In Robert Mugabe’s Harare, the streets are not paved with gold – they are paved with discarded Zimbabwean dollar bills. And nobody is bothering to pick them up.

With the highest inflation rates in the world and financial chaos at both government and street level, local currency has become a conundrum, even a joke, to many Zimbabweans. Eighty per cent are unemployed and living below the poverty line, according to figures from the Zimbabwe Congress of Trade Unions.

Blessed Mbhoko, a young professional in Harare, has resorted to cutting branches from decorative street trees to fuel a meagre breakfast fire in his kitchen for porridge. “I wake up with no idea what anything will cost. My pirate taxi driver is also in the dark. All we can agree is that my trip to work will cost more,” he said.

As the brutal government crackdown on opposition continues and widens its net, there is no indication that what Gideon Gono, the Reserve Bank Governor, has dubbed “the inflation monster” and “economic HIV” will be curbed, or that the Zimbabwean ordeal will end.

Last week Mr Gono belatedly declared that inflation had reached the 2,200 per cent mark. The declaration had been due the previous month but allegedly had been postponed to avoid embarrassment to President Mugabe as he embarked on a state visit to offer economic advice to Namibia.

The International Monetary Fund described Mr Gono’s statistics as “understated” and said that the inflation figure was closer to 3,000 per cent at the end of February. Economic analysts in Zimbabwe say that the actual rate of inflation could have reached 4,400 per cent and have revised their predicted year-end tally from 5,000 to about 7,000 per cent.

Mr Mugabe, 83, continues to swing verbal fists at the West, particularly Britain, and blames sanctions for his country’s economic and social collapse. The sanctions, imposed by Western powers after widespread malpractice in the 2002 presidential polls, specifically target Mr Mugabe and members of his inner circle and have a negligible influence on the economy, opposition groups say.

Running a business in a hyper-inflationary environment brings with it huge problems, unknown in the West for decades. Old Mutual, the Anglo-South African insurer, has had to change its local dividend payout in just six weeks from just over Z$20 a share to nearly Z$1,250 a share.

Commodity prices have soared in response to Mr Gono’s latest inflation figures.

A 10kg sack of porridge flour, a dietary staple essential to the survival of many Zimbabweans, increased from Z$6,200 to Z$62,000 overnight. The official cost of corn rose 700 per cent. Two litres of cooking oil rose from Z$55,000 to Z$75,000 and fresh milk quadrupled in price.

Yet salaries remain stagnant, with the bulk of civil servants earning Z$200,000 a month. While the ruling elite drive shiny Mercedes and BMWs, life for the ordinary Zimbabwean has become a grim daily battle to survive.

Shops and supermarkets witness scenes reminiscent of the cartoon series Wacky Races as shoppers run to grab products before hurrying staff can attach the day’s latest increased price tags. Tills, cash machines and wallets struggle to accommodate the huge number of bills now needed to purchase basic commodities.

Government response to inflation seems set to feed Mr Gono’s dragon. In a move that has been seen as a 90 per cent devaluation of the currency, a parallel exchange rate of Z$15,000 has been hastily established. It is available only to exporters and the select few.

Stubbornly pegged at an official exchange rate of $1 to Z$250 for ordinary Zimbabweans, the black market exchange market offers $1 for Z$25,000. Z$250 will buy a small boiled sweet and Z$25,000 is a quarter of what will cover a frugal breakfast excursion to a café. The government scheme is to “creatively” encourage exports by purchasing foreign currency at the special “parallel market” exchange rate of Z$15,000. Thus the bank is losing Z$14,750 for every single American dollar that it buys.

Subsidies are nothing new and neither are their disastrous consequences. For more than a year, the Grain Marketing Board bought maize at Z$52,000 a tonne, then sold it on to millers for Z$600 per tonne. “The grain company is still bleeding,” Paul Nyakazeya, a business journalist, said. “The entire economy is fraught with massive distortion. Government purchases fuel at 59 (US) cents and sells at a loss-making Z$325; it costs bakers Z$6,000 to bake bread that the government insists they sell at Z$824.” Another journalist pointed out that a plate of porridge is more expensive than a gram of gold: “This is the season of madness.”

Tutsi Malima is a Zimbabwean who fled into exile in Namibia after Mr Mugabe’s police forced him to personally demolish his home and family clothing shop during the “Drive Out The Trash” shanty town clearance campaign that left more than 500,000 people homeless. “At independence we were the bread basket of Africa. [We’ve gone] from bread basket to basket case.”

Like him, more than two million Zimbabweans have taken refuge in neighbouring African states since the takeover of white-owned farms began seven years ago, sending the economy into freefall. An exile organisation said that a further 400,000 are “waiting it out in England”.

With Mr Mugabe showing no sign of relinquishing power and southern Africa’s “quiet diplomacy” proving impotent to precipitate regime change, the wait shows every indication of being a long one.

Rising sums

$444m foreign investment in Zimbabwe in 1998

$2.5bn Zimbabwe’s foreign debt last year

$109m foreign debt in 1999

2,200% offical rate of inflation

3,000% Rate of inflation estimated by the IMF

Z$250 official exchange rate for US$1

Z$25,000 black market exchange rate

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