Wednesday, May 22, 2024

Multiple currencies spell doom to Zimbabwe itinerate traders

The decision to officially adopt multiple currencies for transacting business following a spectacular collapse of the local Zimbabwean currency has spelt the death of cross border traders and informal money-changers that cluttered the city’s pavements.

Cross border traders and informal money changers were evident with their flashy lifestyles, and used to live like diplomats, moving with loads of new script Zimbabwe dollars and foreign currency. They used to drive the latest fast flashy cars and frequented expensive food outlets and hotels for breakfast and lunch.

Denis Nyoni (30), a former cross border trader, now sits expectantly among a row of other men and women at the edge of a pavement arranging packets of biscuits into a stack and sweets imported from South Africa in clutches on plastic sheeting spread on the ground.

Occasionally the women and men out shout one another to advertise their wares to passers-by.

“Only five rand (R5 or US$0, 50 cents) for the biscuits and one rand for ten sweets,” they chorus in contrast to the discreet approach they were accustomed to, to evade the police while dealing in exchanging hard currency.

In late January this year, the Reserve Bank of Zimbabwe (RBZ) lost the battle of trying to stem dollarisation of the economy and let all companies and individuals conduct transactions in foreign currencies following the collapse of the local currency.

Until then, only authorized businesses were allowed to do so. That decision dealt a heavy blow to informal money changers and cross border traders.

Business was booming for cross border traders when Zimbabwe shops and supermarkets were empty. They used to cross to Botswana to import various basic commodities and household goods for resell to desperate Zimbabweans at flee markets at three or four times their cost.

Business also boomed for the illicit trader while the central bank tried to fight pesky currency shortages by printing money, accelerating the devaluation of the local currency in relation to other hard currencies.

Informal money changers often offered higher exchange rates than commercial banks, driving holders of hard currency to beat a path to the illegal currency dealers and money exchangers operating on street corners.

But the decision has precipitated hard times for the cross border traders and informal money-changers that used to thrive on the back of a volatile local currency due to hyper-inflation. The daily erosion in value of the Zimbabwean dollar drove most people to seek better store of value in foreign currencies.

“I will be lucky to sell ten of these a day,” Nyoni, a father of four says, reluctantly pointing at packets of biscuits stacked near his feet and adding: “Even if I do, it is hardly enough to get me and my children going for a week.”

At the peak of his business, Nyoni used to rake thousands of pulas every week selling basic goods and household property to Zimbabweans at a high cost since the shops and supermarkets were bare.

He had managed to also buy two cars, a BMW X5 vehicle and an Audi that he has been forced to sell as he has been pushed out of business by the shops and supermarkets that are now allowed to charge for their goods and services in foreign currency, at a low price compared to cross border traders.

Nyoni says it has become an uphill struggle to make ends meet these days compared to the past when she could comfortably fend for himself and his son and daughter from the income he generated from commission as an informal money-changer.

“As you can see for yourself the competition for customers is stiff, with all these shops and supermarkets selling the same products at half price,” Nyoni told the Sunday Standard.
Like his many colleagues these days, Nyoni says he is now struggling to survive and can barely pay for his lodgings as they have been turned to near beggars following their sudden change of fortunes.

According to investigations, most of the cross border traders who had easy access to foreign currency, have now resorted to selling their property and cars to make ends meet.

At the same time, most of them have moved away from flats and low density areas where they had flocked when they had easy access to loads of Zimbabwe dollars.

They are now heading to high density areas where there is relatively cheap accommodation and are said to be withdrawing their children from expensive private schools and taking them to government schools following their change of fortunes since they now have no access to loads of cash like they used to before the dollarisation of the economy.

During their heydays, cross border traders and informal money-changers lined up the same pavements clutching handbags bulging with wads of local currency to exchange for hard currency.
Most operated as agents for well-heeled cash barons in return for a commission while others, acting on their own, raked in thousands of dollars daily which enabled them to maintain comfortable lifestyles.

“My sister could not withstand her changed circumstances, gave up and returned home,” says Gladys Ncube (39). Both had drifted from rural Gokwe to the city to join the growing numbers of money changers.

Together, they had shared the rent for lodgings in Njube working class suburb of the city. “It was worthwhile staying but if the situation persists as it is, I might follow her decision,” Ncube says.

Hard times have befallen money changers and Ncube says she finds it tough to raise the rent from her new line of business. Some of her former money changers are drifting back to the rural areas after discovering that the going is getting tougher for the informal trader.

Last month, she pawned her bedside radio in order to raise the rent and pay her share of municipal service charges with other tenants.

Ncube fears she might be forced to sell off other assets she had acquired during her two year stint as an informal money changer to make ends meet.

And the absence of money-changers particularly along Fort Street has brought mixed reactions from affected businesses on the same street.

A fast-food restaurant manager, Desmond Moyo, says he had experienced a notable slump in business when cross border traders and money-changers deserted the pavements.

“They would linger along the pavement and bring in their clients to negotiate exchange rates over a snack or a packet of chips away from the probing eyes of the police,” says Moyo. “Now they are gone along with the customers they brought in.”


Read this week's paper