Zimbabwe’s Currency Crisis: the worthless $100 trillion bill

This video is sponsored by Ting. Start paying only for the data you actually
use and get $25 off with the link in the description. Life in Zimbabwe has never been easy. Since its independence, the Southern African
country has seen factional violence, international sanctions, and rampant political instability. But in the mid 2000’s, it lost something
even more fundamental: its currency. Surviving meant waking up as early as 2 in
the morning, trekking to the nearest ATM, and then waiting in line. On a good day, you’d be able to withdraw
the equivalent of about one or two US dollars – the maximum allowed by the government. Or, you might find, after losing sleep and
waiting for hours, that no more money was left. That’s because, around 2007, Zimbabwe experienced
the second highest inflation in history, after Post-War Hungary. It’s hard to know exactly how bad it got,
as the government stopped reporting numbers after 100,000% inflation, when a loaf of bread
cost 30 billion Zimbabwean dollars. Employees stopped going to work when their
annual salary wouldn’t even pay for their bus ride home. And vending machines were put out of service
– unable to hold the billions of coins that a single can of soda would cost. To keep up, the central bank kept printing
bigger and bigger banknotes – a million dollars, one hundred billion, and, finally, one hundred
trillion – worth a whole 40 US cents. So, how did Zimbabwe get here? And how did this devastating economic crisis
help launch Africa’s financial technology revolution? Zimbabwe is home to the largest waterfall
in the world: Victoria Falls – over twice the height of Niagara, and whose tumbling
water can be heard 40 kilometers, or 25 miles away. Further South are the intricate stone ruins
of an 11th century palace city. And savannas everywhere in between hold Africa’s
Big Five: lions, leopards, elephants, buffalo, and rhinos. Unfortunately, few will ever get to see these
wonders. Because, in addition to being blessed with
natural beauty, Zimbabwe is also cursed with an abundance of gold, platinum, coal, and
diamonds. All things which led Cecil Rhodes of the British
South Africa Company to invade the land with the newly invented Maxim Gun at the end of
the 19th century. The company-run territory was almost entirely
governed and exploited by the tiny white minority. Years later, two rival factions emerged: Zimbabwe’s
African People’s Union, supported by the Soviet Union, and the National Union, backed
by Mao’s China. In 1980, Zimbabwe gained its independence
and the National Party won its first election. Almost immediately, with the spirit of nationalism
strong, leader Robert Mugabe began doing what all good dictators do: consolidate power. His army, trained by North Korea under Kim
Il Sung, began murdering dissidents. He granted himself the power to dissolve parliament,
declare martial law, and removed all term limits. Mugabe’s authoritarian rule lasted 37 years,
just 4 short of Africa’s record, and teemed with corruption. He once accidentally let slip that his opponent
had won 73% of the vote in the last election before quickly correcting himself. This insatiable thirst for power had more
than political consequences. In 2000, his government began forcibly seizing
land from white farmers for redistribution. Officially, the goal was to correct for the
country’s unjust colonial past. In reality, the policy help him buy political
support. The effects were devastating. The new farmers usually had little or no experience
and sometimes no interest in agriculture. From 2000 to 2009, total agricultural output
was cut in half, with some farms producing only a tenth as much as before. By wiping out two of its largest crops: corn
and tobacco, land reform both singlehandedly destroyed its economy and decimated its food
supply. Meanwhile, many of its skilled farmers fled
for safety. As farms became less productive and demand
for the little food left rose, so did prices. And fast. Daily inflation reached 98% and Zimbabwe’s
economy totally collapsed. Shops, if they were still open, increased
prices multiple times a day as 12 million people struggled to find food, water, and
power. Now, to slow inflation, a government must
do two things: First, it has to stop printing money. Basic economics says increasing money in circulation
simply decreases its value. Second, and much harder is a government has
to convince people that its currency has value. Mugabe did neither. To fund its involvement in the Second Congo
War, the Reserve Bank kept printing new, higher denominations. But it just couldn’t keep up. The bank spent $500,000 US Dollars a week
ordering new banknotes, which, by the time they arrived from Germany, were already worthless. Twice it redenominated – removing 10 zeros
from all banknotes in 2008 and 12 in 2009 – but, to no avail. Zimbabweans didn’t believe their currency
had value, and, therefore, it didn’t. In other words, prices kept rising largely
because people expected them to. And soon, no more money was left. There just weren’t enough bills to go around. And that’s when Zimbabwe got creative. Like much of Africa, the vast majority of
its population is unbanked. In advanced economies, about 92% of people
have some kind of bank account, but that number is only 20% in sub-saharan Africa. Here, where the number of transactions are
high but balances are low, branch locations and ATMs just aren’t very profitable – leaving
Zimbabwe with 6.5 ATMS per 100,000 people, Uganda with 4.2, and Niger with 1.7, compared
to the United States’ 174 or Macao’s 324. Zimbabweans lacked the infrastructure necessary
to keep money safe or transfer it between people. Not only does this hide the flow of money
– granting cover to criminals and making it impossible for the government to regulate
or tax it, but it’s also physically dangerous. Many who live in cities regularly send money
to family members in the country, requiring they take a one or two day journey themselves
or hire someone to do it for them – and risk having it stolen. But while this lack of banks would ordinarily
only slow the continent’s technological progress, African entrepreneurs turned it
into an advantage. What it does have a lot of are phones. In many of it countries, total mobile phone
penetration stands at 80%. These two things allowed countries like Zimbabwe
to leapfrog over checks and credit cards, and then surpass more advanced economies in
mobile payments. In places like the U.S., the ubiquity of banks
and credit cards actually holds back new technologies. Tapping or texting would make sending money
much easier, but first, you and I need the same app. Hence why there are so many competitors – Chase
Pay, Google Pay, Square Wallet, PayPal, Apple Cash, Cash App, Zelle, and Venmo. The hard part isn’t building the app, it’s
hitting a critical mass of users. In Africa, the selling point was obvious:
Either take a two day bus ride, or send a text. And because many of its countries are dominated
by a telecom monopoly – that company can ensure quick and universal adoption. In 2007, for example, Kenya’s largest mobile
network operator, Safaricom, launched M-PESA, ’m’ for mobile and ‘pesa’, meaning
money. Each M-PESA user is associated with a SIM
card, allowing them to text anyone else money. There’s no charge to sign-up or deposit,
and fees are minimal. But what’s truly revolutionary is that it
doesn’t require a bank account. To deposit or withdraw, you simply find an
agent – over 100,000 middle-men who get paid to collect and then bring cash to banks, or
take out cash for when users withdraw or transfer money. It’s so convenient that it’s used for
almost everything – school fees, water, electricity, food, and so on. In Zimbabwe, the preferred app is called EcoCash,
which in 2017, had 6.7 million users compared to its two million bank accounts. That year, the Reserve Bank reported digital
payments accounted for 90% of its $97.5 billion dollars in total transactions, making its
economy virtually cashless. Even digital currency, however, isn’t immune
to political incompetence. As a landlocked country, Zimbabwe relies on
its powerful rivers for water and electricity. The Kariba dam alone provides over half of
the nation’s electricity, making its frequent droughts extremely dangerous. In July, Econet generators failed to start
after a power outage, disabling its mobile payment platform, and, therefore effectively,
the national economy. Lifting a nation out of poverty is so difficult
not for a lack of resources but rather because solutions require deep, political changes. To rebuild its economy, Zimbabwe must first
manage its inflation. To manage inflation, it has to build confidence. And to do that, its government requires reform. That hope came in 2017, when Mugabe was deposed
after nearly 4 decades of economic ruin. Fear promptly returned when this year Zimbabwe
reintroduced its Dollar and inflation again, began increasing. Yet, even while countries like Zimbabwe and
Kenya clearly still have plenty of unresolved challenges, they’re also model examples
of how those very same challenges are the necessary ingredients for innovation. Mobile money is, at best, a convenience for
most of us. But for the world without bank accounts, it’s
life-changing. By making transactions faster and more secure
– apps like M-PESA literally increase the value of money. Theft is reduced, there’s less waiting in
line or time spent delivering money, credit is more accessible to entrepreneurs, it increases
savings, and improves accountability. Africa is the world-leader in mobile money
precisely and only because it previously had so far to come. And as the youngest continent, on the receiving
end of massive amounts of loans, its financial revolution is just the beginning. What’s genius about M-PESA is how it piggybacked
on existing technology – phones were widespread, and SIM-cards and carriers were well established
in Africa. Likewise, the expensive part of cell service
– towers and equipment has already been built by big companies like T-Mobile and Sprint. Ting can help you save money by using those
exact same networks in the U.S. but without a monthly plan. The truth is WiFi is everywhere – we spend
most of our day at homes, school, work, and shopping. So it might not make sense to pay for the
same 2, or 5, 10 GB a month. With Ting, you only pay for exactly what you
use, so it’s a good way to save money. The average bill is $23 a month, and if you
use my link in the description, you get a $25 credit, which is essentially a whole month
free. Thanks to Ting for sponsoring this video and
to you for watching.

Maurice Vega

100 Responses

  1. wait are saying the country was better under absolute white rule? fuck off you Nazi it doesn't matter how many people have to die diversity is our strength

  2. The most disgusting part of this is when Mugabe died he was celebrated for 'getting rid of white people'. There are plenty of racists black people who do not care about how Mugabe destroyed the lives of black people, doing even more damage to black people.

  3. Mom can we have post war hungary inflation?
    We have post war hungary inflation at home
    Post war hungary inflation at Home:

  4. You got ZAPU and ZANU wrong with the supporters.

    Edit: By the way you got Macau’s flag wrong. That’s supposed to be HONG KONG’s.

  5. My father likes to collect a lot of shit. So he collected tons of Zimbabwean dollars. It was the greatest investment he ever made.

  6. you have to surround yourself to jews or you and your people will suffer rest of their Lives , this is exemple of how Jews and their Puppets control the world .

  7. u failed to mention the fact that the US and EU forced economics ban on Zimbabwe after Robert took the land from the whites. people. as idiotichis politics are lets not forget how white people act when u take back what they stolen from you

  8. Anyone who believes Zimbabwe was better as Rhodesia should look back at history and see that life for the blacks weren't any better. The white minorities were heavily racist and refused to give up power until international condemnation forced them. You can guess during that time blacks (despite it being their land for history) weren't given much right. Why else do you think the people supported Mugabe when he chased away the white farmers. The people were oppressed by the whites for so long and wanted them out.

    Was it the right choice? No, not really. Sure the economy was okay under the country's former name, but that was only beneficial to the whites.

  9. Mugabe proved he was intelligent when he was young but became absolutely corrupt and failed his people to the point where they would have been far better staying ruled by the white minority.

  10. How to get cheap toilet paper
    1. Go to your local currency exchange
    2. Swap out $5 into Zimbabwe currency
    3. Get busload of paper money
    Cheap toilet paper for years

  11. This white male just supported white males illegally staying in power. So in one breath he's denouncing a black dictatorship and in the other he's supporting a white dictatorship claiming they are the only ones who knew how to farm. Do you know how insane that sounds. What a trash channel. He always gets major downvotes too because he's mostly just a propaganda channel for corrupt big white owned corporation's and of course….skillshare smfh

  12. Do you think there is a link between the placement of economic and political sanctions to the economic decline. It’s a an amazing coincidence that economic sanctions were placed then the economy declined. Maybe I’m just ignorant but there appears to be a correlation. What is the purpose of economic sanctions? Who are the sanctions targeting and who ultimately pays the price?

  13. Life in Zimbabwe was always easy. Until your hero, Robert Mugaap decided to chase out the white people. Miss us yet?

  14. Soo… you googled most of your r notes; but thats honestly bad journalism or what ever you're doing, people wont realize but you wasted time. You need atleast 3 fuckin years in Zim to understand the reality of shit that goes on down there.

  15. This is what happens when you are fighting a war against communists guerrilla groups and are abandoned by the west. The communists turned the country of Rhodesia, once known as the bread basket of Africa. Into a economic failure that is facing a famine.

    The solution to communist trying to take over your government is not negotiation, but napalm.

  16. just like the Americans impose sanctions on innocent Zimbabweans in the name of democracy …it shall never be a colony again .How does Trump solve Zimbabwean problems when he has never set foot there .All Western empirialists want is Africa to be a warzone whilst they loot the resources .ALL IN THE SPIRIT OF BLACK MAJORITY AFRICA UNITE …let not Zimbabwe end like Libya and Iraq where peace was destroyed and resources looted but Israeli is persecuting Palestinians day and night but no one talks about it .The whole Arab nation is shaking because of their oil all because of the Western countries …

  17. You know your country is fucked when you have to print a damn 100 trillion dollar note, it kinda just becomes a stupid number

  18. Sounds awesome, that app is so convenient bc i cant do much with my own name so using that would solve the problem. Oh, i wish an african. 🇿🇦🇲🇲

  19. Not even getting the flag of Macau right isnt helping this otherwise pretty well made video…You should at least leave a pinned comment about it.

  20. Reason for Zimbabwe's screwed up economy: Destruction of the principle of private ownership of the means of production (kick out white farmers) + printing endless money.

  21. This video starts out with a lie. It is not "since independence" that problems started. It started when Mugabe kicked out all the white farmers and confiscated their land. That's when the breadbasket of Southern Africa became destitute and hyperinflation spiraled out of control.

  22. Cool video, but with some serious inaccuracies in this video Evan lol. The Econet system outage failure you attributed to generator failure lasted about 5 hours on the Saturday it was down, it isn't still down to this date, and the currency in question was de-monitized a while back and hasn't been in use since 2009 Feb. The ZWD hasn't been re-introduced since it's demonetisation and we still don't have an official currency, but until it's reintroduction we are using a ZWL based on Bond notes and coins and RTGS balances (something really complicated to explain) so in short at the time of writing this, a loaf of bread is 15 bucks (not 30 billion lol)

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