Reuters AlertNet Lite - ZIMBABWE: Inflation hits aid agencies' capacity to assist

Reuters AlertNet Full site

NEWSDESK

ZIMBABWE: Inflation hits aid agencies' capacity to assist

22 Feb 2007 18:26:06 GMT
Source: IRIN

JOHANNESBURG, 22 February (IRIN) - Hyperinflation and an unrealistic foreign exchange rate has posed tremendous challenges for humanitarian organisations in Zimbabwe struggling to provide aid and development.

"We fund the number of programmes that we can at the current inflation and exchange rate, but it is very difficult to estimate the increases, so we have to continuously watch our actual budgets so that we do not exceed available funding," said an aid worker with an international development agency.

Everyone has to buy local currency at the official exchange rate currently pegged at Zim$250 for every US dollar. On the parallel market, on which prices are based, the rate is Zim$6,000 to the US dollar. Some nongovernmental organisations (NGOs) have negotiated an exchange rate with their banks to stretch their limited foreign currency funds.

"But not everyone is that fortunate, not all the NGOs have the financial muscle to negotiate deals with the banks", pointed out an aid worker. "Particularly the local NGOs, who are small - they not only have to deal with the unrealistic foreign exchange but also the high inflation which keeps pushing costs up every month".

As a result even basic office equipment maintenance can cost NGOs several thousand US dollars at the official exchange rate. "Everyone likes to keep their money dealings legitimate, so we are very reluctant to look for deals in the parallel market", commented an advocacy officer with a local rights NGO.

With inflation at around 1,600 percent, nearly 80 percent of Zimbabweans unemployed, and the minimum wage no where near the costs of a basket of basic household items, NGOs are already under tremendous pressure to provide humanitarian assistance.

The NGOs in Zimbabwe are caught "between a rock and a hard place", pointed out John Makumbe, a political analyst based in the capital, Harare. "The NGOs are operating in a war-like situation with high inflation and an increased demand for services related to health, social care and education, which has trebled since 1998, as the government structures have failed to provide for the shattered public. Yet you have a rudimentary structure functioning as the state which prevents the NGOs from reaching out to as many people as they can afford to as they have to use the official exchange rate and abide by other foreign exchange regulations unlike in other war situations, which restricts their spending capacity."

According to the UN Children's Fund (UNICEF), Zimbabwe has the world's highest percentage of orphans - 1.6 million out of a population of about six million children.

A development NGO which provides care and support to vulnerable children in the south of the country has been particularly hard-hit by the economic crisis. While many orphans and vulnerable children under the care of an extended family network, hyperinflation has left support systems very vulnerable.

"In many areas, we are the only support system that people have, and it can get quite tenuous when we have to reduce the number of beneficiaries or the portion of aid they receive," pointed out an operations manager with the NGO.

"The bottom line is you have to become very flexible, be prepared and ready to keep changing your targets and revising your programmes", commented another aid worker.

Zimbabwe's economy has been on recession since 2000, when President Robert Mugabe's ZANU-PF government embarked on a fast-track land redistribution exercise that sought to give land to thousands of blacks from impoverished communal areas by removing more than 4,000 white commercial farmers from their estates.

The land reform programme disrupted agricultural production, the country's main foreign exchange earner.

The government has blamed the crisis on sanctions imposed by the European Union and the United States.

jk/oa

AlertNet news is provided by

Email this article Send comments

Countries

Small country map
© 2004 Europa Technologies Ltd.

Reset map

• Zimbabwe profile
· View map

MORE >>

NGO latest

• Zimbabwe partner office shut down by ZANU PF militia
Christian Aid - UK

• The Road Less Travelled
GOAL - Ireland

• The Zambezi River threatens thousands of families in five southern African countries
IFRC - Switzerland

• Christian Aid backs Benn over new China loans to Africa
Christian Aid - UK

• Southern Africa: International Federation boosts response to help flood and cholera victims
IFRC - Switzerland

MORE >>

Latest news

• ZIMBABWE: Inflation hits aid agencies' capacity to assist

• Zimbabwe teachers' union ends strike amid tension

• Powerful cyclone hits flood-ravaged Mozambique

• LUNCHBOX INDEX

• Powerful cyclone hits flood-ravaged Mozambique

MORE >>

Last updated:Thu Feb 22 18:28:17 2007