Urban dwellers have dumped trillions of worthless Zimbabwean dollars on rural people unaware of the central bank’s currency reforms, leaving poverty-stricken communities with bundles of obsolete currency in exchange for their livestock.

In a bid to halt the country’s economic meltdown, Reserve Bank Governor Gideon Gono gave Zimbabweans a three-week window period to exchange old currency for new, but bad roads and fuel shortages were blamed for the failure of central bank publicity teams to reach many rural areas to inform them of the switchover before the deadline.

Grinding poverty has led to information blackouts in large parts of the countryside, where items such as batteries, radios and newspapers have become unaffordable luxuries.

Lovemore Moyo, a village headman in the cattle-rich Midlands Province, told IRIN that people “could not believe their luck” when city dwellers descended on their communities during the changeover period offering to buy cattle, goats and sheep at very high prices.

“Many members of our community, especially those who were resettled on former commercial farms, had huge amounts of money dumped on them because they were not aware of what was taking place,” he said. “Now they have lost their livestock, while others have the added burden of taking hundreds of millions of dollars back to the bank and prove to authorities how they earned that money.”

Gono, who is being tipped as a presidential candidate when incumbent Robert Mugabe leaves office, cut short an official business trip to China after his austerity measures brought widespread confusion, mainly caused by the limited period allowed for exchanging old money for new, and restrictions on the amount of currency that could be changed per day.

He has now announced that rural people would be given until 2 September, a six-day grace period, to exchange old currency for new, after being adamant that there would be no extension of the 21 August deadline.

The reserve bank governor told IRIN that of the Z$45 trillion (US180 million at the old official rate) of old bearer cheques that had been in circulation, Z$35 trillion (US$140 million) had been returned, leaving $10 trillion (US$40 million) – 22 percent of the money in circulation – unaccounted for.

The missing trillions of dollars are believed to have been offloaded on unsuspecting rural dwellers.

NEW CURRENCY SHOCKWAVES

Seven days after the new currency became the sole legal tender, a cash shortage continues to plague Zimbabwe. Only high denomination notes of Z$10,000 (US$40) and Z$100,000 (US$400) of the new currency are in circulation, while smaller denominations are in short supply.

At one financial institution, bank tellers were putting clients into groups of five, issuing them with a Z$100,000 (US$400) note and asking them to go shopping together so they could split the money among themselves. The bank manager told IRIN they were doing “the best we can do for our clients – we hope nobody runs away with the money, but we have run out of low-denomination currency.” Other banks closed early after they ran out of cash to deal with month-end withdrawals.

Adding to the uncertainty, Gono told a media briefing on Monday that the new currency – actually bearer cheques that pass for currency – would be a temporary phenomenon and would be replaced by a newer currency of “internationally accepted bank notes”, but did not say when this would be introduced.

“Next time round, the implementation process will be short, and therefore swift – it will require less than 24 hours notice and will have much tighter cash limits for allowable deposits.”

When the internationally acceptable currency is introduced it will have Braille for the visually impaired. The latest currency, introduced on 1 August, consists of 13 bearer cheques all the same size with no raised print to identify the denomination.

This oversight cost fruit and vegetable seller Cecelia Shungu, blind since childhood, dearly. “Conducting business with the new bearer cheques has been a nightmare for myself and fellow blind stallholders,” she said. “We lost a lot of money to unscrupulous customers until we sought the assistance of our children, who are currently on school holidays.”

Beyond the daily struggle of grappling with an inflation rate hovering at around 1,000 percent annually and unemployment levels of more than 70 percent, the currency reforms created widespread discontent across the class spectrum. Police roadblocks were set up nationwide and people found carrying more than Z$100 million (US$1,000 at the old official rate) had their money confiscated.

Reserve Bank Governor Gono issued a rare, belated apology. “Whatever bad experiences that some of you experienced at those roadblocks while our teams were carrying out their lawful duties, we sincerely apologise unreservedly.”

Source: AllAfrica.Com
URL: http://allafrica.com/stories/200608290598.htm…/p>