When Zimbabwe’s economic crisis reached its nadir in early 2009, the banking sector was in a shambles, with very few people keen on depositing their cash in banks.
The Zimdollar was so worthless that putting it in the bank would only result in the loss of value of the money as inflation galloped away, with prices of goods increasing three times a day.
While normalcy seemingly returned to the economy following the adoption of the US dollar in 2009, many people were left holding valueless Zimdollar notes.
Many like Richard Nkatha, who moved to Gaborone, Botswana, in 2011, are still in possession of the Zimdollar notes, some of which ran as high as 100 trillion dollars.
The change to the US dollar was a relief but the speed at which the Zimdollar was rendered valueless left a bitter taste in the mouths of many people. Emotions still run high when the issue is brought up, as people feel they were denied the opportunity to use their hard-earned money.
There is a feeling of despondency when it comes to the issue of Zimdollars as people feel it is better to forget about them and move on.
“Yes, it is painful when you have money and one day you wake up and are told that it is no longer of any value. For me, the Zimdollar has many bad memories, I do not want to think about it; I want to move on. We made efforts to recover our funds but the government has been quiet and those who were reimbursed their funds were given $5 irrespective of how much money they had in the bank,” Mr Nkatha told The EastAfrican.
The period caused a loss of trust in the banking system among the general public, and although banks and government have been trying to encourage people to keep their US dollars in the bank, many are reluctant to hand over their funds to the financial institutions because they still have sad memories of that period.
Julius Tapera, chairman of the Department of Accounting and Finance at Lupane State University, says news of the imminent demise of the Zimdollar did not reach most areas; and rural folk lost out as they never used the banking system.
Zimbabwe’s Reserve Bank Governor John Mangudya last year initiated a move to compensate account holders who lost their savings when the government introduced multiple currencies in 2009. The RBZ used the rate of one US dollar to 35,000 Zimbabwe dollars when it demonetised the local currency.
Under the process, everybody who had an account as at December 2008 would be awarded a blanket $5 per account regardless of whether there was any credit in their bank balances.
Recently, though, Mr Mangudya said that all Zimdollar bank balances as at December 2008 will be divided by the then United Nations US dollar exchange rate, with the minimum payment per account slated at $5.
The demonetisation of the local currency will be completed by June 30, allowing many people who had stashed the Zimbabwe dollar to finally discard it. The government is expected to release $20 million for the process.
The local currency was abandoned in favour of mainly the US dollar and the South African rand. Other currencies accepted in the banks were the Australian dollar, British pound, Botswana pula and to a limited extent the Euro, Indian rupee, the Chinese yuan and Japanese yen.
However, a new trend emerged in 2013, where enterprising people began selling their old notes, particularly the 100 trillion Zimdollar note to tourists.
Jonas Mudimba, a trader in the resort town of Victoria Falls, said he sold some 100 trillion notes to tourists, and says with a bit of luck, one could fetch up to $40. Tourists bought the note to take home as a souvenir.
“Yes, it had to take the enterprising to do that but it is not all people with the notes that will benefit from this exercise, which I think is a good way for one to recover the funds they lost,” said Mr Tapera.
The local currency was made moribund in 2009 when the government sought to arrest runway inflation.
The RBZ redenominated the Zimbabwe dollar in 2006, 2008 and 2009, to deal with inflation, with the highest being a 100 trillion dollar banknote printed on bond paper after the German company that used to supply the special paper stopped doing so because of economic sanctions imposed on the country.
The central bank would also occasionally slash the zeros from the notes amid concerns from businesses that the many zeros were crashing their computer systems.
Zimbabwe has a huge external debt and Economic Minister, Patrick Chinamasa is on record as saying the debt had become a major impediment to the country’s efforts to access concessionary borrowing from multilateral lenders.
The Southern African country owes the World Bank $1 billion, the IMF $142 million and $566 million to the AfDB. The debt-ridden country also owes the Paris Club $3.09 billion and the European Investment Bank $350 million.