HYPERINFLATION

Hyperinflation is simply very high or abnormal rate or level of inflation. This is an enemy of many stakeholders in any economy beginning from genuine investors, suppliers, government, workers and should I simply say the general populace at large. In any given case, there are always winners and losers. Even in the case where an economy is “suffering” from hyperinflation, some smart business individuals can take advantage of prevailing economic conditions as a result of various weaknesses in fiscal and monetary policies during such difficult times. I will endeavor to cite some classic examples of how hyperinflation could be taken advantage of in business later in the article. However, in the case of salaried employees, they are the most hardly hit due to presence of minimal mitigation measures by employers such as implementation of commensurate salary adjustments as inflation soars.
For accounting purposes, management of any entity should exercise reasonable judgment to determine whether or not their functional currency is that of a hyperinflationary economy. This is very important because there are international financial reporting standards requirements that directly impact on hyperinflation (To be specific IAS 29) which should be applied whenever preparing financial statements under such circumstances.
The following are simplified indicators of hyperinflation:1. Cumulative inflation over 3 years is approaching or exceeds 100%2. Highly unstable prices for commodities3. Sky-rocketing prices4. General population prefers to keep its wealth in non-monetary assets (e.g. real estate) or ina relatively stable currency (e.g. USD, £, Pula etc)
Technical aspects

1. Where an entity’s functional currency is the currency of a hyperinflationary economy, the financial statements must be restated to take account of inflation.
2. All non-monetary assets and liabilities are restated to their current market value at the balance sheet date using an appropriate price index. (Price indices are normally available from Central Statistical Office in the case of Zambia and other economic watch groups such as JCTR etc)
3. Monetary items are not restated given they are already expressed in terms of the monetary unit current at the balance sheet date (although comparative amounts are restated by using yearly conversion factor)
4. The entity should in the period in which it identifies the existence of hyperinflation in the economy of its functional currency not having been hyperinflationary in the prior period, apply the requirements of IAS 29 (Reporting in hyperinflationary economies) as if the economy had always been hyperinflationary.
   Hyperinflation-The case of Zimbabwe

Clear indicators of hyperinflation in Zimbabwe are outlined below:

a) Inflation is highest in the world and stands at over 16,176%-Y2007(56.2%-Y2000-source: World Bank)-[“World record breaking inflation for Zimbabwe soars past 100,000%”, source: CNBC Africa, date:22/02/2008, time 07:10]

b) Very unstable foreign exchange rates [This discourages Foreign Direct Investment (FDI)] and as at two (2) weeks ago Z$7,000,000=1US$... (Z$55.05/1US$ in 2001-source: Encarta 2004)

c) Very high prices of commodities e.g.- a bag of mealie meal costs Z$180,000,000 (US$25.71 & ZMK102,840- ROE ZMK4,000/us$], source: Zimbabweans- a 2kg bag of sugar costs Z$35,000,000 (Us$5 & ZMK20,000)

d) Unemployment levels have surged to about 80%,Y2007-source: new African magazine (6%-Y1999, source: Encarta)

e) Drastic fall in GDP US$5.0billion-Y2006,source:worldbank (US$9.1 billion-Y2001, source: Encarta 2004)

f) Serious shortages of commodities & inputs such as fuel, food etc.

g) It is estimated that over 2 million Zimbabweans are estimated in the diaspora looking for greener pastures. (source: BBC)

The above economic indicators are a very big source of concern to any genuine African, for example the rate of inflation in Zimbabwe in the year 2000 was 56.2% (source: World Bank) compared to 100,000% (source: CNBC). This implies that local currency has lost its purchasing power and the monetary values (Pricing) of basic commodities are no longer in single digit but at least over six digits currently!

The exchange rate has also crushed from ZM$55.05=1US$(2001) to ZM$7,000,000(2007). In fact according to CNBC, the exchange rate has further gone up to ZM$15,000,000=1US$ as at this week. I wonder if this is also compensated by salary increases to locals because it simply means that the cost of living has gone up. On the other hand, business minded people can take advantage of these instabilities e.g. Importation of Mealie meal from Zambia at about K39,000 and reselling in Zimbabwe at K102,840 could make reasonable business sense.

It will take Zimbabwe ages to recover from this economic crisis. The country has the potential for economic prosperity given the intact infrastructure, abundant natural resources and rich human capital. In my opinion, all that could be needed in order for the economy to begin recovering from its “crashed” state, is re-aligning of economic fundamentals. Lastly, I personally believe that it is not a political regime change that has the answer to economic fortunes and recovery but rather the indigenous Zimbabweans themselves.
By Ansley Syanziba
The views expressed in this article are those of the author and Hardknocks takes no responsibility whether legal or professional.

THE CREATION OF A LEGACY

It is truly invigorating to talk about our success। Our achievement has been preceded by a long period of hard concentrated work. We have recorded the highest number of ZICA Technician graduates than any other institution in Southern province and more certainly among the best in the country.

We had 22 students anticipating to graduate and managed to have 18 graduates (A full list of the graduates has been published on the hardknocks graduates page) and out of the 18 three were omitted from the list published in the daily mail, namely Kapelwa, Nakubiana and Tina। This is actually no mean achievement, considering that other big institutions had as low as one । We are measured in carats and not in Kgs, it is not the size of diamond that matters but the number of the carats. A number of our competitors have called us names, we are on their lips every time they hold meetings, trying to find ways to pin us. We have tried to meet all minimum statutory requirements of the land, we are registered by Pacro, municipal council business permit, paying taxes to Z.R.A, and T.E.V.E.T.A is well cheered in processing our acreditation or certificate. We took a litmus paper test to see how we are appreciated by the community without advertising and the response has been very good. The level of commitment from both the lecturing staff and students is above board. Recently our Chief Growth Officer, Mr. Kapepe was offered a teaching Job at one of the big institution which he gladly turned down because of his unshaken loyalty to Hardknocks. Our students talk good about Hardknocks and that has been management's strategy, we believe that for students to pass they first have to acknowledge and appreciate where they get the service.

It is high-time competitors came into terms that we are partners in National development, we have to work together to improve the general pass rates of Livingstone. It is now that we should develop loose working alliances। We will remain a premier Institution in ZICA Programmes, and we particularly thank, ZICA for having recognised our efforts and pledging to support us in every way possible. The ZICA Chief Executive Officer, promised to come with his staff and see this "success story" in Livingstone. This is an Institution which is being run by young people with full of ideas and in-touch of the realities of the modern world. We have developed a three year strategic plan which will see us settle and remain the market leaders in the industry.

It is indeed not by fluke that we always record the best results in the city; we always work extra hard। We have started receiving the working class students every Friday from Zimba and Kalomo, whom we have designed special classes. They are taught intensively from Friday to Sunday, and later in the day they travel back to their respective towns. We have always prayed that our competitors come into terms with the fact that it is not the teaching methodologies which produces better results but motivation and strong sense of passion to lecture from the lecturing team. Not even the greatest army can defeat an ordained vision.

For these results achieved we particularly thank our lecturing team, students and our competitors। We are very open to any meaningful partnering and exchange of ideas.

Below is the list of those who passed ZICA costing exam.

1.Mike Kaonga

2.Nicolas Saili

3.Richard Gwanu

4.Owen Chindolo

5.Jean-pierre Miyoba

6.Noah Kalozya

7.Richard Muleya

8.Act Milandu

9.Thabani Mazwi

10.Jowel Mwewa Mufalali

11.Gift Tembo

12. Jane Sakala

13.Nakubiana Lisibani

This list it is not exahaustive as a number of our students haven't yet received their results। This list it is authentic.

BUSINESS AND COMPETITION

Every dream starts small, like a tiny seed of a big tree. We are told where Zambezi river originates from is just a stream of directionless waters but where that water falls is a huge pool of water creating one of the seven wonders of the world. Meaning you have to start from somewhere to be where you desire. Why do people hate genuine competition? Hardknocks it is not an amateur in this field, it has become a household name. We are knocking so hard on peoples conscious. When many others are complaining of slave wages and unemployment, we have set one business venture which has created a lot of awareness and proving to be an option of a quality service. Competition is ever healthy and most desirable in business because the customers benefit and it drives the competing parties to think ahead. Zambians can be empowered and own very big companies if only can be supported by their own. When customers complain it gives the opportunity to a respective organisation to put its house in order, to reinvent and produce a service which meets the requirements of the customers. As an institution we have struggled to be where we are, we have traded our sleep, friends, weekends and holidays for serious work which we believe has taken us to greater heights. We had to test the water (industry) and we have seen that we precisely fit! Just give us the support, we will continue turning tables. Viva youth empowerment!