Zimbabwe Businesses Tackle Inflated Currency
ANDREA SEABROOK, host:
We turn now to Zimbabwe, where negotiations begin again tomorrow between longtime President Robert Mugabe and opposition leader Morgan Tsvangirai. The political stalemate there has led to an economic catastrophe. Inflation is so out of control - over two million percent at last count - that the price of a loaf of bread hit - get this - 200 billion Zimbabwean dollars.
So, yesterday the government chopped off ten zeroes from the end of the Zimbabwean currency. What used to be a ten-billion-dollar bill is now a dollar. So, that loaf of bread? Now a mere 20 bucks.
We got in touch with Rick Kriel last night. He's the president of a chemical company there and joined us on his cell phone from Zimbabwe's second-largest city, Bulawayo. We asked him how people are dealing with the devaluation.
Mr. RICK KRIEL (President, Acol Chemical Limited, Zimbabwe): Well, it's incredibly difficult. It was difficult when the 10 zeroes were there and now to have two days' warning to chop 10 zeroes off has made it pretty chaotic, but it was something that was necessary because the way inflation was going, we were going to be trading in quintillions, and that just becomes totally impossible from an accounting perspective.
SEABROOK: So, now with the devaluation or the chopping off of the 10 zeroes, what's it like today? Have you gone down to the shop to buy anything?
Mr. KRIEL: I haven't personally. We have had customers come into our company to make purchases, and there is a lot of confusion amongst them. And people are carrying around little cheat sheets to see what the numbers should be. Because it's very difficult when you've been used to talking hundreds of billions and quadrillions to suddenly be talking 25 dollars and 15 dollars.
SEABROOK: Could you take out your cheat sheet for me? Do you have it on you?
Mr. KRIEL: Let me just get it out of my wallet. All right. I have it in front of me.
SEABROOK: So, what does it say at the top?
Mr. KRIEL: The old money versus the new money. And the conversion rate says not important, because it's meaningless. In the first level is $100 million is one cent; $500 million is five cents. You get up to 100 billion is $10. And it goes to a trillion dollars, which is $100. And we get to the quadrillions - a quadrillion is $100,000 of new money. And the last one on this cheat sheet is one quintillion - which has 3, 6, 9, 12, 15, 18 zeroes - and that's $100 million of new money. That's my cheat sheet.
I believe the banks - it was very chaotic in the banks today and there are a lot of queues. And the other strange thing they've done is they've allowed the use of coins once again.
SEABROOK: Have they devalued the coins as well, or are they suddenly worth a lot more than they were?
Mr. KRIEL: Yeah, they improve in value by ten - a factor of 10 billion. So, a one-dollar coin, which yesterday was absolutely worthless - I mean, it was infinitesimal in value - is today worth 10 billion. What is happening is people are now digging in their shelves and pulling out the old jars that they used to throw their money into.
And there was evidence today in Bulawayo of a lot of people carrying around sacks of coins trying to use them before they start losing their value again. Because with the current level of inflation it won't be very long before those coins once again become useless.
SEABROOK: Economists outside Zimbabwe have criticized this move as dealing with just a symptom of the country's complete economic collapse, ignoring the root cause here. Do you have any hope that this devaluation will make anything better?
Mr. KRIEL: No. The only positive side of the devaluation is it addresses the hardware problem to an extent. Because computers aren't designed to deal with that magnitude. But it's not going to address the problem. This is just buying a little bit of time.
SEABROOK: Rick Kriel is the president of Acol Chemical Limited in Zimbabwe. Mr. Kriel, thanks very much for sharing your cheat sheet with us.
Mr. KRIEL: Pleasure. Thank you very much.
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