R50 for poverty-stricken Zim pensioners
Zimbabweans who lost their pensions and life savings when the Zimbabwean dollar crashed will each receive about R50 in compensation from the bankrupt state.
The central bank says it will “demonetise” the defunct Zimbabwe dollar by June 30.
“This will bring finality to this long-outstanding government obligation to the banking public,” central bank governor John Mangudya said on Wednesday.
“The reality of the economy is that all the fundamentals or indicators are too weak to even contemplate the return of the local currency,” said Mangudya.
Untold numbers of Zimbabweans lost their life savings and pension funds when hyper-inflation destroyed the value of the Zimbabwe dollar.
The central bank at that stage was run by Gideon Gono, who spent a fortune of Zimbabwe’s scarce foreign currency by allowing different rates of exchange.
The man-in-the-street would pay a trillion Zimbabwe dollars for one US dollar by the middle of 2008, but those he favoured, particularly politicians, were known to source foreign currency from the central bank at much more favourable rates. Some made their fortunes that way, according to several former currency changers.
Gono also spent scarce foreign currency on imported agricultural equipment handed out virtually free to many top Zanu-PF farmers.
When supermarkets were empty in 2007, Gono allowed Grace Mugabe US$1 million to import commercial vehicles from South Africa.
Old Mutual, Zimbabwe’s main insurance company, wrote off thousands of its members’ life savings during the final stages of hyperinflation. Many whose pensions were wiped out and who received a pittance from Old Mutual remain outraged.
“People who had prepared for their old age were unjustly treated,” said economist John Robertson.
Strangely, Zanu-PF has recreated some of the facts of the hyperinflationary period and claims there was some undefined Western plot that undermined the economy which began falling apart from 1997 when President Robert Mugabe made large unbudgeted payments to war veterans and took Zimbabwe into war in the Democratic Republic of Congo.
The economy worsened when tobacco sales dived after land invasions began in 2000.
Zimbabweans abandoned their currency in mid-2008 when they stopped fearing arrest for being found in possession of foreign currency and used it in selected shops which, in turn, imported food.
Later that year, the government authorised citizens to own and trade in foreign currency and the inclusive government adopted various currencies when it came to power in 2009.
Gono then abandoned printing tons of worthless Zimbabwe notes, and schools and hospitals were closed as staff could not be paid.
During the hyperinflationary period, Gono also withdrew foreign currency earnings from private and corporate bank accounts to fund his state activities. That money has still not been paid back. Parliament is now considering whether the taxpayer should pay off that debt.
Without its own currency, Zimbabwe had no small change beyond lollipops or credit notes for the past decade.
Then the central bank imported what it calls bond coins, which are now operating as change in the retail sector, although many people are still suspicious about them.