Some Zimbabweans see only more pain as prices fall

HARARE (Reuters) – Food is returning to store shelves in Zimbabwe and prices falling after years rocketing higher — but the end of the black market leaves some Zimbabweans with little to cheer about.

For people like Beatrice Kurwa, a 25-year-old primary school teacher in Highfield township, the signs of returning economic stability are welcome but without informal earnings, she now has only $100 (69 pounds) a month.

"I am happy to walk into a shop and buy what I want but now I have to live on my allowance and it has become even harder to survive because I have no other source of income," Kurwa said.

Goods have flooded back after the government’s decision to abandon the worthless local dollar — destroyed by inflation that officially topped 230 million percent — and to let Zimbabweans use foreign currency.

The change has raised hopes that the new unity government of President Robert Mugabe and old enemy Morgan Tsvangirai can revive the ruined state.

But it also means Kurwa can no longer generate extra cash by crossing the border to South Africa to buy maize meal, cooking oil and flour to sell on the black market. The long queues for basic goods are gone.

In U.S. dollar terms, prices fell 3.1 percent in February and 2.3 percent in January — the first time inflation had been negative since mid-2005 — according to official statistics.

Prices of bread, maize meal, sugar and cooking oil have fallen by half since December and further falls are expected now that there is an incentive for industries to raise production. 

"Things had gone way out of control but now there is no longer room for speculation and every dollar really counts," John Robertson, a consultant economist said.

The enterprising are even finding some value in the Zimbabwe dollar, although it is impossible to spend in shops. Bills denominated for as much as Z$100 trillion can sell for up to $20 to the few foreign tourists.

DONORS VITAL

But long term recovery requires major foreign investment. The government is seeking $5 billion.

Winning that, however, depends on Western donors being satisfied that a democratic government is in place and that economic reforms are being implemented to reverse a decade-long collapse which Mugabe’s critics blame on his policies.

Mugabe, who has ruled since independence from Britain in 1980, has always said Western sanctions ruined Zimbabwe.

The International Monetary Fund made clear on Wednesday that it would only provide financial help once Zimbabwe clears nearly $90 million in arrears and implements sound policies.

"Until the Western governments, who are the main IMF shareholders, change their attitude, there is no money coming our way any time soon," said Tony Hawkins, a professor of business studies at the University of Zimbabwe.

"They want to see who is really in control and an issue that comes to mind is that the government says it will not tolerate land invasions and yet they are still continuing." 

The seizure of white-owned farms to give to poor black Zimbabweans has been a cornerstone of Mugabe’s policies, but his opponents say they have destroyed the agriculture sector that was once the backbone of the economy.

Unemployment is over 90 percent and some three million Zimbabweans have fled abroad in search of work.

Security guard Allen Mangena, 34, is happy that basic services such as water and garbage collection are slowly being restored as authorities collect rates in foreign currency.

But the pressure on him has eased little with his monthly salary of $50 divided between paying for rent, food, bills and supporting his aged parents in the countryside.

"There are times when I have gone to bed without a meal. You can not borrow from anyone in this economic environment, money has really become scarce," he said.