Poor Billionaires

Zimbabwe's new 10 million dollar bill is red. One side has the official stamps of the Reserve Bank of Zimbabwe and some meaningless serial numbers. The other is a pastiche of a fish jumping out of a lake and a giant dam in the background. The bill, released for the first time last month, is actually not a proper currency note at all but rather a "bearer check." Zimbabwe stopped printing real money long ago, when its inflation rate was still at a manageable level. Today these bearer checks are the only currency remaining. Last week in Zimbabwe 10 million dollars could buy exactly two rolls of toilet paper. By now it probably won't get quite that much.

Such is the state of the world's most bankrupt and fiscally untenable economy. Zimbabwe's 100,000 percent inflation rate is the world's highest—a runaway train with no driver, no brakes and no limits to the train's top speed. Perhaps it's not surprising, then, that Zimbabweans have learned to cope by developing one of the world's most sophisticated black markets. If the local merchants didn't keep this economy afloat with fuel, oil, corn and the cash to fund it all, the already unstable southern African nation could slip into civil war.

Nor is the country's March 29 presidential election likely to bring any relief from the scourge of hyperinflation. Robert Mugabe, the autocratic president whose 28-year rule is blamed for Zimbabwe's economic mess, blames the problem on the legacy of sanctions and British imperialism. None of his rivals has offered up concrete proposals to fix the problem. His main challenger, Simba Makoni, says that simply removing Mugabe will do wonders for the economy by restoring a modicum of confidence in the markets. But the fact is that no one really knows where to start. "We just don't have people here who have dealt with this kind of hyperinflation," says David Coltart, an opposition parliamentarian.

Officially, one U.S dollar is worth about 30,000 Zimbabwean dollars. As of last week the real price on the black market was about 35 million dollars, or 1,166 times the official rate. The bill for a simple meal I shared with five other people at an unassuming cafe in Zimbabwe last week came to 581 million Zimbabwean dollars. The black market value: US$21. If I had paid according to the bank's rate? US$19,366.

Much of the international focus on Zimbabwe has been on the land disputes between white farmers and the black pro-Mugabe "war veterans" who have occupied their properties in recent years. But a closer look at the skewed price scales offers a different insight into why the country is in such profound crisis. The average wage for a farm worker is 30 million dollars per month. A domestic worker makes about five times that amount, and a laborer in one of Zimbabwe's decrepit factories can expect to earn as much as 300 million per month. It sounds good until you consider how much things cost. Four Coca-Colas cost about 20 million. A one-way bus ticket around town will set you back one of those 10 million dollar notes (and that price may go up even as you're on the bus). Ten kilograms (22 pounds) of corn meal, which might last a family of four two or three days, goes for 45 million. It's 7 million for less than a quarter pound of low-grade beef. A loaf of bread is 10 million. If you're a government worker you'll earn a monthly pension of 60,000 (yes, thousand) a month. But an empty potato sack alone costs 2 million, or 33 times your monthly pension.

It's no wonder the black market is thriving. At the center of it is fuel. The price of fuel can change every hour, throughout the course of a day. Last week a liter of fuel (about a quarter of a gallon) was selling for 32.5 million, the week before it was 25 million, and by next week it's estimated to be up to more than 40 million. "As fuel prices rise, everything else rises," one black marketer explained to me recently. We were sitting at his living room table, which was piled high with bundles of 10 million dollar notes, billions and billions of dollars scattered about the table like piles of napkins. On a nearby shelf more bundles were stacked. This black marketer, who wouldn't give his real name because of the nature of his work) sells up to 1,000 liters (about 250 gallons) of fuel a day. "Fuel is not static at all; it's changing on an hourly basis," he explained. "A load of transport costs 10 dollars, and fuel is eight. Say you've bought a side of beef that costs 20 million, and transport was a million, now you sell the beef for 22 million. Then the price of fuel rises, but you've already sold your beef, so it'll cost you 24 million in the end. So the price of fuel controls everything that gets sold around here." The government does import fuel, but no one would have access to it if it weren't for the black market. The bureaucracy is too complicated. "By the time you're done applying for fuel three days have gone by and you get to the garage and they haven't got it," explains the black marketer.