US embassy cable - 03HARARE1577

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 
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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