Zimbabwe’s Hyperinflation Crisis: Exploring the Economic Situation in African Countries
Zimbabwe’s hyperinflation: a look at African countries economic situation Economics starts with a house of three people who will do a small financial breakdown of how they are going to pay school fees for their three kids, the rates, and what they are going to eat.
The moment they fail to provide for the basic needs of their family, then the guardians or parents have dismally failed their role dismally. A look at the case of Zimbabwe as of today shows that the rate at which inflation is dropping is alarming.
As of today, inflation might be over 300% compared to the dollar. The local currency for the country, which is the bond note, has been failing to sustain the market.
Zimbabwe’s Hyperinflation Crisis: Exploring the Economic Situation in African Countries
Inflation means more bills are printed, but these bills have weak purchase power. In the case of Zimbabwe, a paper bag filled with bond notes might not be enough to buy a loaf of bread. The black market has been one of the major causes of this inflation situation.
A larger number of workers, including civil servants, have been getting their salaries in Rtgs dollars. Going to the bank to withdraw that money has also been a challenge, so they then resort to the black market to get a stabler currency, which is the US dollar.
This black market is the one that then inflates the local currency. The ratio might be one to one in the morning, but by the end of the day, it could have reached one to twenty. Apparently, they earn a living by selling money.
Obviously, politics can also be blamed for this loss of market value because African countries have been known for misusing government funds, stealing, and even corruption. No wonder these inflation rates usually rise drastically during times of elections.
The highest denomination of the local bond note cannot even buy candy. We are on the road to the Great Depression in Germany, where someone needed a wheel barrow to go and buy a box of matches. Even the salaries cannot sustain the workers; one needs another job or a side hustle to manage and provide for their family.
This is disgraceful considering that the country was once considered the bread basket of Africa, but now the basket is empty, left with nothing but crumbs.
According to Trading Economics, Zimbabwe is top-ranked when it comes to inflation and interest rates, followed by other African countries like Sudan, Ghana, Sierra Leone, and Ethopia. Inflation comes with an increase in the prices of commodities, which then hardens the lives of the citizens.
One solution to inflation is that the government can reduce the number of bills circulating in the country. Printing more money is one of the reasons that causes inflation. Now, if there is less money circulating, there is nothing to inflate. Also, controlling the black market, or “money changers, as they are called, is very significant in fighting inflation; otherwise, the economy will crumble, leaving everyone else in poverty.
