Why Zimbabweans keep watching their money go up in smoke

It was 10 p.m. when a frantic pounding on Modester Nyangoni’s door dragged her out of a deep sleep. 

That hot October day, she had been on her feet manning her stall at the largest market in Zimbabwe’s capital, a bustling maze of businesses selling everything from dried fish and gas stove accessories to hair extensions. 

Now, a neighbor was at her door to tell her that the market where she worked, Mbare Musika, was on fire.

By the time Ms. Nyangoni reached her stall, nothing was left. The flames had torn through everything in their path, including the cash savings many traders hid with their wares in order to keep them out of Zimbabwe’s topsy-turvy banking system.

Within hours, around $5 million in goods, cash, and property went up in smoke, according to official estimates. Nothing was insured. 

The fire’s devastation is part of a wider crisis: Most Zimbabweans live on the precipice of economic disaster. Over the past two decades, relentless financial crises have doubled the number of people here living in extreme poverty – a figure that stands today at about 40%. Three-quarters of Zimbabweans toil in the informal workforce, one of the highest rates of off-the-books work in the world. This year, the government introduced a new currency, called the Zimbabwe Gold, or ZiG, to help stabilize the economy. Instead, it has plummeted ordinary Zimbabweans into further uncertainty. 

For traders at Mbare Musika, the fire was simply the last domino to fall. 

100-billion-dollar bread

This was not the first time that many of the traders in Mbare Musika lost their savings in an instant. 

In the early 2000s, a catastrophic agricultural reform program and an expensive war in Congo left Zimbabwe’s government flat broke. To fill its coffers, it decided to simply print more money, and then more again. By mid-2008, inflation hit 231,000,000%.

Ms. Nyangoni remembers her late mother, also a trader, coming home at the end of her workday with big plastic bags full of nearly worthless cash. If they were lucky, the family might be able to exchange the money for a single loaf of bread. The price tag: nearly 100 billion Zimbabwean dollars (about $5). 

Finally, in 2009, the government stopped printing Zimbabwean dollars, and officially allowed the use of the U.S. dollar and the South African rand. But by then, most Zimbabweans had lost any savings they had. 

Meanwhile, multinationals like mining and tobacco companies fled en masse, and even many large local businesses found themselves unable to bear the financial risk of keeping their doors open. 

Many simply could not survive the uncertainty, explains Batanai Matsika, a researcher and finance professional in Harare. That, in turn, led to a “proliferation of informal players.” 

What he means is that over the next decade, the economy became, increasingly, an unregulated Wild West. People still farmed, mined, and traded – but now they did it all out of the government’s reach. Businesses went unregistered, taxes unpaid. Zimbabweans learned to keep their cash close, and bought and sold things in whatever combination of rand and U.S. dollars they happened to have on hand. By 2022, just 30% of adults in Zimbabwe were regularly using a bank account.

“We no longer trust keeping money at the banks,” explains Irene Mutanga, another trader at Mbare Musika. “We are wiser now.” 

Today, Zimbabwe has one of the world’s largest informal economies, according to the World Bank, with nearly two-thirds of its gross domestic product generated completely off the books. 

Meanwhile, on several occasions over the past decade, the Reserve Bank of Zimbabwe has tried to introduce new local currencies to stabilize the economy. But each time, Zimbabweans’ skepticism has tanked their value. 

Parallel worlds 

Like most Zimbabweans, Ms. Mutanga operates in multiple parallel financial universes every day. At her market stall, she accepts payment for baggies of dried fish in both U.S. dollars and ZiG. Like other traders, she pegs her ZiG prices to the black market exchange rate, which is about twice the official one.

She then uses her ZiG – now pegged to the official exchange rate – to pay government bills or buy groceries at big-box supermarkets. 

More than a month after the fire at Mbare Musika, Ms. Mutanga says she is still struggling to rebuild what she lost. The market has sprung up again, quite literally from the ashes. But its paved floors are gone, replaced by thick dust that turns to a muddy slurry on rainy days.

On a recent morning, she rearranged the bags of fish on her table and thought of the bill she owed for her children’s school fees – ZiG 3750, or $150. She was late. The headmaster had given her a month. 

And so she waited anxiously for her next customer. It was nearing 3 p.m., and so far today, she had sold nothing.