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ZIMBABWE: The grey economy is the real one
04 Nov 2008 18:19:50 GMT
 Source: IRIN

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•  Zimbabwe crisis

•  Zimbabwe hunger

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BULAWAYO, 4 November 2008 (IRIN) - Takunda Moyo, 35, seems the epitome of a successful business person: he drives a sleek car, wears designer label clothes, and is never short of a dollar or two. He is part of a new class of entrepreneur - the illegal foreign exchange hustler.

As one of the front men for the cartel that runs the business in Bulawayo, Zimbabwe's second city, Moyo is several rungs up the ladder from the people who stand on the pavements all day.

His job is to supply them with daily cash floats and communicate new currency rates to thousands of individual dealers in the city. "The foreign currency exchange business is a complex web, and all the women you see on the streets, changing foreign currency, are simply employees of a big cartel that runs the illegal black market in the country," Moyo said with a chuckle.

"They are the big fish," he remarked, preferring not to divulge whether or not he actually knew who the cartel members were. "Trying to sniff them out will put you in big trouble, my brother. They are well connected in big places and nothing happens to them; they control this country."

How forex prices are set and adjusted is a mystery to most Zimbabweans, like the ever-rising inflation rate, which, officially, is 231 million percent, but independent economists estimate it could be high as a billion percent. The point is that with goods increasingly denominated in foreign currency, getting your hands on some has become a necessity.

"Food prices are always going up, as people are charging in foreign currency," complained Nomathemba Moyo, who lives in the working-class suburb of Magwegwe. "The price changes daily with the movement of foreign currency rates."

Moyo provided some insight into how the rates are calculated. "There are several factors our bosses look at, and they include availability of cash, demand, and the rates from the Old Mutual 'implied rate' [a daily estimate produced by the insurance firm]."

This rate can be influenced by big companies making large purchases as they source foreign exchange for imports, and in so doing push down the value of the local currency.

In an economy in which 8 out of 10 people are unemployed, the only job Sifiso Nyoni, 26, has ever had is as a currency trader, but she has no idea who she really works for.

"Every foreign currency dealer on the street knows that the people who bring the money to us [and communicate the rates] are just small," she said. "But there are others - bigger people, who are controlling the black market."

Despite numerous measures put in place by the Reserve Bank of Zimbabwe to try and curb the parallel currency market, it continues to thrive, mainly because it offers much better prices than the official rate, and - so the rumour goes - because the cash-strapped government itself uses it.

"The rates are attractive on the black market, so I will rather risk arrest than change at the banks, where the rates are ridiculously low," said Mercy Sibanda, who had just changed R100 (around US$10).

Currently the US dollar is trading at Z$100,000 and the South African rand is worth Z$10,000. At independence in 1980, one Zimbabwean dollar fetched US$1.47.

ld/oa/he

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A woman suspected of cholera is brought in a pushcart to a clinic in Harare November 4, 2008. Zimbabwe state media reported the troubled southern African country was battling a cholera ...


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