Showing posts with label Economics. Show all posts
Showing posts with label Economics. Show all posts

Friday, September 27, 2013

Tito Mojito and the Wealth of Nations

I had the opportunity to do some bar work this week for a little under the table cash. We had 150 people in the bar for a Bacardi promotional night (something I never would have expected in Zimbabwe, to be honest). Of course, alcohol promotions mean free booze. Three people making free cocktails for 150, well, that just spells chaos.

Luckily, we had Tito Mojito on our side.

Tito is a young, black Zimbabwean, soft-spoken, baby-faced and gentle. I thought he would get eaten alive by the crowd. Instead, he held his own and rocked the house.

Tito works two jobs. By day, he’s a shop assistant. At night, he’s working bar. He does this nearly every day of the week. Some nights are easier than others, but the nature of the Zimbabwean bar is that you don’t go home until everyone else has gone home. The clubs don’t ring a bell. They pubs don’t call time. You’re there until you’re finished, or until everyone else is.

It means you have no real idea when you’ll drag yourself through the door and into bed. This one took us from four in the afternoon, when we arrived at a bar literally still under construction, until about one in the morning.

I think I’m officially getting too old for this.

Tito handled it like a pro. He had to. We had four cocktails on offer, but far and away the most popular was the mojito. I have no idea why. Any time there’s a mojito on offer, it’s instantly one of the most popular, even if it’s badly made. Considering we ran out of sugar towards the end of the night, these could’ve been better. I guess by eleven in the evening, you’re no longer there for the taste.

Tito’s a mojito specialist. The woman running the show, Di, has known it from the first gig she ever did with him. I suspect that’s why she put the drinks on the menu. Since I hate making mojitos, I delegated all of mine to Tito. He delegated me everything else. At times, he’d have ten to fifteen drinks in front of him, running an assembly line just feeding drinks to thirsty customers. Watching a trained bartender do that is a bit magic, a bit skill, and always mystifying.

We wrapped up shop around midnight, and as Tito and I sat and shared a drink, we spoke a little about his life. He told me about the two jobs and then, with a sigh said, “I have to be up in three hours.”

What shop is open at 3 am? You have inventory or something?


“No, I’m studying to be a certified accountant. The state exam is coming up, so I have to wake up early and study for it.”

I was floored. Here was a man who worked two jobs, who took public transport every day, as he couldn’t afford a car, and in his spare time, he studied for a better life.

It’s something not uncommon in Zimbabwe, which for years led the continent with the best education system in Africa. Take a stroll through the University of Zimbabwe in the northern suburbs of Harare, and you’ll find students sprawled out on the grass in study groups or packed into the library like stony-faced owls. It surprised me to see a campus that, with the exception of the dusty paths and the jacaranda trees, could easily have been cut from an American cloth.

The combination of a well-educated populace with few jobs means that the competition in this country is cutthroat. I met migrant farmers in South Africa with university educations from Zimbabwe. The tiny country, only 12 million people, has probably lost more university graduates to emigration and brain drain than many African nations ever had.

We tend to equate poverty with ignorance when we think about Africa. Some who’ve traveled the length and breadth of the continent deride Africans, specifically African men, as lazy or worse (looking at you Paul Theroux). Neoliberal development scholars decry Africans’ lack of entrepreneurialism.

Ha-Joon Chang, an old-school Keynesian scholar at Cambridge, argues the opposite: that Africans and others in poor countries are degrees more entrepreneurial and industrial than the average Western citizen. What they suffer from, is an underdevelopment of the institutions and capital that accelerate productivity.

One of the places I think they’ve got us beat, however, is transport. Walk around any African city and you’ll become used to the sight of the beaten-up, broken down public commuter buses weaving in and out of traffic at speeds considered only nominally sane. Wealthier locals will warn you against them, complaining that they’re unsafe, that the kombis speed through the streets, that they’re the most likely to have accidents.

None of that is demonstrably false (though I would like to see some stats on automobile accidents involving public commuters in Africa). What I might argue, however, is that that when you add up all the miles driven on an average day, factor in streets where no one uses a crosswalk, where traffic lights are a suggestion at best, and where your paycheck is determined by the number of passengers you can keep in the car, and I bet the kombi drivers come out on top.

Unfortunately, driving ability is about the only way the kombi drivers come out on top. If you take a walk around Mbare township, one of the poorest neighborhoods in the capital Harare, you’ll quickly notice one name above all others: “Boss K.” It’s stuck on about 80% of the kombis in the township along with the name of the vehicle. I asked Oscar, my guide, about it.

“Ya, he owns all the kombis, it seems like. I think he must have fifty now. He puts his name on all of them and then comes up with some name to keep track of them all.” The scheme is this. Boss K rents out his cars to his various drivers. They pay him $100 a day. At the end of the night, they have to bring the car back to the depot, hand over their money. Whatever’s leftover, after gas and any repairs is theirs to keep.

Considering that a kombi holds 18 people at any one time, each of whom pay fifty cents to get across town, I can’t imagine it can be very much (though again, an economic study would be fascinating). A driver will take a route out and back from, say, Copacabana to Chisipiti. When they return to the rank, they have to line up and wait their turn to go again. “Usually about an hour,” one driver told me. You’d have to make at least five trips just to pay off that day’s loan.

I don’t know if there’s much more to say on these subjects at the moment, though they have been meandering through my head this week. Just remember that the next time you read African travel literature that complains of the “death trap” public commuters or the lazy men idling in the shade (again, looking at you Paul Theorux). Appearances can be deceiving, and there are always reasons for individual behavior.

Whether it’s a good reason is another story. For some, like the kombi drivers, they’re in a race against time. Another run could be the difference between being in debt to a dangerous man and putting food on the table for a hungry family. For others, even two jobs aren’t enough. They, like Tito, may work all day, work all night, and study into the wee hours of the morning. In a country like Zim, you do what you have to do.


Sometimes, that’s all you can do.

Saturday, August 3, 2013

Make the Money, Change the Game

In my last post, I compared Bulawayo, Zimbabwe to Monrovia, Liberia in that they are both cities that have suffered terribly from mismanagement and negle3ct in the last several decades, such that a visit to either feels like one has walked into a stage piece from 1978. Neither city has experienced much new construction in the last thirty years, and this is evident in everything from cracked pavement to broken streetlights, from faded paint to rusted steel.

However, there is another way in which Zimbabwe and Liberia compare, and this one is far more disconcerting for the average traveler - the use of the United States dollar as the main unit of domestic exchange.

If you've traveled often through any region of the world, you're probably used to operating a kind of internal forex everywhere you go. You may go to the ATM or use traveler's checks (do people still use traveler's checks? I honestly have no idea), but the end result is a proliferation of colorful new bank notes in various denominations, a plethora of new coins in different shapes and sizes, and a clean slate of personal knowledge on what costs how much where.

In West Africa, I had to remember that a dollar was equivalent to roughly 500 cfa, but that in Ghana, a dollar was roughly the same as one cedi. Okay, one hurdle jumped, but then there were the new prices and the old prices, a result of a World Bank sponsored revaluation exercise. A banana might cost 500 cedi, but that was the old price, before they cut off three zeros, so really that banana costs fifty cents. In Sierra Leone, that banana probably costs the same, only now it's 5000 Leones. If you're primarily traveling to Francophone West Africa, you'll be relatively fortunate that the cfa covers seven countries, but if you plan to leave any of the former French colonies, you'll still need to get used to the Ghanaian cedi, the Liberian dollar, the Leonean leone, and the Guinean franc, which is the same as the West African franc but with an extra zero for good measure.

To add to the mental gymnastics, one is constantly reminded that the West African monetary union drastically devalued the franc in the early 1990s, and yet the language of commerce just took it in stride and never bothered to readjust. Thus, a 1000 cfa note is often called 200, a fifty cent piece is known as a ten, and remembering the conversions and the vocabulary while negotiating over a pack of oranges can quickly become a frustrating but occasionally hilarious cultural exchange.

It's a bit easier in Southern Africa. The South African rand has fallen to 10ZAR : 1USD. Lesotho's Maloti is tied to the rand. In Botswana, the pula is doing a bit better at 8BWP : 1USD, and in Zimbabwe, wel...

Zimbabwe, like Liberia, uses the US dollar in most day-to-day transactions. This makes sense for Liberia: the country was established as a new colony for freed American slaves in 1822 and gained its independence twenty-five years later. Its political end economic systems have always been linked to those of the United States. It has its own currency, the Liberian dollar, which is pegged to the US dollar at 75 LRD : 1 USD. The two are easily interchangeable, and, owing to their historic ties, the use of the US dollar doesn't seem strange at all.

Zimbabwe, on the other hand, uses a hodgepodge of US dollar, South African rand, and even Botswanan pula. Zimbabwe has no currency of its own, at least not lately.

Some who follow African politics may remember Zimbabwe's catastrophic inflation of the last decade. This wasn't the result of the global economic crisis, or of US/EU sanctions as some here claim, but neither of those helped matters much as inflation peaked at 231,000,000% in 2008. Zimbabwe's massive hyperinflation is the second worst in the history of the world. Daily inflation peaked at 98%, meaning that prices doubled every 24.7 hours. Prices soared. If one had to buy diesel for a car or generator, it was best to buy in the morning, prices could increase many times over by afternoon.

The crisis wiped out pensions, cleared bank accounts, and reduced the country to a barter system. One lodge owner told me that he allowed a friend of his to pay for his accommodation in cans of paint. In an attempt to control prices, the state ordered police into stores and businesses, froze prices for certain goods, and commanded shop owners to roll back prices to a previous date, effectively forcing business owners to halve their prices. The same lodge owner told me he kept multiple sets of accounts to appease the authorities while keeping his business running.

Maybe you've seen the Zimbabwean dollars from that time period. In 2009, Improbable Science awarded Gilbert Gono, the head of Zimbabwe's Reserve Bank, with the IG Nobel in Mathematics. The prize is given for dubious accomplishments that make you laugh, then think. Gono won for "giving people a simple, everyday way to cope with a wide range of numbers - from very small to very big - by having his bank print bank notes with denominations ranging from one cent ($.01) to one hundred trillion dollars ($100,000,000,000,000.00). It's a feat that won't easily be matched for many years to come (or until Zimbabwe reintroduces the Zim dollar).

These dollars float around now as collectables, but if you look closely, you'll realize that they aren't collected for their design elements. With inflation rampaging out of control, these notes are often simply plain paper printed with a few numbers (many of them zeros) and a slapdash etching of a lake or a bird. At the nadir of economic collapse, the bank didn't even bother to print bills on both sides, and why would you? They were literally worth less than the paper on which they were printed.

For years, the black market in Zimbabwe used foreign currency and maintained its own floating exchange rate. Of course it was illegal, and the state railed against it while many of its highest placed officials profited from the economic chaos, using their influence to game the fixed rate versus that of the black market. Ultimately, however, hyperinflation forced the government to ditch the Zimbabwean dollar and welcome the US dollar as the new basis for the economy.

This leads to some pretty interesting exchanges in shops and on street corners.

"Two dollars, please."

Alright, here's a fiver.

"Oh, ah...do you have two dollars?"

Nope, only this and a twenty.

"Okayyy...I just need to find change. What coins do you have?"

Not enough, I have eight rand, five pula, and fifty thebe (about $1.45). 

"That's fine. It's better to have change anyway. Thank you!"

This may seem like an odd interaction, but it's happened to me several times now. To make matters worse, many ATMs only spit out $100 bills. The first time I used one, it gave me five options: 100, 200, 400, 500, 1000. I thought to myself, "They can't surely mean..." They did. Your only options with many ATMs are clean, crisp, $100 bills.

It's then necessary to spend about two hours wandering around looking for change. The banks don't want to give their limited smaller bills away. Neither does Western Union. Street vendors just laugh when you ask if they can break a bill, and the various shops around town just send you down the street in a never-ending game of cat and mouse. 

If you ever can find some change, you're presented with a series of bills in a degree of usability that decreases with the denomination: crisp $100 bills, slightly ruffled fifties, still usable twenties, grimey tens, and fivers that are worn, dirty, and tattered.

And dollar bills? Well, alright, have you ever been to a smoker's house, and I mean a smoker who's smoked for the better part of six decades, not a stressed out master's student who is, at this point, surviving solely on coffee and cigarettes. I mean someone like, say, your great aunt. Okay, so you know how your great aunt has that couch that's been around for years and is probably stuffed with asbestos? It has to be stuffed with asbestos. There's literally no other way to explain the multitude of cigarette burns that have yet to burn the house down. Okay, so you're a kid, and your and has this couch, and it's dirty. Besides getting a contact buzz from the nicotine embedded in the fabric of the thing, it's never been cleaned, and your great aunt's seven cats have shed and yakked and and loved and lived and probably died all over this couch for fourteen years, each. And your great aunt has sat with her TV dinners and cigarettes watching Jeopardy since whatshisname hosted, that guy before Trebek. Merv Griffith. Ya, and you're a kid, and you're bored, and you're digging your hand in the cushions of the couch because you don't understand germ theory nor do you care about personal hygiene (a quality that some of us maintain long into adulthood). And there, between the metal frame of the pull-out bed that your cousin Gary had to sleep on for three years after his wife left him, is a snag of paper. And you pull, and squirm, and you finally manage to reclaim a dollar bill that was long ago lost to humanity. The thing is more brown than gree, it's been folded and handled so much that it feels like silk, and it smells like a sewer, but you don't care because that thing can buy you a coke and a candy bar (this is back in the day we're talking about after all). So you go out to the nearest gas station, and you hand that thing over to the wheezing, diabetic old woman watching the pumps like a hawk, like a sleepy, obese, rheumatoid hawk, and you walk out with a Dr. Pepper and a bag of Skittles to irritate the shit out of your parents with a sugar-induced game of hey, hey, hey, hey...hey, hey...pay attention to me, PAY ATTENTION TO ME.

You know what I'm talking about, right?

These are the only dollar bills that have ever made it to Zimbabwe.

It's not like the country has a direct line of credit to the US mint. These things get passed around and recirculated ad nauseum. New money must come into the system eventually, probably through traveling diplomats, businessmen, and criminals (sometimes all three embodied in the same individual). It is, after all, relatively easy to transport bills internationally. The same cannot be said of coins. Anything below a dollar is paid for in rand and pula from neighboring South Africa and Botswana. 

They've set the exchange rate at 10 rand to the dollar, so it makes the math relatively easy, but there's little to prepare you for paying for a drink and getting your change in three different currencies.
I've even seen quite a few $2 bills here. Most Americans, I'm sure, aren't even aware that they still produce $2 bills. I have a few left over from when I was a kid, but using them in daily transactions is about as common as using the Sacajawea dollar coin. Can you even name who's on the $2 bill. 

It's ahh...shit. It's Fillmore isn't it? Millard Fillmore?
It's Jefferson, bitches.

There's been some talk of reintroducing the Zimbabwean dollar, but after a senior politician (read: Mugabe) floated the idea at a recent political rally, the panic on the stock market forced the party come back and table it as a "long-term strategy." 

So grab all the trillion dollar notes that you can. One day they may be worth something. For now though, you're probably better off drawing up your own money with a pack of crayons and some scrap paper. The resulting disaster may be valued by at least one person, which is more than can be said for the Zimbabwean dollar.