against US dollar) to a free

floating exchange rate that was determined by dynamics of market forces of aggregate demand

and supply of foreign currency.93 The complex factor was that RBZ was at the helm of chronic

foreign currency shortages for levelling the macro-economic ground. Before 1991, depreciation

was under control because the RBZ used to determine (or peg) the value of the Zim-dollar

against the US dollar, but with the adoption of ESAP it ceased to peg the value of Zim-dollar

bounded by conditionalities of neoliberalism to liberise.

Zimbabwe’s commitment to ESAP is mistaken, because the Zim-dollar had no adequate backup

in reserves (on bonds and gold) to be exposed to market forces.94 Therefore the liberalisation of

exchange rate saw the Zim-dollar nosediving into a freefall. 95 After liberalising, an exchange rate

had plummeted from 2.64 in 1990 to 5.01per US dollar in 1991, and by 1996 the exchange rate

had depreciated to 10.80 due to liberalisation.96

A non-neoliberal scholar Bond dissects that neoliberalism through exchange rate liberalisation

drove the Zim-dollar into a ‘cul-de-sac demise.’ 97 In 1991 alone, the Zim-dollar become volatile,

and depreciation exceeded 100%.98 A year later in 1992, depreciation continued at a time when

Zimbabwe was haunted by a severe drought which has been described as “one of the worst

93
History of Exchange Rate Controls in Zimbabwe, Online RBZ Catalogue.
https://www.rbz.co.zw/index.php/about-us/departments/exchange-control, Accessed on 15 March 2019 15:54.
94
“The Reserve Bank of Zimbabwe in a Liberalising Economy”, Presentation by DR. L. L. Tsumba, RBZ Governor
at the Bar Association of Zimbabwe, Advocates’ Chambers, 24 July, 1997.
95
Ibid.
96
See table 1.1.

97
P. Bond and M. Manyanya, Zimbabwe’s Plunge, p48.
98
Ibid, also see table 1.1.
29
drought in a century.” The 1992 devastating drought necessitated the importation of food at an

estimate of US$400 million resulting in substantial deterioration of terms of trade worsening the

Zim-dollar.

An exchange rate liberalisation under ESAP collapsed the RBZ, and the effect of depreciation

was severe to an extent that many economists attest that exchange rate liberalisation by ESAP

caused ‘Economic Suffering for African People.’99 Chakaodza analyses how ESAP even placed

the ‘yoke of debt’ from the WB and IMF to Zimbabwe.100 External debt increased from US$2

billion in 1991 to US$4 billion in 1992 and by the beginning of 1995, the debt had risen to over

US$5 billion and amounted to 91 per cent of the country’s GDP compared to 45 per cent in 1989,

leaving the Zim-dollar at 9,31 against US dollar by the end of 1995.101

A period leading to 1997 further locate causes of depreciation to political goals that was

presiding over fiscal matters. This have been witnessed by lack of proper budgetary

housekeeping deterrence system starting with the payment for gratuity to appease war veterans to

become Mugabe’s storm troopers, helping Robert Mugabe to hang on to power as his popularity

waned.102 Hence the Zimbabwean government in quest to appease the war veterans on the

August 21st of 1997, decided to run the printing press to finance once-off payments of $50 000

dollar (equivalent of USD3,000 at rate of the time), and a monthly pension equivalent to

USD125, for life to each of 60,000 ex-combatants as gratuity to the role they played in the

99
“Review of Zimbabwe’s Economic Reforms and Liberalisation”, Address by Dr. L.L.Tsumba, Governor, Reserve
Bank of Zimbabwe, at the Farmers’ Dining Club, Harare, 8 October, 1997.
100
A. M. Chakaodza, Structural Adjustment in Zambia and Zimbabwe Reconstructive or Destructive?, p26.
101
Economist Intelligence Unit, Country Report: Zimbabwe, 1994, p.10-11.
102
Patrick Guramatunhu, When Mugabe paid war vets $50k in 1997 it was a bribe, freedom fighters became
mercenaries, Bulawayo 24 News, 16 December 2014.
30
liberation war.103 This award is a decision that economists always point as the genesis of

Zimbabwe’s debilitating currency crisis.

Kairiza notes that this gratuity payment was essential for depreciation of Zim-dollar as it inflated

the 1997 fiscal Budget by 55 per cent, and dramatically left the fiscal lacuna that could not been

covered with tax revenue.104 Depreciation was primarily plummeted by running the printing

machine to print out 5 billion dollars for war vets.105 Even Chenjerai Hunzvi, the leader of war

veterans, opined that government used wrong course for fundraising.106

The IMF and WB reacted to the unbudgeted war vets compensation by blocking financial aid of

BOP support to Zimbabwe leaving Zim-dollar in unprecedented fall. World Bank suspended US

65 million of balance of payments (BOP) support, demanding that the RBZ demonstrated how it

intended to raise money by printing.107 This was so catastrophic since the value of Zim-dollar

was stabilised by the supply of foreign currency. Economist Dr Gift Mugano asserted that W.B

and IMF absentia, lack of budgeting practice, normal fiscal mistakes linked to war vets

appeasement culminated in a horrible incident of November, 14 1997.108 Although there were

large depreciations in 1982, 1991, and 1993, but on 14 November 1997, the Zim-dollar hugely

lost its value against the US dollar.

103
The Financial Gazette, August 28, 1997, also read the Provision of War Veterans Act in terms of Statutory
Instrument 281 of 1997; R. Bourne, Catastrophe: What Went Wrong in Zimbabwe, p.128.
104
V. Sibanda and R. Makwata, Zimbabwe Post Independence Economic Policies, p16.

105
Happiness Zengeni, Black Friday 17th anniversary, The Herald, 14 February 2014.
106
The Herald, 14 February 2014, ibid.
107
The Herald, 14 February 2014, ibid.
108
The Herald, 14 February 2014, ibid
31
On Friday, November 14, 1997, the Zimbabwe dollar crashed in a market, loosing 71.5% of its

face value against the US dollar. This ended in 46% of stock market investors scrambling out of

the Zim-dollar stock market exchange rate as they ran to get shares in the US dollar just within

four hours of exchange.109 This day even now is referred as the “Black Friday.”110 Sympathisers

of the government piled the blame to unscrupulous actions of Harare speculators on 14

November who are alleged to have speculated against the Zim-dollar, however, the academic

world denied this claim purporting that even the government controlled newspaper, The Herald

attributed the Black Friday to ‘fiscal imprudence’ illustrating how the “government shot itself on

the foot by awarding massive packages to war veterans.”111

Factually, the Black Friday market crash was an enormous jeopardy to the Zim- dollar. Up to

today, the day is still a trauma to many eye-witness economists. Dr Emmanuel Munyukwi, who

was the Zimbabwe Stock Exchange chief executive at that time said, “There was bloodbath on

that day... Investors, particularly foreigners, sold their stocks because the level of depreciation

was shocking. It took a lot of time for the market to recover, but eventually it had not

recovered.”112 Conclusively, the black Friday is an episode widely regarded as the precursor of

the subsequent rapid depreciation of Zim-dollar.

109
Carte Blanche Online Update, Black Friday 1997: How the Zimbabwe Dollar crashed and Tipped the Economy
Over the Brink,http://munzwembiri.blogspot.com/2017/11/read.me_14.html, Accessed 12.03.2019 11:07; Happiness
Zengeni, The Herald, 14 February 2014.
110
Carte Blanche Online Update, ibid, Richard Bourne, Catastrophe: What Went Wrong in Zimbabwe?, p 135.
111
The Herald 15 November 1997, V. Sibanda and R. Makwata, Zimbabwe Post Independence Economic Policies,
p16.

112
The Herald, 14 February 2014, ibid
32
SECTION 3

A PERIOD OF RAPID DEPRECIATION OF THE ZIMBABWE DOLLAR

Introduction

This period from 1997 to 2009, is a period that set in motion a rollercoaster of events that

resulted in the setting aside of Zim-dollar as currency. The Zim-dollar depreciated with a rapid

rate from the Black Friday to the 12th of April 2009. This section focuses on the causes of rapid

depreciation of Zim-dollar. These causes include involvement in DRC war, fiscal imprudence

and quasi-fiscal activities as well as post 2000 policy gyrations by the cabinet.

DRC ADVENTURE, ZANU PF POLICY GYRATIONS AND TARGETED SANCTIONS

From the Black Friday, it is seen that the Zim-dollar veered into a free fall depreciation in 2000s,

and it remained losing its value until 2009. The dominating argument by scholars is that

depreciation on this episode was catapulted by inflation. Soon after the Black Friday, inflation in

January 1998, stood right at 50 per cent.113 Finance Minister Murerwa openly denounced

inflation for accelerating the depreciation of Zim-dollar.114 It is widely noted by newspaper

economists that Zimbabwe had a creeping inflation in 1980s,115 a running inflation in 1990s116

and when inflation remained unfolding, it became a galloping inflation by post-2000. 117 Chidzero

during his tenure of office as finance minister once warned the government against inflation

saying “...inflation if continue unchecked will prove ruinous to a Zimbabwe dollar.”118

113
The Herald, 01 February 1998.
114
Ibid.
115
Single-digit inflation.
116
Double-digit inflation.
117
Multiple-digit inflation, The Financial Gazette, 12 December, 2000.
118
The Herald 16 June 1991.
33
Economically speaking, it is not refutable that inflation as a component of macroeconomics

depreciated the Zim-dollar. Though inflation was depreciating Zim-dollar, the failure of the

government to stop inflation whilst the government was denouncing inflation, to a greater extent,

resonates in Frederick Ross-Keith opinion that, “Inflation is just like a sin, every government

denounces it, and every government practices it.”119

Given that depreciation even after the Black Friday continued eroding Zim-dollar, the

government responded by launching a blueprint policy called Zimbabwe Programme for

Economic and Social Transformation (ZIMPREST 1996-2000) as an emergency plan to rescue

the Zim-dollar.120 From independence to ZIMPREST, Zimbabwe had implemented more than 5

economic blueprints, but all these blueprints failed to improve the falling value of Zim-dollar.

Although blueprint policies were crafted and implemented one after another, however, the Zim-

dollar remained depreciating against the US dollar.121

On ZIMPREST, the blueprint was implemented to strengthen the value of Zim-dollar, but this

plan fared poorly, and the value of Zim-dollar get worse during ZIMPREST. 122 It can be blamed

that during this period of ZIMPREST implementation (from 1996 to 2000), the government

embarked on fiscal misbehaviour, a programme which worked against the ZIMPREST blueprint.

119
Imad A Moosa, Quantitative Easing as a Highway to Hyperinflation, London, World Scientific Publishing
Company, 2013, p1.
120
Government of Zimbabwe, Zimbabwe Programme For Economic and Social Transformation (ZIMPREST),
1996- 2000, Harare: Jongwe Printers, 1996.
121
Godfrey Kanyenze, Prosper Chitambara and Judith Tyson, The Outlook For The Zimbabwean Economy,
Supporting Economic Transformation, 2017, p 5.
122
V. Sibanda and R. Makwata, Zimbabwe Post Independence Economic Policies, p15.
34
For instance on the time of ZIMPREST, without consulting parliament or the cabinet, using his

powers as Commander in Chief of Zimbabwe Defence Forces, president Robert Mugabe decided

on August 27th of 1998, to participate in what BBC termed an ‘expensive’ civil war in the

Democratic Republic of Congo, to prop up the tottering Laurent Kabila regime which was under

beset attack by insurgent rebels who were on the brink of taking over Kinshasa, the DRC

capital.123

Depreciation of Zim-dollar worsened during this DRC war, especially when the war siphoned

more resources than the Zimbabwe government had calculated. 124 In a letter by Finance Minister,

Herbert Murerwa to the IMF Managing Director, Michael Camdessus, on the 16 th of July 1999,

Finance Minister revealed that the DRC participation siphoned, “...US$3 million per month or

0.6 per cent of GDP.”125 But some criticism is levelled against Finance Minister Murerwa for

lying to the IMF Managing Director, Michael Camdessus since the cost of participation

according to a leaked hard copy to the BBC from the official gazette of Zimbabwe Defence

Forces internal memo stated that DRC war drew at least a minimum of US $1 million per day.126

When questioned about the cost to Zimbabwe of a hovering minimum of million US dollars per

day, Mugabe as the head of the government replied, “...don’t talk of resources as if resources are

123
BBC News, Mugabe's costly Congo venture, Tuesday, 25 July, 2000, 09:06 GMT 10:06 UK. Accessed from
http://news.bbc.co.uk/2/hi/africa/611898.stm, on 14.03.2019 16:16, BBC News, World: Africa Mugabe defends
fighting for Congo, Friday, December 4, 1998 Published at 16:24 GMT, Accessed from,
http://news.bbc.co.uk/2/hi/africa/227930.stm, on 14.03.2019 16:42.
124
The South African Institute of International Affairs, Report No. 30, The Zimbabwe Economy: How has it
survived and how will it recover?, 2002, p.17.
125
Letter to Mr. Michel Camdessus, Managing Director, International Monetary Fund, Washington, D.C. 20431
from Hebert Murerwa, Zimbabwe Minister of Finance, 16 July 1999.
126
BBC News, Business: The Economy: Zimbabwe denies misleading IMF, Monday, October 4, 1999.
http://news.bbc.co.uk/2/hi/business/464967.stm, 14.03.2019 16:16.
35
more important than the security of the people and the sovereignty of the country.” 127 Given

conditions that Zimbabwe does not share a common boundary with the DRC, and had no

strategic threat from the DRC foreign instability due to geographical factors 128, MDC

Parliamentarian complained about the involvement saying, "The government of Kabila worth no

single Zimbabwean fly or mosquito to die for." 129 Similar sentiments are raised to justify that

causes for depreciation of Zim-dollar were avoidable if the government was determined to avoid

them. Noting that Zimbabwe was on a precarious state by foreign currency bankruptcy

emanating from its dwindling coffers of reserves130, the government is criticised for failing to

have its own fiscal auditing by dragging itself in a distant foreign war which required

expenditures in foreign currency. On this regard, the Financial Gazette has it that DRC

participation depreciated Zim-dollar to 55 dollars against 1 US dollar by 2000, from 37 Zim-

dollars in 1998 before the war.131

Moreso, lack of basic budgetary housekeeping practice by the government that was consuming

contrary to the budget essentially led to the fall of Zim-dollar. 132 From 1984, the government ran

on budget deficits133, betide these deficits, the government never cared and continued with its

usual flamboyant expenditures disproportionate to available potential revenues. This contradicted

127
M. Meredith, Mugabe: Power, Plunder, and the Struggle for Zimbabwe, p 123.
128
Dylan Yanano Mangani, Zimbabwe’s Foreign Policy in Southern Africa, 1980-2013, p 53.
129
BBC news ibid, R. Bourne, Catastrophe: What Went Wrong in Zimbabwe?, p143
130
RBZ, Quarterly Economic and Statistical Review, Sept/Dec 1998.

131
The Financial Gazette, 12 December, 2000.
132
P. Haslam and R. Lamberti, When Money Destroys Nations, p 40.

133
Government of Zimbabwe, Budget Statement, ibid, p 3.
36
the “eat what you kill” mantra,134 as since 1997 onward, in fiscal language, the Zimbabwean

government was eating an elephant contrary to a rat it killed.

This is confirmed by President Mugabe who was staying on aeroplane than ever.135 Only in 1996,

he travelled constantly visiting more than 151 countries around the world to an extent of being

literally referred to as a resident of the sky. What arose as a burden was a bloated delegation

accompanying him ballooning the existing budget deficit by exuberant costs granted in the name

of travelling allowances.136 Though the IMF kept on encouraging governments in Third World to

practice proper fiscal management to cut their budget deficits by reducing expenditures to keep

the value of their currencies. This came contradictory to Zimbabwe as Mugabe disputed the IMF

fiscal lessons, that at one incident, returning from a fifteen-day trip in China, Singapore, and

Dubai in May 1999, President Mugabe declared,

I do not like the IMF. It is a tool being used by the western (neo-colonialists) to subject us

to their will. The IMF is now being political and we will be political towards it. We are

better off without it. We will not die as a country. Never...137

Mugabe’s aggressive foreign policy of reckless official utterances had ramifications on the Zim-

dollar as the IMF continued withholding BOP support for Zimbabwe on time to time for fiscal

misbehaviour though other nations benefited a lot from IMF funds.

134
The “eat what you kill” concept remains a simplest and basic concept to avoid deficits, it was publicised by

Tendai Biti. Read, Government of Zimbabwe, Budget Statement, Harare, Printflow, 2009.

135
M. Meredith, Mugabe: Power, Plunder, and the Struggle for Zimbabwe, p 129
136
T. Jones, Uncovering Zimbabwe’s Debt, p 11.
137
M. Meredith, Mugabe: Power, Plunder, and the Struggle for Zimbabwe, ibid.
37
It is apparent that the Zim-dollar which had been worth 40 U.S cents in 1990, sank to less than 5

cents as of 1997. Effects of Zim-dollar depreciation manifested in the sky rocketing of basic

prices of goods and services, and a hike in the cost of living to ordinary Zimbabweans as the

buying power of the Zim-dollar was continuously rendered defunct. By December 1997, prices

of basic commodities astronomically quadrupled in comparison to that of 1996. 138 A mass mob

riot erupted in tantrum to this depreciation on December 9, 1997, a most violent day called the

Red Tuesday, paralysing Zimbabwe for a moment of hours.139

On the same week of Red Tuesday, instead of combating depreciation to save the intrinsic value

of money, the government revealed its up-side-down priorities by spending US$2,5 million on

importing fifty brand new Mercedes-Benz vehicles for cabinet ministers. Again on December 19

1997, this cabinet which benefitted from new Mercedes-Benz approved a legislation called the

Presidential Pension and Retirement Benefits Amendment Bill, providing sumptuous benefits for

the president and his family as well as pensions, plus free vehicles, free air travels and substantial

free medical attention to the other two vice presidents.140 This did not only exacerbated a

persistent budget deficit but further reflected tendencies of fiscalitise syndrome.141

Beginning 2000, the country railed into the circle of policy gyrations starting with the Fast Track

Land Resettlement Programme (FTLRP), that contributed to the sheer demise of Zim-dollar.142

The partisan nature of the reform and the absent of the rule of law associated with it had an

138
Ibid.
139
P. Bond, Uneven Zimbabwe, p.xvii, (preface).
140
Studio Seven, https://www.voazimbabwe.com/radio/schedule/297/1997/12/19, Accessed: 04.12.2018 12:33.

141
See footnote number 4.

142
R. Bourne, Catastrophe: What Went Wrong in Zimbabwe?, p172.
38
unprecedented impact to the Zim-dollar. Firstly, by directly distorting the main forex earner as

agriculture earned 60% of foreign currency, secondly, by tarnishing the image of Zimbabwe on

concerned parties with respect for property rights, and thirdly by incurring confidence deficit to

world investors.143 After the land reform, the relationship between Zimbabwe with IMF, WB and

Western international players deteriorated to a degree that Zimbabwe earned itself a ‘high risk’

profile or a pariah status.144

Fourthly, it is crucial to note that in response to this land reform, the United States government

put Zimbabwe on targeted sanctions in 2001, through the enforcement of the Zimbabwe

Democracy and Economic Recovery (ZEDERA) Act of 2001. 145 Section 4C of the ZEDERA

Act146 stipulates the Multilateral Financing Restriction to Zimbabwe including restriction to

finance the RBZ. This collapsed revenues in 2002, and where there was a revenue surplus of

$322 million to the RBZ coffers in 2001, a credit freeze by ZEDERA led to a deficit of $18

million by the end of 2002, thereby ravaging the Zim-dollar in all subsequent years.147

These tragic events had been followed by an exit of Zimbabwe from the Commonwealth, a trade

sphere of former British colonies.148 Scholars ascertain that Zimbabwe locked itself in a self-

143
Medicine Masiiwa (Editor), Post-Independence Land Reform in Zimbabwe: Controversies and Impact on the
Economy, Harare, Friedrich Ebert Stiftung and Institute of Development Studies, University of Zimbabwe, 2004.
144
G. Kanyenze, Beyond the Enclave, p41.
145
The ZEDERA (S. 494) is an act passed by the legislature of the Federal Government of the U.S. The Act imposed
economic sanction penalty on Zimbabwe to provide for a transition to democracy and to promote economic
recovery, R.Bourne, Catastrophe: What Went Wrong in Zimbabwe?, p.183.
146
Full Text of S. 494 (107th): Zimbabwe Democracy and Economic Recovery Act of 2001, GovTrack.us. 13
December 2001.
147
Gideon Gono, The Impact of Sanctions Against Zimbabwe, Supplement To The Mid Term Monetary Policy
2008.iew Statement, Reserve Bank of Zimbabwe, 2007, p 15-28.
148
Dewa Mavhinga, Youths in the Wilderness: Effects of Zim’s Absence from the Commonwealth, Marshalltow
SA. Regional Office, Crisis in Zimbabwe Briefing, 16-22 Nov 2016.
39
imposed embargo when it withdrew from the Commonwealth (in December 2003) by shutting

doors to trade with Britain and to a larger extent the E.U. 149 Following withdrawal after having

protracted relations with the west in the face of sanctions due to ZANU PF policy gyrations,

Mugabe made a paradigm shift in 2003, from looking ‘West’ to ‘East’ by adopting the ‘Look

East Policy’.150 Although Look East Policy strengthened bi-lateral commercial relations between

China and Zimbabwe, however, the contribution of China to the economy of Zimbabwe was

entirely negative, since China took advantage of Zimbabwe’s foreign diplomatic crisis to start

having a monopoly on Zimbabwe’s mineral commodities (owing that Zimbabwe could not

directly sell its minerals on the global market due to sanctions). Trade sabotage by China

depreciated the Zim-dollar (via depletion of mineral reserves) as mineral commodity became the

basis in valuing the Zim-dollar.151 Indeed, without minerals, the performance of the Zim-dollar

would have even been worse though dependence of Zimbabwe on minerals has been worrying.

The symptoms from the depreciation of Zim-dollar in the economy of Zimbabwe remained

limited forex to import ‘sine-quo-non’ or ‘essential’ raw materials subsequently leading to

closure of industries (deindustrialisation). Closure of industries led to informalisation with a

mushrooming of ‘zigzag dealings’ or Kukiya kiya businesses.152 One of this kukiya-kiya

149
Dewa Mavhinga, ibid.
150
Zimbabwe Elections Debate 2018, Nkosana Moyo vs Christopher Mutsvangwa: Dignity Dialogue and Debate,
Youtube Video, https://www.youtube.com/watch?v=uqNuMnnXh20, Accessed on 25.03.2019 17:42. And read a
dissertation by K Matenga, Keane Matenga, The impact of the Look East Policy on Zimbabwe’s economy from
2000-2012: The case of China-Zimbabwe relations, Faculty of Social Science and Humanities, Department of Peace
and Governance, Bindura University of Science Education, 2012.
151
“Unlocking Our Mineral Resource Potential,” Ministry of Mines and Mining Development, Government of
Zimbabwe Publications, 2018, p 1; G. Gono, The Impact of Sanctions Against Zimbabwe, p.34.
152
Jeremy L. Jones, ‘Nothing is Straight in Zimbabwe’: The Rise of the Kukiya-kiya Economy 2000–2008,
Journal of Southern African Studies, Volume 36, Number 2, Chicago, University of Chicago, 2010.
40
businesses was the black market foreign exchange as it emerged. 153 Gono labelled this black

market as money laundering. There are fascinating works of black market literature, with

Jianping and Makochekanwa arguing that it is the foreign exchange scarcity that lead to the

emergence of the black market.154 This is disputed by Coltart. According to Coltart there had

been substantial currency abuses within the RBZ with regard to corruption as “RBZ officials

became rich by taking foreign currency from the official RBZ coffers of FCA accounts... selling

it at the black-market rate, pocketing the difference”155

Black market enabled Zimbabwe to familiarise with currency burning. With this Zimbabwe has

been regarded a casino or gambling economy, and this left the Zim-dollar more valueless as

currency burning depreciated the value of Zim-dollar. 156 The role of this casino economy to

depreciation has been likened to what a wheel-barrow economy has been to Germany.157

Currency burning happened when an estimate of 3 million Zimbabweans had fled the nation due

to the Zimbabwean crisis. In a book titled Zimbabwe’s Exodus: Crisis, Migration and Survival,

Crush and Tevera added that “Without the involvement of the Zimbabwean diaspora, the country

would be in an even more desperate situation....”158 That is the Zimbabwean diaspora mitigated

153
For a more detailed analysis on the operations of the black market see J. Jones, “Nothing is straight in
Zimbabwe”. Also see Showers Mawowa & Alois Matongo, “Inside Zimbabwe's Roadside Currency Trade: The
World Bank of Bulawayo”, Journal of Southern African Studies, Vol 36, No.2, 2010, pp319-337.
154
Jianping Ding, “China’s Foreign Exchange Black Market and Exchange Flight: Analysis of Exchange Rate
Policy”, The Developing Economies, XXXV1-1, 1998, p24 – 44.
155
David Coltart, A Decade of Suffering in Zimbabwe, 2008, p. 4
156
Gideon Gono, Zimbabwe’s Casino Economy: Extraordinary Measures for Extraordinary Challenges, Harare,
ZPH Publishers, 2008.
157
Jeff Thomas, Wheelbarrow Economics, https://internationalman.com/articles/wheelbarrow-economics/, Accessed
25.03.2019 17:31.
158
Jonathan Crush and Daniel Tevera (Eds), Zimbabwe’s Exodus: Crisis, Migration and Survival, Cape Town,
Southern African Migration Programme, 2010.
41
depreciation through supply of foreign currency remittances. Governor Gono launched a Home-

Link Programme for beneficiaries to receive their remittances via RBZ accounts. With non-

performing sectors of economy, sources of foreign currency to RBZ came from nothing else than

through remittances. But Zimbabwean diaspora resorted to informal ways of remitting currency

to their families, deserting the Home-Link, after allegations of RBZ for abusing diaspora

remittances.

Generally, Home-Link remittances failed to stimulate supply of currency in the formal market,

in-fact, it unintentionally sustained the thriving black market as diasporas have been sending

currency through informal ways after allegations levelled to the RBZ in abusing the Home-Link.

Unconfirmed reports have however, indicated that the RBZ printed Zim-dollars and purchased

foreign currency in the black market through what has been referred to as “runners.” This was a

syndicate of Queen Bee that is senior Reserve Bank officials who were running a cartel at central

bank. Rumour says that ‘runners’ were employees of the RBZ whose job was to collect printed

money from RBZ, and purchase forex on the black market on behalf of the Bank to avail

forex.159 In an interview with Mr Clemency Rwenhamo at Gulf Complex, Mr Rwenhamo paused

the clarification that the black market could feel the shock after runners whipped all the forex in

the market, and this resulted in vertical fall of Zim-dollar as runners leave the black market with

high demand for US dollars disproportional to supply for which the supply of US dollars was

from remittances.160 However, the existence of ‘runners’ has not been confirmed by the previous

159
Facebook Live Video, www.facebook.com=lumumba names corrupt rbz officials&epa, watched live by the
researcher on 21 October 2018.
160
(Interview with Mr Clemency Rwenhamo, Gulf Complex, Harare, 15.06.2018). Mr Clemency Rwenhamo is a
senior forex trader who once served in the government before he became a victim of ESAP retrenchment which
impelled him to seek survival in the informal sector.
42
literature or by the Central Bank itself. And the RBZ continued to deny these allegations as many

times they are raised.161

Though Maravanyika argues that foreign currency reserves fell from $760-million in January

1997 to be low to $255-million by November 1997 of the Black Friday. 162 On a telephone

inquiry interview with a chief RBZ official who disavowed to be disclosed his name, said, “…

Youngman listen closely...as early as 1997, our coffers of reserves, literally speaking…had been

empty coffers…”163 From 1997, therefore the RBZ had no reserves hence it has not to be called

the Reserve Bank of Zimbabwe but it has to be called the Reverse Bank of Zimbabwe, for it had

started reversal policies.

RBZ reversal policies ranged from controlling export surrender schemes, management of forex

cartels including “runners”, raiding of forex in FCAs, confiscation of dipositor’s money without

the consent of the depositor and continuous lending of money to the government, money which

belonged to the depositors. However, the government had this propensity of not channelling back

funds borrowed from the RBZ. This ushered many depositors to pull out of banking citing that

banking with RBZ is risky.164

A relationship between RBZ and government’s borrowings from the RBZ is that government

borrowings went to levels that were unsustainable without printing of money. A conclusion is

identified by Siklos, in 2000, who observed that, there is a nexus between central banks and

continuous government’s borrowing, but government’s continuous borrowing from the central
161
Interview with RBZ official see footnote 163.
162
Godfrey Marawanyika, Zimbabwe marks 10 years since black Friday, 2007, Available from:
https://mg.co.za/article/2007-11-11-zim-marks-10-years-since-black-friday, Accessed: 22.03.2019 16:42
163
Telephone interview in RBZ Building with RBZ official, 25 October 2019.
164
Timeline, Chronology of Zimbabwe's Economic Crisis, 2007.
43
bank limits its ability to borrow further without footing on the printing press. Siklos said that, in

the extreme case, a government may be unable to generate any revenue other than through

seigniorage. This reliance on seigniorage revenue is a common factor for depreciation of

currency.165

Due to lack of other alternatives to generate revenue, the Zimbabwe government resorted to

printing as buttressed by Osborne that "Printing money is now the only resort for this desperate

government, when there is no other alternative of getting revenue.” 166 Martin Rupiya, a professor

of war and strategic studies at the University of Zimbabwe, stated that "The regime is now

surviving by printing money. At this stage there is no other way."167

QUASI FISCAL ACTIVITIES

The definition of QFAs is a contested terrain among economists. Using the practice of QFAS by

RBZ, it can be deduced that QFAs refer to printing of money to accumulate seigniorage profit for

revenue to the government to finance its flamboyant expenditures and budget deficits.168

In European economies or America, QFAs are referred to as quantitative easing performed by

central banks to rejuvenate reserves and value of their currencies. In the Zimbabwean context,

the execution of QFAs by the RBZ did not improve the value of Zim-dollar, but it further

depreciated the value of Zim-dollar. The depreciation by QFAs was further worsened by

165
P. L. Siklos, Inflation and Hyperinflation, Waterloo, Wilfrid Laurier University, 2000, p.3.
166
BBC News January 8 2009 , news.bbc.co.uk/2/hi/uk_news/politics/7817623.stm, Accessed 25.09. 2018 14:03.
167
Gold News, 11.02.2009, http://goldnews.bullionvault.com/zimbabwe_inflation_021120091.
168
RBZ, Round Up of Reserve Bank of Zimbabwe’s Quasi-Fiscal Operations, Supplement to the January 2007
Monetary Policy Review Statement, 31 January 2007.
44
illegitimacy and political interests of authorities around Zimbabwean QFAs. Though this study

will not elaborate further on how depreciation was caused by QFAs through the need to prevent

Robert Mugabe’s coup,169 however Geraldine Sibanda buttresses that the RBZ conducted QFAs

to the fiscus of Zimbabwe without an oversight role of the parliament.170

Though Sibanda argued that depreciation of Zim-dollar by QFAs dates back to the time of

Tsumba as the governor when RBZ printed war veteran’s gratuities and the DRC finances. 171

This study argue that Zim-dollar was saved by Tsumba’s orthodox or (bookish) economics that

limited printing, thereby shielding RBZ from being manipulated by politicians. By the time

Tsumba’s tenure of the Governor expired on 30 June 2003, Tsumba’s orthodox tendencies have

led to the deterioration of his relationship with the Head of State, Mugabe, who possessed

constitutionally the appointing powers to the governorship of the RBZ, 172 such that he used

these powers to appoint Gideon Gono to the RBZ chieftaincy, in December 2003. On Gono’s

appointment, President highlighted that he was no longer in fraternity with Tsumba because of

his tendencies to bookish economics.173

President Mugabe, the appointer of Gono, said “I am not one... who believes in orthodox

economics…we were not in agreement with the former Governor... He was..orthodox.”174 The

advent of Gono in 2003, saw RBZ roles gravitating from bookish economics on the auspices that
169
Gideon Gono, “I printed Money To Avoid Mugabe’s Coup,” The Standard, April 29, 2018.

170
Read Geraldine Sibanda’s dissertation: Geraldine Sibanda, Institutional responses to the Zimbabwe economic
crisis: The case of the Reserve Bank of Zimbabwe’s Quasi-fiscal Activities, p 1.
171
RBZ Act Chapter 22:15, ibid.
172
The Herald, 18 December 2003.
173
The Standard, 19 December 2003; The Standard, 16 November 2003.
174
Geraldine Sibanda, ibid, p 74.
45
they considered a practice of the theories of economic books at RBZ to be orthodox. 175 Jonathan

Moyo argue that the coming of Gono as governor of RBZ automatically depreciated Zim-dollar

as it heralded a new dispensation at RBZ, since Mugabe have started to “play politics of the

national purse” with Gono176 as the use of printing machine became systematic without even

application of economics. This saw rapid Zim-dollar depreciation as printing on QFAs

accelerated depreciation.

To Gono, exogenous stimulus like the ZEDERA sanctions and droughts were the blame for

depreciation.177 To him QFAs meant that RBZ was to bust sanctions with the printing press.

This saw him printing large quantities of money to appreciate currency against the depreciation

he alleged was caused by the scotched earth policy against Zimbabwe. He argued QFAs are

RBZ’s response to establish proper exchange rate value. This is fully illustrated in his personal

authored book, Zimbabwe’s Casino Economy: Extraordinary Measures for Extraordinary

Challenges, where Gono insist that printing were ‘Extraordinary Measures’ for ‘Extraordinary

Challenges’ of exogenous ‘impulses’ faced by RBZ in triggering depreciation of Zim-dollar.178

That is QFAs, to Gono, were the extra-ordinary measures to challenges of depreciation of

currency. But the RBZ printing went against the advice of the Quantity Theory of Money. In

money economics, the quantity theory of money (QTM) states that the amount of money supply

that is (M3) is inversely proportional to the value of currency. That is by increasing money one

175
RBZ, Unpublished document.

176
Jonathan Moyo, “Politics of the National Purse: Public Budgeting as Public Policy in Zimbabwe,” Harare,
SAPES Trust, 1992.
177
Summary of RBZ’s Strategic Imports Programme 2004-2006, RBZ Supplement, p 4.
178
Geraldine Sibanda,ibid, p 82.
46
will be decreasing its value in the QTM principle. Hence RBZ had to stop printing through

quasi-fiscal activities to save the value of Zim-dollar.

SLASHING OF ZEROES AND CURRENCY REDEMPTION

The currency redemption process is an operation of resuscitating ‘zeroes to heroes’ that meant to

redeem the Zimbabwe dollar value from further depreciation. 179 It is also called revaluation

campaign, which Gideon Gono himself named "Operation Sunrise" meaning a new beginning

from the malaise of depreciation (see footnote). 180 In less than half of a decade, the Zim-dollar

was redeemed three times, in 2006, in 2008 and in 2009.181

The first currency redemption was executed on 1 August 2006, when RBZ demonetized old bank

notes for the introduction of a new currency. Denominations of the introduced new currency

were 1, 10, and 100 thousand dollars. One new Zim-dollar was worth 1000 old Zim-dollars.

Thus this process slashed 3 zeroes of Zim-dollars from $1 000 to $1. The operation of slashing

the three zeroes was then termed ‘Sunrise I’ by the RBZ. 182 Though zeroes had been cut off,

depreciation continued to bedevil the Zim-dollar. The slashing of zeros only solved problems of

carrying large batches of notes and arithmetic challenges especially in accounting since it

reduced some zeroes of the many zeroes in calculation of money.

179
Gideon Gono, Taking the Bull By The Horns: Roadmap to Our Rapid Disinflation Programme, Macro-
Economic Stability and Posperity For All Zimbabweans, RBZ First Half 2006 Monetary Policy, 2006.

180
According to Gono ‘Operation Sunrise’ meant a new beginning for Republic of Zimbabwe since sunrise means
the coming of a new sun which brought a fresh breeze to Zimbabweans from the malaise of currency depreciation.
G. Gono, Taking the Bull By The Horns, ibid.

181
Dumisani Ndlela,"78% old currency returned: RBZ", Zimbabwe Independent, 15 September 2006.
182
G. Gono, Taking the Bull By The Horns, p30-34.
47
Though 3 zeroes had been slashed, the Zim-dollar rapidly persisted to lost its value against the

US dollar, and a year later on 1 August 2007, the RBZ printed a 200 thousand dollar to catch the

value of US dollar. This marked the start of a series of new denominations issued in more rapid

succession, including 250, 500, and 750 thousand dollars by 20 December 2007, 1 million, 5

million and 10 million dollars by 16 January 2008, 25 million and 50 million dollars by 4 April

2008, 100 million and 250 million dollars by 5 May 2008, 500 million and 5 billion, 25 billion,

and 50 billion dollars by 20 May 2008, and 100 billion dollars by 21 July 2008. 183 From the time

of currency revaluation to the end of July 2008, the total amount of money printed in circulation

in the central bank increased from billion to nearly sextillion that is a 20 000 000 000 000 000

fold increase.184

Depreciation led to the 2008 Budget to be presented in multiple zeroes of a staggering $665 000

000 000 000 000 000 000 000 Zim-dollars, that was only equivalent to US$3 billion. 185 The

budget was presented in US$ because zeroes were difficult to read to a doctoral qualified, the

minister of finance.186 Although Reserve bank Governor Gono, thrashed zeroes in a bid to curb

the ever growing depreciation but it did not work.

On 30 July 2008 the RBZ announced another redenomination of the Zim-dollar when the RBZ

slashed ten zeros in what it termed ‘Sunrise II’. This second redenomination was done from 1st

August 2008, with old $10 billion reduced to $1. The new currency were issued in coins of $5,
183
RBZ Reports.

184
RBZ Reports.
185
Government of Zimbabwe, Budget Statement, Harare, Printflow, 2008.
186
Ibid.
48
$10 and $25, and banknotes of $5, $10, $20, $100 and $500. Despite the efforts to redenominate

the Zim-dollar, depreciation continued to surge the currency, and the RBZ continuously printed

higher value bank notes to catch up with the value of the US dollar, with ten zeros reappearing

by the end of 2008. By mid-November 2008, depreciation had peaked to a monthly rate of 89.7

sextillion percent.187

Depreciation persisted to erode the purchasing power of the Zim-dollar, and RBZ printed other

new series of notes with bigger digits up to a point when RBZ printed a 100 trillion dollars note,

which is the largest denomination paper note ever to be issued by any central bank throughout

the history of paper money. According to The Herald, upon the introduction of this note on 16th

January 2009, it was worth thirty US dollars (US$30) on the exchange rate market. After 48

hours, on 18th January 2009, it worth less than one US dollar.188 By end of January 2009,

depreciation surged and further printing failed basic calculators to cope with the number of

zeroes since they did not have enough algorithm base to record the number of zeroes. Haslam

interviewed one business owner who used an accounting system that could electronically handle

transactions equivalent ‘to the size of the Russian economy.’ 189 Even though, his accounting

system could not match with the number of zeroes. It is not surprising that when the accounting

systems ran out of space for the zeroes, some accountants had to give up with their professions in

accounting. Even to individuals, depreciation surged, to an extent that an automated teller

machine in one of the major bank of Zimbabwe gave a "data overflow error" 190 and stopped

187
Central Statistics Office, 2009
188
The Herald, 22 April 2009.
189
P. Haslam and R. Lamberti, When Money Destroys Nations, p.114.

190
In computer programming ‘data overflow error’ occurs when one forces an arithmetic operation to create a
numeric value or number of digits larger than the maximum range.
49
customer's wish to withdraw money with so many digits that was larger than the maximum range

of a computer.191

On the 2nd of February 2009, the RBZ announced that 12 zeroes were further slashed and $1 000

000 000 000 Zim-dollar became equivalent to one dollar in an operation called ‘Sunrise III’. The

RBZ introduced new bank notes with face values of $1, $5, $10, $20, $50, $100 and $500. In

total, the Zimbabwe dollar was redenominated three times in a space of less than three years

slashing an amount of 25 zeroes. If they had not removed the zeroes, a Z$1 note at the end of

hyperinflation would have been a Z$10 000 000 000 000 000 000 000 000 note (that is 10

septillion or 10 trillion trillion).192 However, despite the cutting of zeroes, the Zimbabwe dollar

rapidly depreciated on hourly basis that the removal of 25 zeroes in less than 3 years, from 2006

to 2008, failed to stem the tide as the parallel market took centre-stage in transacting.

DEPRECIATION OF EXCHANGE RATE

OF ZIMBABWE DOLLAR PER 1US DOLLAR [Zim-dollar/$US]

Year Value of Zimbabwe Dollar/$1US

1980 0.63
1981 0.72
1982 0.92
1983 1.11
1984 1.50
1985 1.64
1986 1.68
1987 1.66
1988 1.94
1989 2.27
1990 2.64
1991 5.05
1992 5.48
1993 6.94
191
‘$100 Billion for Three Eggs,’ The Herald, 25 July 2008.
192
P. Haslam and R. Lamberti, When Money Destroys Nations, p.115.
50
 1994 8.39
1995 9.31
1996 10.80
1997 16.77
1998 37.25
1999 38.14
2000 55.05
2001 55.04
2002 55.04
2003 826.45
2004 5696
2005 26004
2006 101,195.54
2007 30 000
2008 30,715,686,649
2009 35 000 000 000 000 000
Table 1.1.
Official Source: Reserve Bank of Zimbabwe Exchange Rate Control Division.

Despite the extra-ordinary measures innovated by the RBZ to redeem the currency, the value of

Zimbabwean dollar continued to deteriorate against the US dollar. As a result of this spectacular

depreciation, people refused to accept the Zim-dollar as currency. 193 It was a scenario that those

who have accepted the Zim-dollar as medium of exchange found themselves checking the rate of

Zim-dollar on every ten minutes or less than that due to the rapid level of depreciation ever heard

in world except in one country which was involved in a major World War in 1945. 194 From

Hanke’s analysis, the depreciation of Zim-dollar is ranked the second highest after the 1946

depreciation in Hungary in global depreciation of currencies.195

It is factual that many monetary scholars locate causes of depreciation of currencies in

developing world as an effect from the aspect of descending macro-economic variable

193
The Herald, 24 April 2009.

194
Ibid.

195
Albert Makochekanwa, Clothed in rags by hyperinflation: the case of Zimbabwe, Pretoria, Department of
Economics University of Pretoria, 2009, p3.
51
fundamentals. This is featured with commerce which becomes rigid, export of primary product

on bust cycle, a Dutch disease phenomena including overdependence on (mono) agriculture or

mineral commodity, lack of value addition, diversification and beneficiation. However, the

justification for not bringing those macro-economic aspects on board is that almost all African

countries are peculiar with these, and have this similarity macro-economic characteristics like

Zambia but the Zambian Kwacha had never reached 35 quadrillion against the US dollar. What

has been unique with Zimbabwe to the Zimbabwean dollar was not even a biased nature of

international trade as argued by dependence theorists, or other concepts articulating to macro-

economic fundamental variables, but the depreciation of Zim-dollar is only traceable in the use

of printing machine, policy irregularities and fiscal delinquency associated with the RBZ inter

alia other self-inflicted microeconomic problems. All these resulted in the depreciation of

Zimbabwe dollar to a climax level.

At the climax level on 12th of April 2009, one can note that the annual inflation rate stood right at

6.5 quindecillion novemdecillion percent (quindecillion novemdecillion has 107 zeroes,) from

the 11% in 1980, GDP growth rate stood at minus 10 million, (from plus 5354.8 million in

1980), and the highest paper note denomination currency was a $100 000 000 000 000 bank note

compared to a valuable $20 note in 1980, when the official exchange rate became 35 quadrillion

per 1 US dollar from the US$1.67 to one Zim-dollar of 1980. This dramatically spearheaded the

natural death of the Zimbabwean dollar to a multi-currency system.

MULTI-CURRENCY SYSTEM

The depreciation of Zim-dollar eventually preceded in the Zimbabwean dollar as an official

currency to be discarded on the 12th of April 2009. On 12 April 2009, Economic Planning
52
Minister, Elton Mangoma officially announced the termination of the Zimbabwe dollar as local

currency for the Republic of Zimbabwe. 196 This marked a watershed in history for the first time

having a Zimbabwe country without currency.

In his first budget during the Inclusive Government, the Zimbabwe Finance Minister, Tendai

Biti, stated that "...the death of the Zimbabwe dollar is a reality we have to live with... Since

October 2008 our national currency has become moribund."197

However, at first instance Zimbabwe had faced a currency confusion on which currency to

adopt.198 There were a menu of alternatives, that was, to pursue the de facto dollarization regime,

to reintroduce Zimbabwe dollar without RBZ but with a Currency Board backed by mineral

resources, or joining the Rand Monetary Union by adopting the South African Rand. 199 From

these menu, finally, a multi-currency basket was preferred. Brian Hungwe defined the multi-

currency basket as a system of using numerous currencies similar to an elaborate example of

what the Eurozone have done.200 That is in place of the Zimbabwean dollar, a basket of nine

currencies including the South African rand, British pound sterling, Indian rupee, euro, Botswana

pula, Australian dollar, Japanese yen, Chinese yuan and the United States dollar has to be used as

legal tender.201

196
"Zimbabwe Suspends Use of Own Currency," Voice of America, 12 April 2009, Cris Chinaka "Zimbabwe dollar
shelved 'for at least a year'", New Zimbabwe, 7 June 2009.
197
The Independent, 17 December 2009.
198
Brian Hungwe, "Zimbabwe's multi-currency confusion", 6 February 2014, BBC News Online. Accessed
05.03.2019.
199
G. Kanyenze et al, Beyond The Enclave, p 67.
200
Brian Hungwe, "Zimbabwe's multi-currency confusion", 6 February 2014, BBC News Online. Accessed 5 March
2019.
201
Voice of America, 12 April 2009.
53
CONCLUSION

The study unearthed a plethora of endogenous and exogenous factors that depreciated the

Zimbabwe dollar against the US dollar. Though Zimbabwe witnessed sporadic droughts, for

example recurrent droughts of 1983, 1987, 1992, 1999, 2002 and 2008, amongst other exogenous

shocks. Yes, this cannot be denied that exogenous impulses have an impact to deterioration of

currencies, but in the case of Zimbabwe, deducing drought and sanctions as mainly responsible

for depreciation of Zimbabwe dollar is a preposterous fallacy. Exogenous circumstances for

example, sanctions and droughts were just presented by sympathisers of the government as

propaganda or reasons to obfuscate facts. It is the contention of this study to substantiate that

causes for depreciation of the Zimbabwe dollar were not exogenic or were not beyond

government’s capacity to unravel, hence they could have been controlled, and even be avoided.

On this argument, endogenous causes like freely chosen Marxist-Leninist socialist policy,

payment for gratuity of war veterans, expenditures in the excursion of DRC war, lack of proper

budgetary housekeeping practice, printing money and post-2000 ZANU PF policy gyrations (for

example the land reform) mired the depreciation of Zimbabwe dollar. The study arrives at a

rationale conclusion that these endogenous factors, than the role of exogenous factors

depreciated the value of Zimbabwe dollar from rating more than 1 US dollar in 1980, to a value

of less than a paper it had been printed on by 2009. Then this depreciation eventually led to the

loss of Zimbabwe sovereignty currency in less than thirty years of independence by adopting a

multi-currency basket system effectuated from the 12th of April, 2009.

54
BIBLIOGRAPHY

GOVERNMENT AND INSTITUTIONAL REPORTS

African Banking Corporation, Quarterly Economic Bulletin June- July 2001, 2001
Central Statistics Office, 2009

Gideon Gono, The Impact of Sanctions Against Zimbabwe, Supplement To The Mid Term
Monetary Policy Review Statement, Reserve Bank of Zimbabwe, 2007.

Government of Zimbabwe, A Framework of Economic Reform 1991-95, Harare, Government

Printers, 1991.

Government of Zimbabwe, Budget Statement, Harare, Printflow, 2008

Government of Zimbabwe, Budget Statement, Harare, Printflow, 1982

Government of Zimbabwe, Budget Statement, Harare, Printflow, 1983

Government of Zimbabwe, Transitional National Development Plan 1982-85, Harare,

Government Printers, 1982.

Government of Zimbabwe, Zimbabwe: Programme For Economic and Social Transformation

(ZIMPREST), 1996- 2000, Harare: Jongwe Printers, 1996.

Government of Zimbabwe, Growth With Equity An Economic Policy Statement, Harare,

Zimbabwe, 1981.

Reserve Bank of Zimbabwe, Quarterly Economic Review, December 1980

RBZ, Quarterly Economic and Statistical Review, September/December 1997, Vol. 8 Numbers
3&4, 1987
55
Reserve Bank of Zimbabwe, Quarterly Economic and Statistical Review, Sept/Dec 1991, Vol.12
Nos.3 & 4, 1991.

Reserve Bank of Zimbabwe, Annual Report, 2003.

Reserve Bank of Zimbabwe, Quarterly Economic Review, December 1980, Vol.1 No.2, 1980

Reserve Bank of Zimbabwe, Quarterly Economic and Statistical Review, September/December

1997, Vol. 18 Number 3/4, 1997.

Summary of Reserve Bank of Zimbabwe’s Strategic Imports Programme 2004-2006, RBZ.

ZANU-PF Election Manifesto, Harare, The National Commissariat and Publicity, 2002.

PARLIAMENTARY DEBATES
Hansard Parliamentary Debates, Report by Minister of Economic Planning, 4th March 1981

BOOKS
Bond P and Manyanya M, Zimbabwe’s Plunge Exhausted Nationalism, Neoliberalism and the
Search for Social Justice, Weaver Press, 2003.

Bond P, Uneven Zimbabwe: A Study of Finance, Development and Underdevelopment, Trenton,

Africa World Press, 1998.

Bourne R, Catastrophe: What Went Wrong in Zimbabwe?, London, Zed Books, 2011.

Bresciani-Turroni C, The Economics of Inflation: A Study of Currency Depreciation in Post-War

Germany, Milan, Universita Bocconi, 1931.

Chakaodza A. M, Structural Adjustment in Zambia and Zimbabwe Reconstructive or

Destructive?, Third World Publishing House, 1993.

56
Chiumbu S. and Muchemwa M., Crisis! What Crisis? The Multiple Dimension of the
Zimbabwean Crisis, Cape Town: HSRC, 2012.

Compagnon D, A Predictable Tragedy: Robert Mugabe and the collapse of Zimbabwe,

Philadelphia, PA: University of Pennsylvania Press, 2011.

Crush J and Tevera D (Eds), Zimbabwe’s Exodus: Crisis, Migration and Survival, Cape Town,
Southern African Migration Programme, 2010.

Gono G, Zimbabwe’s Casino Economy: Extraordinary Measures for Extraordinary Challenges,

ZPH Publishers, Harare, 2008.

Haslam P. and Lamberti R, When Money Destroys Nations: How Hyperinflation

Ruined Zimbabwe, How Ordinary People Survived, and Warnings for Nations that Print
Money, Paperback, London, 2015.

Kanyenze G et al (editors), Beyond The Enclave: Towards a Pro-Poor and Inclusive

Development Strategy for Zimbabwe, Harare, Weaver Press, 2011

Krugman P. et al, International Economics: Theory and Policy, Boston, Pearson, 2012

Masiiwa M, (Editor), Post-Independence Land Reform in Zimbabwe: Controversies and Impact

on the Economy, Harare, Friedrich Ebert Stiftung and Institute of Development Studies,
University of Zimbabwe, 2004.

Meredith M, Mugabe: Power, Plunder, and the Struggle for Zimbabwe, Washington D.C, Perseus
Books Group, 2003

Mlambo A, The Economic Structural Adjustment Programme: The Case of Zimbabwe, 1990-
1995, Harare, University of Zimbabwe Publications, 1997.

Moosa I. A, Quantitative Easing as a Highway to Hyperinflation, London, World Scientific

Publishing Company, 2013

Moyo J, “Politics of the National Purse: Public Budgeting as Public Policy in Zimbabwe”,
SAPES Trust, 1992.

57
Sachikonye L, Zimbabwe's Lost Decade: Politics, Development and Society, Oxford: African
Books Collective, 2012

BOOK CHAPTERS, ARTICLES AND JOURNALS

Breaking the Silence, Building True Peace: A Report on the Disturbances in Matabeleland and
the Midlands, 1980 to 1988, Harare, Catholic Commission for Justice and Peace, Legal
Resources Foundation, 1997.

Chabal P, The Socialist Ideal in Africa(Review Article), Africa, 1990.

Cohn H, African socialism-success or failure, Springer-Verlag Publishers, Volume 6, Issue 11,

1971.

Coltart D, A Decade of Suffering in Zimbabwe, 2008.

Hanke S H, “Zimbabwe: From Hyperinflation to Growth,” Cato Institute Center for Global
Liberty & Prosperity, 2008.

Ding J, “China’s Foreign Exchange Black Market and Exchange Flight: Analysis of Exchange
Rate Policy”, The Developing Economies, XXXV1-1, 1998.

Garikai B. W and Dhoro N. L, Currency Substitution, Dollarisation and Possibility of De-

Dollarisation in Zimbabwe, Journal of Economics and Finance, Volume 6, Issue 1, 2015.

Jones J. L, ‘Nothing is Straight in Zimbabwe’: The Rise of the Kukiya-kiya Economy 2000–
2008, Journal of Southern African Studies, Volume 36, Number 2, Chicago, University of
Chicago, 2010.

Kanyenze G, “Economic Structural Adjustment Programme (ESAP): Precursor to the Fast Track
Resettlement?,” in Masiiwa M (Ed), Post-Independence Land Reform in Zimbabwe:
Controversies and Impact on the Economy, Harare, Friedrich Ebert Stiftung and Institute of
Development Studies, 2004

Mawowa S & Matongo A, “Inside Zimbabwe's Roadside Currency Trade: The World Bank of
Bulawayo”, Journal of Southern African Studies, Vol 36, No.2, 2010.

58
Robinson P, “Zimbabwe Hyperinflation: The House is on Fire –But Does the Government Know
it is Dousing the Flames with Petrol?”, Bonn: Friedrich-Ebert-Stiftung, 2006.

Shumba M J, Zimbabwe’s Predatory State: Party, Military and Business Complex, PhD Thesis,
University of Witwatersrand, Johannesburg, South Africa, 2016.

Makochekanwa A, Clothed in Rags by Hyperinflation: The Case of Zimbabwe, Pretoria,

Department of Economics University of Pretoria, 2009.

Makochekanwa A, Zimbabwe to introduce Zimbabwe Bond Notes: reactions and perceptions of

economic agents within the first seven days after the announcement, Harare, University of
Zimbabwe, 2016.

Mangani D. Y, Zimbabwe’s Foreign Policy in Southern Africa, 1980-2013, Beau Basin, LAP
LAMBERT Academic Publishing, 2017.

Mavhinga D, Youths in the Wilderness: Effects of Zim’s Absence from the Commonwealth,
Marshalltow SA. Regional Office, Crisis in Zimbabwe Briefing, 16-22 Nov 2016.

Mhone G, “Dependency and Underdevelopment: The Limits of Structural Adjustment

Programmes and Towards a Pro-Active State-Led Development Strategy”, African Development
Review, Volume 7, No 2, 1995

Muzondidya J, “From Buoyancy to Crisis, 1980-1997,” in Raftopoulos B and Mlambo A,

Becoming Zimbabwe, A History from the Pre-colonial Period to 2008, Harare, Weaver Press,
2009

Nkomazana L, ‘An Overview of the Economic Causes and Effects of Dollarisation: Case of
Zimbabwe’, Mediterranean Journal of Social Sciences, Vol 5 No. 7, 2014

Southall R J, Bond notes, borrowing, and heading for bust: Zimbabwe’s persistent crisis,
Canadian Journal of African Studies / Revue canadienne des études africaines, 2017 Vol. 51, No.
3, Department of Sociology, University of the Witwatersrand, Johannesburg, South Africa, 2018

59
Raftopoulos B, “Crisis in Zimbabwe, 1998-2008,” in Raftopoulos B and Mlambo A, Becoming
Zimbabwe, A History from the Pre-colonial Period to 2008, Harare, Weaver Press, 2009

Siklos P. L, Inflation and Hyperinflation, Waterloo, Wilfrid Laurier University, 2000.

“Unlocking Our Mineral Resource Potential,” Ministry of Mines and Mining Development,
Government of Zimbabwe Publications, 2018, p 1.

Zhou G and Zvoushe H, Public Policy Making in Zimbabwe: A Three Decade Perspective,
International Journal of Humanities and Social Science, Vol. 2 No. 8, Harare, University Of
Zimbabwe Department of Political and Administrative Studies, 2012

Zhou G, Fiscal Management in Zimbabwe, International Journal of Economics and Business

Modeling, Vol. 3, Issue 1, Department of Political and Administrative Studies, University of
Zimbabwe, 2012

NEWSPAPERS
‘$100 Billion for Three Eggs,’ The Herald, 25 July 2008.

Chinaka C, "Zimbabwe dollar shelved 'for at least a year'", New Zimbabwe, 7 June 2009.

Christina L, "Planeloads of cash prop up Mugabe," The Sunday Times, 2 March 2008.

Gold News, 11.02.2009, http://goldnews.bullionvault.com/zimbabwe_inflation_021120091.

Gono G, “I printed Money To Avoid Mugabe’s Coup,” The Standard, April 29,
2018.

Happiness Zengeni, Black Friday 17th anniversary, The Herald, 14 February 2014

Ndlela D,"78% old currency returned: RBZ", The Zimbabwe Independent, 15 September 2006.

60
Patrick Guramatunhu, When Mugabe paid war vets $50k in 1997 it was a bribe, freedom fighters
became mercenaries, Bulawayo 24 News, 16 December 2014

“President Speaks out on Socialism”, The Herald, 16 June 1991.

Daily News, 18 October 2002.

The Financial Gazette, August 28, 1997.

The Financial Gazette, 12 December, 2000.

The Standard, 01 February 2008.

The Independent, 17 December 2009.

The Herald, 25 Oct 1988.

The Herald, 14 February 2014, ibid

The Herald, 15 November 1997

The Herald, 22 February 1999.

The Herald, 30 March 2003.

The Herald, 18 December 2003.

The Herald, 22 April 2009.

The Herald, 24 April 2009.

61
The Standard, 16 November 2003.

The Standard, 19 December 2003

The Standard, 29 April 2018.

Timeline: Chronology of Zimbabwe's Economic Crisis, 2007.

Timeline: Zimbabwe, 2009.

Unpacking impact of sanctions on Zimbabwe, The Chronicle,7 March 2019.

The Independent, 13 June 1999.

POLICY PAPERS AND REPORTS

Berre (Ed) and Bonillar M, International Monetary Fund Annual Report 1996, Washington D.C,
1996.

Economist Intelligence Unit, Country Report: Zimbabwe, 1994.

Jones T, Uncovering Zimbabwe’s Debt: Jubilee Debt Campaign, London, Grayston Centre, 2011.

Kanyenze G, Chitambara P and Tyson J, The Outlook For The Zimbabwean Economy,
Supporting Economic Transformation, 2017.

“Review of Zimbabwe’s Economic Reforms and Liberalisation”, Address by Dr. L.L.Tsumba,

Governor, Reserve Bank of Zimbabwe, at the Farmers’ Dining Club, Harare, 8 October, 1997.

“The Reserve Bank of Zimbabwe in a Liberalising Economy”, Presentation by DR. L. L.

Tsumba, Governor, Reserve Bank of Zimbabwe, at the Bar Association of Zimbabwe, Advocates’
Chambers, 24 July, 1997.

62
The South African Institute of International Affairs, Report No. 30, The Zimbabwe Economy:
How has it survived and how will it recover?, 2002.

NEWS
Hungwe H, "Zimbabwe's multi-currency confusion", 6 February 2014, BBC News Online
"Zimbabwe Suspends Use of Own Currency". Voice of America, 12 April 2009

BBC News, Business: The Economy: Zimbabwe denies misleading IMF, Monday, October 4,
1999.

BBC News, World: Africa Mugabe defends fighting for Congo, Friday, December 4, 1998,
http://news.bbc.co.uk/2/hi/africa/227930.stm,

BBC News, Mugabe's costly Congo venture, Tuesday, 25 July, 2000,

http://news.bbc.co.uk/2/hi/africa/611898.stm,

UNPUBLISHED SOURCES
Kufakurinani U, et al (Editors), Zimboes Never Die? Negotiating Survival in a Challenged
Economy, c1990s to 2015.

Reserve Bank of Zimbabwe, Unpublished Source.

Matenga K, The impact of the Look East Policy on Zimbabwe’s economy from 2000-2012: The
case of China-Zimbabwe relations, Faculty of Social Science and Humanities, Department of
Peace and Governance, Bindura University of Science Education, 2012.

Sibanda G, Institutional responses to the Zimbabwe economic crisis: The case of the Reserve
Bank of Zimbabwe’s Quasi-fiscal Activities, 1997-2009, Unpublished Dissertation, Masters of
Arts in Africa Economic History, University of Zimbabwe, 2017.

INTERNET SOURCES
BBC News, January 8 2009 , news.bbc.co.uk/2/hi/uk_news/politics/7817623.stm
63
Carte Blanche Online Update, Black Friday 1997: How the Zimbabwe Dollar crashed and
Tipped the Economy Over the Brink,
http://munzwembiri.blogspot.com/2017/11/read.me_14.html,

Fox News, “One US dollar = Z$35 Quadrillion as Zimbabwe phases out old currency,” 2015,
https://www.foxnews.com/world/one-us-dollar-z35-quadrillion-as-zimbabwe-phases-out-old-
currency,

IMF online catalogue, https://www.imf.org/external/pubs/ft/fandd/1998/12/enoch.htm,

Machemedze R, Zimbabwe And The IMF:Time For Shifting From Neo-Liberal Paradigm To
People Centered Development Alternatives, https://sarpn.org/documents/d0000758/P852-
Zimbabwe_IMF.pdf

Marawanyika G, Zimbabwe marks 10 years since black Friday, 2007, Mail and Guardian
[Online] Available from: http://mg.co.za/article/2007-11-11-zim-marks-10-yearssince- black-
friday,

Mushakavanhu T, “I was a quadrillionaire in Zimbabwe, but could barely afford to buy bread,”
Quartz Africa, 12 June 2015, https://qz.com/africa/426925/i-was-a-quadrillionaire-in-zimbabwe-
but-could-barely-afford-to-buy-bread/,

The Value of Zimbabwean Dollar, https://www.xe.com/currency/zwd-zimbabwean-

dollar#additionalinfo,

The Worst Hyperinflation Situations of All Time, https://www.cnbc.com/2011/02/14/The-Worst-

Hyperinflation-Situations-of-All-Time.html,

Thomas J, Wheelbarrow Economics, https://internationalman.com/articles/wheelbarrow-

economics/,

64
 RBZ Online Catalogue. https://www.rbz.co.zw/index.php/about-us/departments/exchange-
control,

World Bank, http://data.worldbank.org/indicator/ny.gdp.cp,

‘Zim uprisings against useless bond notes’, The Zimbabwe Independent, 23 August 2016,
https://www.theindependent.co.zw/2016/08/03/zim-uprisings-useless-bond-notes/,

Zimbabwe Dollar OANDA Currency Facts, https://www.oanda.com/currency/iso-currency-

codes/ZWD,

YOUTUBE VIDEOS
Zimbabwe Elections Debate 2018, Nkosana Moyo vs Christopher Mutsvangwa Dignity Dialogue
and Debate, Youtube Video, https://www.youtube.com/watch?v=uqNuMnnXh20

Letest News:Acie Lumumba Exposes Corruption at the RBZ -Reserve Bank Of Zimbabwe,
https://www.youtube.com/watch?v=cEnS79BCb5k.

INTERVIEWS
Interview with Mr Clemency Rwenhamo at Gulf Complex, Harare Central Business District,
15.06.2018.

Telephone interview in RBZ with RBZ official, 25 October 2019, in RBZ building.

ACTS AND DIPLOMATIC LETTERS

Full Text of S. 494 (107th): Zimbabwe Democracy and Economic Recovery Act of 2001,
GovTrack.us. 13 December 2001.

Provision of War Veterans Act, Statutory Instrument 281 of 1997.

Letter to Mr. Michel Camdessus, Managing Director, International Monetary Fund, Washington,
D.C. 20431
65

View publication stats