Walk into Pedzai Nyika’s furniture factory in Zimbabwe’s capital and he’ll offer a 20 percent discount straight away — provided you pay in cash.
He’s not alone. A shortage of banknotes gripping the southern African nation has become so dire that business are offering huge discounts to cash-paying customers and limiting the amounts they can charge on credit cards or refusing to accept them altogether.
“I am desperate. Business is very slow, so really I need to do anything I can to retain cash flow,” Nyika, 46, said by phone from his office in Harare. Most fabric suppliers “only accept dollar notes, nothing else and certainly not cards.”
Rising Unrest
The crisis has fueled opposition to President Robert Mugabe, who’s been in power since independence from the U.K. in 1980 and overseen an economic decline that’s given rise to food shortages, an unemployment rate of more than 90 percent and the collapse of basic services.
Even as 92-year-old Mugabe’s health falters, the ruling Zimbabwe African National Union-Patriotic Front, or Zanu-PF, has nominated him as its presidential candidate in the next elections in 2018.
In a bid to address the banknote shortage, the government began distributing so-called bond notes in November, with about $73 million of the dollar-linked securities issued to date.
While the introduction of the notes was met with protests, initial predictions that they would be universally rejected haven’t materialized with banks and most large retailers recognizing them as legal tender.
Many small stores, informal traders and taxi drivers won’t accept them, however, or price them at as little as 70 percent of their dollar face value.
“The dollar is real money. Dollars work everywhere,” said Mike Mawere, 54, who sells tools and building supplies from a stall in Harare. The bond notes “are paper, so I suppose they’re worth what the paper and ink are worth, but no more.”
Bloomberg