Cash dealers swell on Harare’s streets

CASH shortages have created a new crop of money dealers in Zimbabwe.

The past few months have seen a proliferation of dealers whose business is selling cash, an enterprise which has become very lucrative, attracting hundreds of dealers every day.

A survey by Standardbusiness in Harare last week established that there was a massive increase in the number of cash dealers on the streets and bus termini where scores of young men and women, including members of the Apostolic faith churches, conspicuous by their white church clothing, dangled huge wads of cash, mostly bond notes and loudly solicited for customers.

There is a high concentration of the cash dealers at areas like Eastgate shopping mall, Roadport bus terminus at Fourth Street and areas like Copacabana terminus in downtown Harare.

The dealers have established themselves so much that some of them have set up makeshift open air offices where they have tables and chairs at street corners.

One cash dealer who identified herself as Mutsa is in her early 20s.

She says she got into the cash selling business a few months ago and she found it very lucrative.

Mutsa said she had failed to secure formal employment despite having acquired tertiary education.

“It is very difficult (working on the streets) but what do you want me to do?

“There are no jobs. I come here every day to look for people who want to change bond notes, rand (South African rand), and dollars (United States dollar). I get on average 12 to 15 people and that gives me about $20 a day which at the end of the month adds to between $450 and $500,” she said.She said she worked from Monday to Saturday, selling cash at an average 15% mark-up.

According to Mutsa, contrary to what many believe, most street cash dealers do not have their own money but are actually working for clients who have the means to get hard cash easily.

On average, if a person wants to buy the South African rand from cash dealers using bond notes or dollars, they get the currency at the same exchange rate as it officially prevails on that particular day.However, when the cash dealer is reselling the rand they charge a 5% mark-up.

But, surprisingly, the snap survey revealed there was a growing number of people who go to cash dealers in search of bond notes.

Some dealers demand $100 for $107 bond notes.

“Some people actually come from Mukuru.com [an international money travel agency] over there (across the street) with dollars or the rand looking to buy bond notes.“What they do is that they change only the amount they intend to use for shopping while keeping some of it with them to take home,” a middle aged woman who identified herself as Mary said.

For $100 bond notes one has to pay R1 320 while for the same bond notes they demand $103 if a client has smaller US dollar denominations. For larger US dollar denominations the rate is at par with the bond notes.The big denominations are considered as $20 and above.

“Look, we come here to do business. I get up to 20 clients with some being regular customers,” Mary said.

“This gives me about $500 to $600 a month. There is money here to be made.”

After talking to several other dealers, it became apparent that bond notes were the most sought after currency with the majority of the dealers claiming that people looking for the surrogate currency were mostly coming to them with the rand.Most clients said they needed the bond notes for their groceries, transport, airtime and other day to day expenses.

Tatenda, another cash dealer, said for people buying the US dollar using bond notes they charged a 7% mark-up and 5% if they used the rand.

“Deals involving the dollar are where there is a higher amount transacted,” he said.

“Sometimes people can bring R50 000 in exchange for the dollars or $2 000 in bond notes which is why dollars have a higher mark-up as compared to the other currencies.”

He said people who brought high amounts of cash included mostly bank officials. Retailers were no longer as many as they used to be since the central bank started clamping down on those who did not bank their cash.

The Standardbusiness survey also established that there were three main reasons why people were seeking the different currencies from the black market.

For those seeking bond notes the main reasons were to finance day to day expenses while the rand was on demand from people travelling to South Africa.

People who want to keep their savings at home buy the US dollar.

What drives people to cash dealers is what a Zimbabwe National Chamber of Commerce Manicaland vice-president, Kenneth Saruchera described recently as “loss of confidence in banks”.

One of the reasons why people have lost trust in banks and stopped banking cash is that despite financial institutions keeping over 70% of the cash, they have unilaterally reduced the Reserve Bank of Zimbabwe (RBZ) sanctioned weekly personal withdrawal limit of $1 000 to an average of between $50 and $100.

In the first five months of the year, the RBZ reported that banks kept about 70% or $1,68 billion of foreign currency earned yet their latest monthly report for the month of April found only $153,53 million was circulating. Of that amount, about 66% was estimated to be in bond notes.

Banks are keeping cash to service their nostro accounts and to service their bigger clients who need to send money to their foreign suppliers which is why they are mainly distributing bond notes.

Senior Office of the President and Cabinet consultant and economist Ashok Chakravati said the country needed about $1 billion in circulation and that for as long as the cash shortages remained, cash dealing would continue to thrive.

“Whenever there is a market imbalance, there will always be an opportunity created for a parallel market,” he said.

The RBZ claimed bonds notes were being sold in border town and neighbouring countries such as Botswana, Zambia, Mozambique and South Africa.

BY TATIRA ZWINOIRA