|
Zaire Currency
In 1967 the Congolese franc was replaced by the zaire,
a
nonconvertible unit with a value of US$.50 to the zaire.
This
exchange rate held good until March 1976 when the zaire
was
revalued to Z1.1 to the SDR. A succession of devaluations
in 1978,
1979, 1980, and 1981 temporarily gave the zaire a
realistic value,
but, because the fixed link with the SDR was retained, the
black
market quickly took over again as the principal market for
exchange. A few exporters, notably Gécamines and other
governmentowned companies as well as the offshore oil consortium,
normally
observed the official exchange rate, a policy that
inevitably had
an adverse impact on their cash flow because the local
currency
they were paid was considerably less than the real value
of their
foreign-exchange earnings.
The overvaluation of the zaire led to consistent
shortages of
hard currency at the official rate, making it difficult
for local
industries to import necessary inputs and spare parts.
This
limitation and restrictions on repatriating profits by
overseas
investors gave rise to a black market where the zaire sold
at a
fraction of its official value. For example, the parallel
rate
stood at five times the official rate in September 1983.
The parallel rate was the principal currency vehicle
for
business. Recorded diamond exports dropped sharply as
smuggling
offered a considerably higher profit margin than operating
officially. Diamonds were sold at one point by
nondiamond-producing
Burundi. Coffee exporters were required to present their
export
documents to official channels in order to register their
allocated
percentage of Zaire's international coffee organization
quota.
However, it was common practice to ask bankers to deliver
foreigncurrency receipts to another customer, who would then pay
the
exporter zaires at the parallel rate minus a commission.
Some
exporters simply smuggled coffee to neighboring countries.
Access
to limited and grossly undervalued foreign exchange
depended on
political and family connections. In this way, many
members of the
Zairian elite gained easy access to hard currency, as
opposed to
those Zairians and foreigners engaged in more
entrepreneurial
pursuits.
Throughout the early 1990s, the Zairian government
accelerated
its attempts to acquire hard currency and to control
foreignexchange transactions. In October 1993, the regime
required all
Zairian exports to be paid for in advance in foreign
currency. In
addition, all incoming foreign exchange had to be "sold"
to the
central bank for domestic currency within forty-eight
hours of
receipt.
In terms of the United States dollar, the zaire has
registered
a dramatic decline in value since 1985, when Z50 equaled
US$1, and
1986 when Z60 equaled US$1. The average annual value of
the zaire
per US$1 was registered as Z112 in 1987, Z187 in 1988,
Z381 in
1989, and Z719 in 1990. The zaire was devalued in August
1991 in
order to match the official exchange rate with the
black-market
rate, resulting in a new official rate of US$1 = Z15,300.
But in
1992 the rate plummeted to US$1 = Z114,291 and continued
to
deteriorate. The official rate was Z1,990,000 = US$1 by
December
1992 (the average annual rate for 1992 was Z645,549 =
US$1).
In January 1993, the regime attempted to introduce a
new Z5
million note. But opposition forces denounced the move as
inflationary and encouraged merchants to refuse to accept
the note.
When many of them did so, soldiers who had been paid in
the notes
went on a rampage, and extensive rioting and looting
occurred. By
March 1993, the exchange rate was Z2,529,000 = US$1.
In October 1993, the regime again attempted to resolve
its
chronic liquidity crisis by announcing the introduction of
a new
zaire (nouveau zaire--NZ), each supposed to be worth 3
million of
the old zaire and set at an official rate of three new
zaires to
the United States dollar; the old currency was to be
withdrawn from
circulation. The change had not been implemented by the
end of
1993. The result of the announcement alone has, however,
been a
drastic plunge in the exchange rate in the black market
and another
surge in prices. The zaire traded against the United
States dollar
at a seemingly ridiculous rate of 8 million to one in
October 1993;
by December the rate was a patently absurd Z110 million to
the
dollar and still rising. Once again some rioting and
looting
occurred when opposition forces promoted a boycott of the
new
currency.
Data as of December 1993
|
