HARARE, Zimbabwe — Festus Nyoni picked out a few items in a supermarket in Zimbabwe’s capital, looked at the prices and knew she was in the wrong place.
She abandoned her shopping cart and headed for a nearby street jammed with traders offering bargains in US dollars. From the trunk of a car, she picked toiletries, rice and soups. For her two children, a young street vendor dodged traffic to offer her a box of candy.
“I can’t keep up with those Zim dollar prices in the supermarket — it’s insane,” Nyoni said, referring to the local currency. “For the price of one in the supermarket, I am getting two soaps in the street.”
A yearslong currency crisis that forced the 2009 adoption of the US dollar — one of the world’s most reliable assets — is changing shopper preferences in this southern African nation of 15 million. Many people are shunning brick-and-mortar stores, where prices must be charged in local currency and rise frequently.
On the street, costs are more stable because shoppers pay exclusively in US dollars.
With greenbacks scarce at banks, many people and businesses get them on the black market, making the official exchange rate — 1,000 Zimbabwe dollars to one US dollar — that retailers are required to use artificially low. It’s double that on the street, so to break even, stores are forced to make their products more expensive.
“Zimbabwe dollar inflation on the black market is on a rampage, so retailers have to constantly change their prices,” economist Prosper Chitambara said.
Other countries like Lebanon and Ecuador also have turned to using the US dollar to beat back inflation and other economic woes, with mixed success. Facing Lebanon’s worst financial crisis in modern history, many stores and restaurants there are demanding dollars.
Similarly, manufacturers and suppliers are now pushing for payment in US dollars from stores that are forced to sell the same products using the freefalling Zimbabwe dollar, said Denford Mutashu, president of the Retailers Association of Zimbabwe.
“It’s currently impossible to purchase goods in US dollars and sell in local currency and recover the money spent,” said Mutashu, adding that manufacturers are increasingly preferring informal traders over formal retailers to avoid using local currency
“The informal market is ready to pay in US dollars. The Zimbabwe dollar is being squeezed out,” Mutashu said. (AP)