RBZ strangles street money changers
They don’t know what suddenly hit them.
It’s no longer business as usual for most, if not all, illegal street moneychangers.
They used to make the decisions over the past few months, determining the prices at which everyone would buy goods and services.
Clearly, they were buying and selling silver on behalf of well-oiled characters, given the high-end vehicles that religiously delivered US dollars and wads of Zimbabwean dollars to them every morning.
Street money changers lived a lot and started eating as early as 7 a.m.
Their lunch hour was not the usual 1-2pm – anytime it was lunch time, and the fast food outlets near the places they operate from were busy all day .
Yesterday, Mr Blessing Marezva sat almost helplessly on the edge of folded cardboard boxes on the corner of Sam Nujoma Street and Robert Mugabe Road in Harare, outside the imposing Eastgate Shopping Centre.
Eastgate Mall is one of the famous malls in Harare where those who pass through it, mostly for the first time, do not hesitate to take selfies, especially near the water fountains.
Similarly, the south and west sidewalks outside the mall have been known as “one big bank” without walls since around 2007.
With the Market Square and suburban bus terminals of Copacabana, the old Ximex mall and the area around the Roadport terminus where cross-border travelers catch their buses to regional destinations, these places have become major hubs for transactions illegal currency exchange.
But following the Zimbabwean dollar’s sustained decline in value over the past five or so months, the RBZ has hoped for intervention after intervention in search of solutions to tame runaway inflation. Some of the measures were not a resounding success, only managing to stem the tide for a few days.
However, the increase in interest rates to 200% has made it difficult for many people to borrow for speculative purposes.
What is seen by many as a masterstroke in dealing with currency volatility and by extension price increases was the introduction of gold coins on July 25th.
Almost 20 days after the Reserve Bank of Zimbabwe launched the gold coins on the market, forex rates and prices have remained stable.
Rising interest rates dried up a source of local currency that was fueling the top of the black market, and gold coins mopped up nearly $4 billion of local currency that would likely also have entered the market.
As a result, traders at the bottom of the pyramid at street level run out of local currency when people come to sell their small denomination of US bills.
On the contrary, top retailers such as Pick n Pay and OK Zimbabwe have been competing to offer discounted prices to their customers.
As prices and exchange rates stabilize, at least for now, illegal money changers are less and less busy.
Some are now uncertain about their future on the streets, as they depended on the suffering of citizens to feed themselves and their families. From rates of around $900 to US$1, rates have dropped slightly to between $800 and $850 to US$1 when buying currency from street vendors.
When selling your US dollars, dealers pay between $650 and $670 for US$1 in wire transfers, but much less when the customer wants cash.
Mr Marezva said: “The government seems to have tightened things up these days. Getting float (money in bank cards and mobile money accounts) is not easy these days. Some of the people who used to supply us with Zimbabwean dollars stopped about a week ago saying they are having trouble getting it.
“Even on a day when you get some local currency, very few people come to change. The end of the previous month was so dry that if it stays that way for the next two weeks, many money changers are weighing their options.”
Another trader who was named Ms Fildah Hove said: “All is not well at the moment. I come, like my colleagues, and sit down hoping to get customers.
“Business is low at the moment. We have low local currency reserves which gives us plenty of business as we transfer to our customers via mobile money or Zipit.”
The situation is so serious that a dealer, one of those who prey on people entering supermarkets and offering them ATM cards or mobile money transfers, was stunned to learn that the card had failed to process a payment of $10,700.
“Sister, the machine says your card has insufficient funds,” shouted the prospective forex customer making a payment at the Pick n Pay Jason Moyo branch in Harare on Thursday evening. The lady paced furiously around the store and, as if in doubt, asked the cashier operator to “try again.”
The response was the same, that there was an insufficient balance and efforts were made to deduct $5,000 from the card, but again the balance was insufficient.
Even $3,000 could not be deducted and the client grew increasingly impatient.
Four street currency dealers were then called in, each to bring what they had, so the customer could pay and leave.
Almost in unison, the four street currency dealers said, “Things are not going well. We’ll be off the street soon if nothing drastic happens.” A single woman who declined to be named, who operated near the OK Zimbabwe supermarket on the corner of Patrice Lumumba Street and Robert Mugabe Road yesterday, said that although exchange rates had not risen since the arrival of gold coins, his business remained sound.
“I still have a lot of people coming to me asking for US dollars and even though I may not have as much money as I used to, I’m still in the game,” she said.
The woman then became an interviewer, wanting to know more about gold coins and the sustainability of their entry on prices and exchange rates.
As street vendors mourn and ponder their future, consumers are beginning to smile, hoping that stability will continue for the foreseeable future.
It may be too early to write epitaphs on the graves of street money transactions, because in 2009, when several currencies were first adopted, dealers disappeared for a while, but found a way to resuscitate their operations.
With 4,475 Mosi-oa-Tunya gold coins purchased over the past few weeks, helping to suck up excess liquidity from the market, low-income earners can afford a smile.
And RBZ Governor Dr. John Mangudya has the daunting task of widening those smiles.
Small gold coins are expected to be introduced in November to include as many people as possible in investing in the alternative platform as opposed to US dollars, and to remove local currency from small wallets as well as large accounts, sparking public interest. hope that obtaining stability will continue.