Harare, Zimbabwe
Sam Nujoma Street is a main artery that feeds downtown Harare with traffic from the suburbs. Known as “Bank Street,” the busy four-lane road is lined with financial institutions.

At the top of Bank Street, the red-brick façade of the Reserve Bank of Zimbabwe gently curves while its gleaming, green-gray modernist extension looms from behind. There are international banks like Stanbic and Standard Chartered housed in angular, brutalist structures, and sparkling domestic banks like CBZ and The National Building Society. Colorful billboards invite Zimbabweans to step inside and sign up for financial products. The street is a parade of modern architecture and advertising from the last 40 years—a testimony to Zimbabwe’s robust economic past.

But there is one thing missing from Bank Street: money.

Zimbabwe’s empty vaults hold a fundamental lesson: In order for money to work, people have to trust in it. And the Zimbabwean government has repeatedly betrayed the people’s confidence through gross financial mismanagement. This has led to severe shortages of manufactured goods and core commodities. Supermarket shelves are empty; medicines and pharmaceuticals, most of which are imported, are in short supply and only at exorbitant prices.

For outsiders, the most striking manifestation is the petrol queues: Lines of cars snake around city blocks as drivers wait for shipments of gasoline. In Harare, wherever there is a hint of supply, a queue emerges, drawing people away from work for a few precious gallons. There’s even an app that tells people which gas stations are likely to get a delivery that day. Of course, this only slows down the already staggering economy as salaried employees waste work hours simply sitting in their cars. In Zimbabwe, my cab drivers told me they regularly get home at 1 AM after joining gasoline queues at 7 PM, knowing that the alternative would be no work on the following day.

A shortage of trust means a shortage of money, and a shortage of money means a shortage of everything else.

How we got here

Since 2008, Zimbabwe has been mired in a financial crisis that has persisted even after the end of Robert Mugabe’s 37-year regime in 2017. The origins of the crisis lie in the country’s colonial history and a 1980 promise from the UK to help purchase the estimated 80 percent of agricultural land that was held by colonizing white farmers who made up around 10 percent of the national population. Mugabe was then supposed to equitably distribute that land to the more than 90 percent of the country that’s black.

By 2000, when British funds to pay for the white farmland had dried up, Mugabe encouraged military veterans to take those farms by force. Agricultural productivity—the country’s main economic activity—plummeted. Even before that, the buyback process was riddled with cronyism and corruption, stalling the economy as the people rewarded through the process had no idea what to do with their newly acquired property. Hyperinflation, triggered by the economic uncertainty, was compounded by Mugabe’s refusal to resign and his escalating authoritarianism. In 2008, Zimbabwe suffered a staggering inflation rate of 80,000,000,000 percent (yes, 10 zeroes).

Between 2008 and 2017, an increasingly frail Mugabe seemed determined to remain in power in Zimbabwe at all costs, resorting to increasingly desperate measures to manage the spiraling financial crisis. In 2006, the country redenominated the official currency—the Zimbabwean dollar—and started printing notes up to 100 trillion. In July 2008, a Zimbabwe dollar was introduced by dividing the value of the old Zim dollar by 10 billion. In February 2009, the Zim dollar was decimalized again by dividing by one trillion dollars. But the inflation kept coming, and so later that year the Central Bank began to allow Zimbabweans to transact domestically in foreign currencies like the US dollar, Chinese renminbi, and the South African rand.

Despite his appalling record, when Mugabe called for an election in 2017, he seemed confident that he would win. The event that stopped his reign was not a public revolt, but the private crisis of his former deputy, army general, and current president Emmerson Mnangagwa. Forced into exile after Mugabe accused him of plotting against the government, Mnangagwa soon returned with the backing of the military and coerced Mugabe into resignation. Mnangagwa won a questionable election in July 2018.

Currency proliferation

“Zimbabwe is open for business” has been the Mnangagwa administration’s battle cry, but the compounding political and electoral crises mean that the public is unwilling to trust a “new dispensation” that is so closely intertwined with the old. No one thought rebuilding the country’s economy would be easy, but policy makers seem confounded. Every time a finance minister appears in public to explain the situation and offer a solution, things get worse. Mthuli Ncube, who was only appointed finance minister in September, is already on the chopping block. During a recent radio interview, he sounded frustrated and short-tempered. “Those are not the issues, and I don’t want to get stuck on those issues,” he snapped at presenter Linda Muriro, refusing to answer her sharp questions about taxation and inflation.

Ncube’s dismissiveness echoes the general state of denial in Zimbabwe’s government. After years of government tinkering with the money supply, people no longer trust in the local currencies.

Following the rapid depreciation of the Zimbabwe dollar in 2008, the government permitted trade in US dollars, making Zimbabwe a dual-currency economy. But dollars are scarce in a country that imports more than it exports, so to make things easier for ordinary people, the Zimbabwe bond note was introduced in 2014. The official exchange rate between the bond note and the dollar is one to one. But largely because of the inability to trade bond notes overseas, the notes quickly suffered arbitrage—a difference between the official and unofficial exchange rates that resulted in an effective rate of 1:3 against the dollar.

More importantly Zimbabweans do not want to use the bond notes. When the Zim dollar tanked, life savings vanished. Many people are afraid that could happen again and so use their bond notes to buy US dollars, further increasing the demand for dollars and the price differential between the official and the actual value of the bond notes. This uncertainty also increases the cash shortage in the economy because people prefer hoarding money to using it. At one point, to shore up the national budget, the government asked Zimbabweans to deposit dollars into bank accounts, and then promptly prohibited them from withdrawing it, rendering their dollar bank accounts useless.

Enter RTGS. The acronym stands for Real Time Gross Settlement and is a system through which financial institutions are able to settle transactions electronically. RTGS is supposed to be an interbank system, but since October even ordinary Zimbabweans know what it is, because the government separated US dollar accounts and RTGS accounts to allow people to use their RTGS accounts to pay for things. Essentially, it made local bank transfers a form of currency. People are able to use specially issued debit cards to pay for transactions at a rate of 1:1 with the Zimbabwe bond note.

To further increase access, people are now able to use RTGS through mobile money known as EcoCash. Mobile money has been popular in Zimbabwe since it was introduced in 2011, and this new system means that they don’t have to deposit cash into their mobile money accounts. Trust in EcoCash remains strong, even though in July the whole system was down for two days owing to “system failures,” leaving many Zimbabweans temporarily bankrupt.

RTGS is supposed to increase confidence in the banking sector, because mobile payments were well established and the government promised that deposits in the system would be protected. A special RTGS debit card means that people don’t need physical money to pay for goods. But the RTGS system seems to be having the opposite effect. Some of the people I spoke to maintained suspicions that the government was arbitrarily manipulating the value of currency in RTGS accounts even though there is no independent evidence of this. But when it comes to a banking crisis, the key thing isn’t what the government is doing; it’s what people think the government is doing.

Zimbabwe has officially been a multicurrency economy since 2008, but there are now effectively five domestic currencies—not to mention the unofficial exchanges for currencies like the Chinese renminbi or the South African rand. Given the taxes and levies on electronic transactions, both RTGS and EcoCash have different values at the tills, meaning each of the five currencies has disparate value. This uncertainty is only sucking more money out of the system as people try and stockpile physical money, particularly US dollars, to shore up their defenses as the crisis deepens.

A cashless future?

Increasingly countries around the world are inching toward a cashless economy. Sweden has moved to state-operated debit cards and experts expect it to be a cashless society by 2023; Kenya leads the world in mobile money; and in China, paying via WeChat or AliPay is ubiquitous. But I can tell you after being in Zimbabwe that cashlessness can be a difficult thing to process. It requires an extraordinary degree of trust in the systems managing the electronic accounts. It also requires tremendous reliability. On December 10, the major mobile money platform in Kenya went down leaving thousands stranded in stores all around the country—and only about 55 percent of Kenyans rely on mobile money for their payments. Cash doesn’t suffer such risks of instant, centralized failure.

Ordinary people who don’t have access to banking or mobile money struggle in a world with no cash or where the value of their cash can be wiped clean at a moment’s notice. The inequality is stark. In Zimbabwe, people who have access to US dollars are simply getting more for their money than those who don’t. Where are people who have no access to relatives or trading partners abroad, or to US-dollar-denominated accounts supposed to find them? How can they keep up?

Money in Zimbabwe is barely performing the core functions of money. In a perverse way, it is a reminder that money is just an idea while people are real. Zimbabwe’s five currencies are oscillating wildly, but Zimbabweans are still eking out an existence despite the hardship; dealing with each other on the basis of barter and other systems that pare down trust to its fundamentals—I see you, I know you, I trust you.

Perversely, this crisis may accelerate Zimbabwe’s economic shift from an agrarian, settler colony to an inclusive, more complex one. But so much of the suffering currently inflicted on ordinary Zimbabweans right now is unnecessary—a symptom of a state that has taken the loyalty and trust of its citizens for granted. Rebuilding public trust won’t come from ever-more complex financial policies or outright denials by members of government. It will start with something as simple as the government finally telling the truth.