Thursday, August 10, 2006

What's the Difference - just a Few Zeros

On August 1, 2006 Zimbabwe dropped 3 zeros from the currency (see following article). For banks and accountants, this was a great relief in these hyperinflation and rapid devaluation conditions. Accounting software would reflect a balance of “overflow” when the account contained as little as the equivalent of USD 1,000.

But dropping three zeros from the currency has no true meaning for most of us - we cannot understand what effect this really has on daily life. Here are some recent examples of the problems ASAP’s staff in Zimbabwe have encountered.

Regai Tsunga and Rose Makhamadze both live in Dangamvura, a suburb of Mutare. Previously they paid zwd 200,000 for transport to work in Mutare each morning. Now they pay only zwd 200. “With the old currency in circulation, I pay the conductor new zwd 500 and receive old $300,000 in change.” explains Rose. This seems like a pretty good deal to most!

But on August 21st the old notes (bearer cheques) are no longer legal tender. The government is on a campaign to flush out the old currency. “The inconvenience to the travelling public is unbearable as police have mounted 24 hour roadblocks in search of bearer cheques.” All vehicles are stopped and searched. Passengers on buses must disembark and this is causing many people to arrive late at their various work places.

Tsunga went on to share another story. “One lady by the name Jane, with whom we are doing the ICDL computer training course and who works for Western Union (money transfer org) yesterday told me that she got confused with the zeros that she mistakenly overpaid a client by $16,000,000.00 in a single transaction. At close of business the shortfall was discovered and she had to go through all processed documents for the day. She identified the transaction and took all relevant details pertaining to it (name of client, contact details, amount of forex tendered, etc). She then personally went to the residence of the client who denied ever receiving any extra cash during the transaction. The poor lady wept profusely and said she would not leave the client’s residence. It took the client’s wife to persuade her husband to own up and surrender the money, which he eventually did. Her confusion, she confessed, emanated from the zeros.”

On the whole, people are slowly adjusting but there really is still some confusion especially given that the new currency is still very scarce and that banks are, through both the teller machines and counters, still dispensing the old bearer cheques upon cash withdrawals.

Political humour is universal…it is rumoured that Finance Minister Gideon Gono has actually changed to a Chinese nationality – now going as Giden Gn after removing 3 zeros from his name!

1 comment:

Stephanie said...

Wow, it's so interesting to hear about the impact of a national economic policy on individuals!