Money fits wallets in Zimbabwe again, reforms still needed

* Economy recovering after collapse

* Doubts remain on ability to attract investment

By Nelson Banya

HARARE, Nov 11 (Reuters) - Zimbabweans now have money that "fits in their wallets" again after a decade ravaged by economic collapse, and hope the country will win donor support to help early signs of recovery gather strength.

But analysts say serious doubts over political reforms are dampening the prospects of attracting foreign aid and investment.

President Robert Mugabe, blamed by critics for the crisis, was forced to share power with his rival, Prime Minister Morgan Tsvangirai, in February after last year's disputed polls.

Dumping the worthless Zimbabwean dollar in favour of foreign currencies, such as the South African Rand and the US dollar, stopping hyperinflation at a stroke, was the first step in halting the decline.

"We now have money that fits in wallets," one Harare resident said when asked if things were improving.

The local currency hit its lowest ebb last year, symbolised in a written warning put up at the busy Beitbridge border post by South African authorities against the use of Zimbabwe dollar banknotes in toilets, which was causing frequent pipe blockages.

A year ago Zimbabweans had to carry bagfuls of notes to purchase bread and had to queue for food, cash and fuel. Now, despite obvious continuing problems, positive signs abound. Shopping, which had become a surreal experience with some traders intermittently closing to adjust prices by the hour as shoppers lined up outside, is no longer a frenzied affair and, with shops restocking, prices are actually falling.

Operations have also resumed at factories and mines that shut last year, hit foreign currency shortages and rocketing prices.

Joblessness remains chronic, but some Zimbabweans are now working five day weeks again and queues have appeared outside the capital's factories as jobseekers try to get back into formal employment.

"I am hoping to get a job, at least now one can earn money that can buy something," said Garikai Chitiyo, who left his factory job in 2007 when inflation drove his weekly transport costs above his monthly wage.

Major infrastructural works are also underway to revamp Harare's aged water and sanitation network, blamed for a cholera pandemic that killed over 4,000 people. Poor townships have started to get water for the first time in three years.

Schools have also re-opened and teachers have returned to work across the country, while hospitals are again a place of hope for the sick after turning away patients last year.