Tag Archives: zimbabwe

Keep the Change

img_1345

At the height of its power, the Roman Empire stretched from Libya to London, Istanbul to Iberia.

img_1332

It was remarkably modern. The Romans collected taxes, they built roads, they negotiated trade deals with the (literal) Slavic hordes.

IMG_2927

The empire’s most critical nervous system was its infrastructure. Mail and goods and information traveled from one end to the other in just two weeks. A network of B&Bs let travelers change horses, rest for the night, eat a hot meal.

IMG_2723

It was a legitimate miracle, a feat of bureaucratic innovation that wouldn’t be matched for a millennium.

IMG_2704

Until, of course, it fell apart.

IMG_2692

The vandals invaded, the military lost, the bureaucracy shattered. Cue dark ages.

IMG_2690

We think of the fall of Rome as an event, a discrete, seeable Thing that happened on a Thursday a thousand years ago.

IMG_2661

In reality, though, it was more like a big long exhale. Yes the barbarians invaded and yes it sucked. But the empire had been faltering for decades beforehand and coasted on its built-up power for decades afterward.

IMG_2650

What happened, slowly and steadily, was that the central authorities lost their ability to project power. Their tentacles of influence—infrastructure, taxes, law enforcement—retracted over decades, leaving power vacuums that filled up with made-up royalty and ad-hoc warlords.

IMG_2711

Province after province, as the shadow of the central authorities lightened, local aristocrats and landowners rose up to replace it. Borders appeared. Mail took longer to deliver. Regions cut themselves off. Trade routes withered. Cities languished.

IMG_2609

It some places it took decades. In others, centuries. To the people living through it, the fall of Rome did not particularly feel like one. It was simply an escalating series of scandals, little mistakes and decisions that rendered centralized power weak, then invisible, then history.

IMG_2605

These are random pictures of Zimbabwe I took over the years.

IMG_2602

It was once the great hope of Africa, a bright spot of prosperity and peace in the (literal) middle of a troubled continent.

IMG_2599

The best universities, the most educated workers, the best infrastructure.

IMG_2570

And then Robert Mugabe, piece by piece, took it apart.

IMG_4279

He confiscated land from industrial farms and gave them to random war generals. He hyper-inflated the economy. He killed rivals and chased off investors and taught his own people to fear him.

IMG_4277

None of this was unexpected or surprising. We did not learn anything new about this man each time he stole an election, disappeared a political rival, inflicted his worst instincts upon his people.

IMG_4272

But each of them mattered.

IMG_4218

There is a human tendency to think that the most important events, the most seismic changes, are differences in kind. Narratives new and unprecedented, developments that erase the past. An earthquake. A fire.

img_1954

They make the best stories. Transformations, turns, reversals. Peace to war, prosperity to squalor, progress to backsliding.

img_1377

But history does not happen in category changes, lines being drawn and then crossed. History is shifts in emphasis, swapped priorities, the future echoing the past a little louder or slight softer.

img_1832

Events from which we learn nothing. Decisions about which we are not surprised, only saddened.

img_1822

There’s this thought experiment for human evolution.

img_1816

Put yourself on an index card. Then make one for your mother, then her mother, then her mother, and so on.

img_1814

Index cards stretching back in time forever. A hundred thousand generations ago you were an ape. A million ago, you were a rat. Ten million ago you were a fish.

img_1799

These changes are profound. But pull any two cards out of the stack and you will see no difference between them.

img_1797

You’re not so different from your parents and they’re not different from theirs. The ape looks just like his parents, and so does the fish.

img_1796

Maybe we’re conditioned to look for differences in kind because we seek stories. Twists, turnarounds, surprises. Differences in degree are less noticeable, harder to find, less tellable in the moment.

img_1352

Britain was one of the first outposts of the Roman Empire to go. The farthest corner, a mossy island, a tiny garrison of troops, warring tribes already competing to usurp them.

img_1351

For 80 years, Roman currency inflated and dwindled. Without money, the elites couldn’t buy leather or food or pottery. Without income, the peasants making them had no choice but to move back to the countryside.

img_1357

As the cities emptied, as tradesmen became backyard farmers, they stole stones from the roman architecture they left behind. Brick by brick, they carried them home along the roads, stacked them in squares around their families. Then they waited for the world to reach them again.

3 Comments

Filed under America, Personal, Pictures, Serious

The Devil you know

IMG_1332

I just got back from a week in Zimbabwe.

IMG_2045

I took these pictures last year, when I visited Victoria Falls for a few days.

IMG_1557

Going on a safari is a shitty way to get to know a country.

IMG_1535

But so is visiting its capital.

IMG_1496

I’ve never met a country with such a suicidal set of national policies.

IMG_1481

Zimbabwe has an acute liquidity shortage. There is not enough money to go around. The unemployment rate is 80 percent. Its per capita GDP is among the lowest in the world.

IMG_1473

Yet instead of bending over backwards to attract investment, its politicians are stepping forward to repel it.

IMG_1470

The country has a policy called ‘indigenization’—All foreign companies must be 51% owned by Zimbabweans.

IMG_1939

In other words, to invest here, you have to give away the majority of your company. You don’t get to pick who you give it to or what they do with it. You are asked to simply simply fork it over, and trust what the government does with it.

IMG_1447

Not to sound all Tea Party about it, but that’s fucking insane.

IMG_1426

The only companies willing to invest here are Chinese and Russian ones. And only under conditions of total secrecy. None of the investment contracts have been made public.

IMG_1412

There was a scandal last month when it was revealed that some of the government officials who were cut in on these contracts were earning $500,000 a month.

IMG_1409

I remember talking to a private equity guy last year just after my first trip here. I asked him if he would ever consider investing in Zimbabwe.

IMG_1403

He told me he hasn’t looked at the country in years. ‘You can’t even read the fucking Wikipedia entry without losing money’ he said.

IMG_1392

You can hardly blame him. The most important thing for investors is certainty. And that’s in even shorter supply than currency here.

IMG_1378

And yet somehow, people tell me that Zimbabwe is doing better now than it was last year.

IMG_1377

I ask my Zimbabwean colleagues about this and they tell me it’s because of the election.

IMG_1345

‘For the last four years we had a coalition government’, they tell me. ‘Mugabe’s party and the opposition sharing power.’

IMG_1352

‘It was chaos. Each minister would tell you a different set of government priorities, depending on which party he was from. Right, left, legal, illegal, you never got a clear answer.’

IMG_1351

‘Since Mugabe won the last election, at least we know what to expect.’

IMG_1357

‘What, for everything to keep getting worse?’ I ask. ‘At least’, they tell me, ‘we can plan for that.’

 

8 Comments

Filed under Personal, Pictures, Serious, Travel

Zimbabwe Dollarized. How Does the U.S. Feel About That?

IMG_1870
The rainbow of 20s you get from the ATM in Harare

Here’s a section that got cut from my New Republic story about the use of the US dollar in Zimbabwe

Wait, so a country can just adopt the United States’s currency without our permission?

“The U.S. government has never taken any overt position on dollarization, formal or informal.” This is Benjamin Cohen, a political economy processor at the University of California Santa Barbara, former Fed employee and the author of some articles I’ve been reading to try to understand how one country just gets up one morning and starts using another country’s money.

Ninety percent of the world’s $100 bills, Dr. Cohen says, are in circulation outside of the United States. Dozens of countries are considered  to be “highly dollarized,” meaning more than 30 percent of their money supply is in dollars.

Unlike Zimbabwe, which has formally adopted the dollar, most countries use the U.S. dollar informally, in parallel with the local currency. A few years ago I was in Cambodia for work, and found that the local currency, the riel, was only used for small stuff like meals, transport and entertainment. Anything major—a TV, a plane ticket, an iPhone—prices were quoted and paid in U.S. dollars.

It’s not just Cambodia. These sorts of arrangements are commonplace throughout the Middle East, Latin America and Southeast Asia. People use the local currency, but keep U.S. dollars as a hedge against inflation, like Tea Partiers hoarding gold.

According to Cohen, the United States has no reason to prevent these arrangements. Not only does the U.S. dollar provide a quarry of monetary calm for citizens of inflating nations, the U.S. actually makes money every time our money leaves our borders. “Seniorage,” as the economists call it, is the profit the U.S. earns every time a foreigner ‘buys’ a dollar for a dollar (It costs 6 cents to print a $1 bill. If you print one, then use it to buy something that costs a dollar, you’ve just earned 94 cents profit. That’s seniorage.).

This sounds like it shouldn’t be a real thing, but the US earns $20 billion per year from all those $100 bills held internationally. Not a huge proportion of GDP, but hey, free money, right?

The other upsides are obvious. Every time another country uses our currency, it reinforces the U.S. dollar as world’s preferred international currency, just like every time someone drinks a Coke or eats a Big Mac it reinforces the status of those brands.

Foreign countries using our currency even gives us diplomatic power. Panama, one of the first countries to formally adopt the U.S. dollar, froze in its tracks when the U.S. cut off access to hard currency in the late 1980s to put pressure on Noriega.

The only real downside of foreign countries dollarizing, for the U.S. at least, is that it creates a headache for the Fed. The more countries dollarize, the more the Fed has to take them into account when making monetary policy. A million calculations go into the decision to raise or lower interest rates, and the last thing the Fed needs is to add the interests of Cambodian iPod salesmen into the mix.

One of the more significant downsides is if a dollarized country suddenly reintroduced their domestic currency, it might flood the market with millions of now-unneeded U.S. dollars, reducing the value of all of them. It doesn’t even have to be a whole country. If the dollar was used widely enough, huge purchases of dollars by foreigners could significantly affect its value.

This is why, Cohen says, the U.S. takes a policy of “benign neglect” toward foreign countries that want to formally or informally dollarize. You want to buy a bunch of dollars and give them to your citizens in exchange for your old currency? Fine. You want to encourage your banks to offer accounts denominated in U.S. dollars? Have a blast. The U.S. isn’t going to be particularly helpful in helping you set this up, but they’re not going to stop you either.

Ten countries (East Timor, Ecuador, El Salvador, Panama and a bunch of small island nations) are formally dollarized, meaning the U.S. dollar is their official currency (most of them have their own coins though).

Zimbabwe is formally dollarized in that all government spending is in U.S. dollars, but it also recognizes the euro, the British pound, the Botswanan pula and the South African rand (why the Mozambican metical got left out, I have no idea). Stores accept payment in whatever currency you have handy, and sometimes give you change in a different currency than you paid.

One of the things that always surprised me about Zimbabwe was how it just switched to U.S. dollars one day, without any relationship to the U.S. Federal Reserve. It was even under sanctions at the time. Can it just do that?

“It’s totally normal to switch to the U.S. dollar without any relationship to the Fed,” Cohen says. “It doesn’t require an application. Anyone can buy paper money, and anyone can get a dollar bank account. Their own country may restrict those things, but the U.S. doesn’t.”

When Ecuador officially adopted the U.S. dollar in 2000, it carried out a mass currency conversion. The central bank sold their U.S. treasury bonds to the U.S. for cash, brought the cash back to Ecuador and gave Ecuadoreans a window in which to exchange their sucres for U.S. dollars. The U.S. didn’t orchestrate, nor condemn, this process.

Like an introduced species, the U.S. dollar tends to take over an increasingly large percentage of the economy. The only country Cohen knows of that has de-dollarized is Israel, which introduced the U.S. dollar in the late 1970s as a parallel currency, and only managed to get rid of it after a series of economic reforms reinstated confidence in the shekel. Lots of informally dollarized countries, like Argentina, go through waves of increasing, then decreasing dollarization in line with citizens’ confidence in the local currency.

I have no idea what any of this means for Zimbabwe. As I say in the New Republic story, bringing back the Zimbabwe dollar is seen by economists (including the head of the Reserve Bank of Zimbabwe) as a bad idea, but that doesn’t mean it won’t happen.

Dr. Cohen’s written a bunch of interesting, easy to read articles on dollarization from the US perspective

 Thanks for the interview!

14 Comments

Filed under Random, Serious, Travel, Work

Zimbabwe: The Director’s Cut

I have an essay in The New Republic about my trip to Zimbabwe last year, and my weird obsession with how expensive everything was there.

One of the things they tell nonfiction writers is ’employ holy shit details’, and in Zimbabwe there is almost no other kind. A lot of insane statistics ended up in the piece, but even more ended up on the cutting room floor. Here are some of them:

  • In 2003, Zimbabwe was out of foreign reserves to import paper and ink to print more money, and had to switch to ‘bearer checks’, thin pieces of paper in increasingly outlandish denominations. Banks limited withdrawals, and anti-riot police had to be dispatched to prevent bank run.
  • Fleeing the cratering economy, Zimbabweans almost singlehandedly raised retail sales in South Africa by 10 percent between 2006 and 2007. Emigrants in South Africa paid bus drivers 20 percent commission  to take envelopes of cash, sacks of groceries, back home.
  • In 2007 a government order required shops to reduce the prices on basic goods by 50 percent. Instead of stabilizing the economy, it simply reversed the direction of the arbitrage. People bought milk in Mutare for 33,000 Zimbabwe dollars, drove it across the border to Mozambique and sold it for the equivalent of 350,000 Zimbabwe dollars.
  • All this time, the government maintained an ‘official’ exchange rate that was orders of magnitude lower than the black market rate. If you wanted to do anything legally—import goods, change money at the banks—you had to use the government rates. ‘I know a guy who worked at a luxury car dealership,’ my friend Colin told me. ‘These generals would come in and say “I’ll buy this car” and he would have to give it to them for the official exchange rate. He was selling cars for $8, $9.’
  • Between 2006 and 2009, the government slashed 25  zeroes off the currency. I ask Zimbabweans the prices they last remember at the supermarket and they tell me that a loaf of bread was 22 billion dollars. Which doesn’t actually matter, because you had to be connected to secure one anyway.
  • Bank teller wages rose with inflation, and they were partly paid in fuel coupons.  They could also ‘burn money’—buy US dollars at the official exchange rate, then sell them at the black market rates. Bank employees were flying to Dubai, buying electronics and coming back to Zimbabwe to sell them on.
  • These days, Zimbabwean banks are the opposite of too big to fail, they’re too small to succeed. As of January 2013, the entire banking sector held just $3.8 billion  in assets, more than half of which were short-term deposits. While the banks are lending out more than they used to, the loans are riskier, since no one has quite figured out how to run a business profitably here. In March 2010, 2 percent of bank loans didn’t get paid back. By December 2012, it was 14 percent .
  •  A 2013 survey of 150 store owners in a suburb of Harare found that 47 percent of them were using their own savings to raise capital and 13 percent were using their relatives and friends. Only 3 percent were using the banking system.
  • What Zimbabwe has gone through in the last 14 years is maybe the greatest loss of productive capacity and personal wealth in modern history. Per capita GDP fell from $644 in 1990 to $376 in 2011. South Africa’s GDP was 17 times larger than Zimbabwe’s in 1996. It was 58 times larger in 2012.
  • Almost 70 percent of Zimbabwe’s government budget goes to government salaries alone.
  • In 2009 Zimbabwe still had the highest 15-24-year-old literacy rates in Africa, but the aftershocks of the crisis are set to drag that down. As of 2012, only 67 percent of kids finished school, and only 50 percent made it from primary to secondary school.
  • The Zimbabwe stock exchange fell 20 percent after Mugabe’s victory was announced , and some estimates say $800 million in investment has left the country since then.

If you want to get a more full view of what Zimbabwe went through during hyperinflation and the challenges it faces now, here’s some publications that give a fuller picture than I was able to, written by people who know more about economics, about Zimbabwe, than me.

  • Here’s the Consultancy Africa Intelligence report, written by Tapiwa Mhute, who I spoke to a few times, on the causes and consequences of Zimbabwe’s dollarization.
  • Here’s a terrific overview of the path to hyperinflation written, rather randomly, by a graduate student in Japan.
  • Here’s a pretty devastating World Bank report on the problems with Zimbabwe’s infrastructure.
  • Here’s the report on remittance strategies by families in one neighborhood in Harare.
  • Here’s an anthology of articles about the hyperinflation. ‘Negotiating the Zimbabwe–Mozambique Border’ is a complete fucking stunner
  • The debate about what ‘really’ saved the Zimbabwean economy is ongoing and, like everything else in Zimbabwe, is totally politicised. Here’s an overview of some of the arguments.
  • Here’s an African Development Bank report from 2009, telling Zimbabwe how to fix the crisis. Most of it’s boring technocratic stuff but, like most of these reports, the ‘context’ section gives a great overview of the challenges.
  • Here’s the same sort of thing from the IMF and from the World Bank four years later, in 2013. They’re basically giving the same overview I am, only with less Grindr.
  • Here’s a Cato Institute (I know, I know) report from 2013: Why Is One of the World’s Least-Free Economies Growing So Fast?
  • Here’s Tapiwa Chagonda’s fascinating survey of bank tellers and teachers during hyperinflation.
  • Here’s Beyond the Enclave, Godfrey Kanyenze’s searing account of the political factors behind hyperinflation and dollarization.
  • And here’s Vince Musewe’s angry, moving columns for The Zimbabwean, giving a more up to date picture of the conditions in Zimbabwe

I mostly worked on the piece in August and September, and I’m sure more reports and statistics have come out since then, so apologies if anything in the story is outdated.

I’m not a journalist, I’m a human rights guy. One thing I’ve realized over the last 18 months, as I’ve spent more and more of my weekday mornings and Sunday nights working on these little longforms, is how dependent journalists are on the generosity and patience of their sources. For this story, I basically cold-called a dozen or so Zimbabwean economists, told them I didn’t know anything about their country or their field and asked if they could, slowly and monosyllabically, walk me through everything they knew.

Amazingly, all of them obliged, and they were super patient with all of my follow ups and hang-on-explain-that-agains. Colin and Lovemore took a risk telling a foreigner about their economic tribulations the last five years, and trusted that I would represent them honestly and wouldn’t publish any details that identified them. Everyone I interviewed, I have nothing to offer them for their time and their trust except my sincere gratitude—and my crushing anxiety that I may have misunderstood or misrepresented them.

I don’t know if I’ll ever be good at this whole journalism thing, or feel like I have the right to be doing it. I tried really hard to fact-check this story, to avoid giving the impression that my experience was definitive. I arrived in Zimbabwe as an outsider, a tourist. No matter how many people I met, no matter how many reports I read or statistics I double-checked, I departed as one. There is a lot of complicated information out there about Zimbabwe, a lot of conflicting narratives. Mine is just one of them.

6 Comments

Filed under Essays, Journalism, Personal, Serious, Work

Zimbabwe: Where US Dollars Go To Die

 

IMG_1867

I am not curious or intelligent enough to know why this is the case, but the dollar bills in Zimbabwe are fucking filthy.

IMG_1873

The official currency here is the US dollar, the Zimbabwe dollar doesn’t even exist anymore. The stores don’t carry change, they just round up to the next dollar with lollipops, chocolate bars or mobile phone credit.

IMG_1870

Some of the bills you get are barely readable, and they all have that leathery, grandpa texture of something that’s been wrinkled and stroked a thousand times too many. I went to the cash machine yesterday and got a wad of twenties that ran the whole filthiness rainbow.

IMG_1869

Also, there are $2 bills everywhere here. I thought those were a myth.

IMG_1868

Next time anyone talks about ‘dirty money’, this is the first thing I’m going to think of.

2 Comments

Filed under Pictures, Travel

Wall, Street: Walking in African Cities

IMG_1796

For me, ‘Sub-Saharan Africa’ used to conjure up images of thatched huts and dust roads, but in the last few years most of the time I’ve spent here has been in cities.

IMG_1797

This, for example, is Harare, Zimbabwe. From above it is basically Tulsa.

IMG_1822

Condos, fast food, bad traffic, cute cafes, fratty sports bars.

IMG_1799

See? Just a government building. Other than the dudes out front selling fish, this could be anywhere

IMG_1814

When you get to the suburbs, though, is when you’re like ‘oh huh this is a hella different country’.

IMG_1805

Everything is designed for cars, that’s nothing new, but it’s also designed for protection. All the streets look like this: Wall, street, wall. The only variety is whether they are tipped with barbed wire, electric wires or broken glass.

IMG_1187

I know we all hate on LA for being pedestrian-unfriendly, but compared to here, it’s Venice.

IMG_1816

Without a car, walking through Harare is like reading a book of blank pages.

IMG_1819

Whatever might be happening here, it’s doing so behind walls. Restaurants, hotels, nightclubs, apartment buildings, as boring as they look looking in, it’s no better looking out.

IMG_1832

I never thought of window shopping and personal safety as mutually exclusive, but here, it’s one or the other.

2 Comments

Filed under Pictures, Travel

So far Zimbabwean billboards

IMG_1793

are even better than Zambian ones

Comments Off on So far Zimbabwean billboards

Filed under Pictures, Travel