INDEPENDENT NEWS

Cablegate: Cargill Makes Bootleg Currency

Published: Wed 6 Aug 2003 11:35 AM
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS HARARE 001577
SIPDIS
SENSITIVE
STATE FOR AF/S and AF/EX
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER
USDOC FOR 2037 DIEMOND
PASS USTR FLORIZELLE LISER
TREASURY FOR ED BARBER AND C WILKINSON
STATE PASS USAID FOR MARJORIE COPSON
E. O. 12958: N/A
TAGS: ECON ETRD EINV PGOV ZI
SUBJECT: Cargill Makes Bootleg Currency
1. (U) Summary: By printing their own Zimbabwean
currency, Cargill executives have found an inventive
solution to Zimbabwe's banknote shortage. End Summary.
"Cargill" Cash
--------------
2. (SBU) With few banknotes available, Cargill had been
unable to compensate small-scale cotton growers. So the
firm created over Z$ 7.5 billion (U.S. $2.2 million) of
its homemade scrip in Z$ 10,000 and Z$ 5,000
denominations. This monopoly money has been a smashing
success, becoming widely traded throughout the country in
just three months. Most retailers - including all Harare
supermarkets - now accept the scrip.
3. (SBU) The Cargill execs admit they initially made a
mistake by touting the scrip as "legal tender." Coverage
in the far-flung press (e.g., Chicago Tribune, Seattle
Times) peeved the sovereignty-sensitive GOZ. Officially,
the GOZ clings to make-believe official exchange rates,
circulating no note larger than Z$ 500 (US$ .12). The
official media lashed out at Cargill for hoarding
banknotes, then police raided its offices. But Cargill
mended fences. Managers insisted the firm was
alleviating the banknote shortage and postponing the
GOZ's politically-painful printing of larger notes.
Comment
-------
4. (SBU) Repeatedly, we marvel at the private sector's
ingenuity in coping with Zimbabwe's peculiar challenges -
in this case, an economy sans banknotes. Thanks to its
scrip, Cargill perseveres. In fact, execs quietly
concede the firm is making a killing on the "float,"
putting off actual payment until scrip is cashed in.
With bank lines blocks long, few recipients go that
route. When scrip finally does trickle in, Zimbabwe's
365-percent inflation will have reduced its value - and
Cargill's payout - precipitously. That makes monopoly
money even better business than cotton in this oddball
economy.
Whitehead
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