Victor Maphosa Herald Correspondent
SHORTAGE of smaller denominations of United States dollars has created an opportunity for illegal money changers and some vendors to sell notes at a premium, The Herald can reveal.
Most of them are charging 10 percent, meaning that if one wants a US$100 note split into US$1, US$2 and US$5 notes, a fee of US$10 is paid.
Some are also making a killing collecting worn out notes before exchanging them in banks. For example, if one brings a torn US$10 note, the vendors accept the money and pay the person US$7.
The vendors, using their connections at the banks and other financial institutions, will then get full value. Some vendors, at times, just mend the torn notes using glue or other adhesives.
The change problem has been worsened by those who do not accept change in local currency after paying for goods and services in US dollars.
A survey carried by The Herald recently has shown that many people pay up to US$10 for them to get change for a US$100 note.
A visit to illegal money trading points at Copacabana, Market Square and Roadport in Harare to ask for change revealed that the dealers were demanding up to 10 percent.
At Market Square, this reporter produced US$20 and one of the money changers demanded to be paid $200 for splitting the note.
The writer, who did not have Zimbabwean dollars, ended up getting US$18 with the illegal money changer deducting US$2.
At Copacabana, the situation was almost the same, but the money changers there were even accepting payment of the 10 percent charge through EcoCash.
“Kana uchida change ye US$50 wondipawo five mari yegreen then toita masports acho opera, (if you want change for US$50 then give me US$5 then we can seal the deal),” said one of the dealers.
The reporter tried to negotiate downwards, offering US$1, without success.
“Hamusi kuda change imi. Chikandai iri Ecocash ye$500 then ndokupai change. Chero muchida maUS$1 notes ndokupai but handikupei mahara, (It seems you are not serious that you want smaller denominations. You can send me $500 through Ecocash then I give you the change),” he said.
A few metres away, a young woman desperate for change was made to pay $100 in order for her US$10 note to be split into US$1 notes.
Justice, Legal and Parliamentary Affairs Minister Ziyambi Ziyambi said selling money was illegal.
“Clearly, that is illegal, but I would kindly refer you to the Reserve Bank of Zimbabwe for a detailed comment on money issues,” he said.
RBZ spokesperson Mr Khumbulani Shirichena said the central bank was making efforts to mitigate the challenge and was engaging various banks.
“Please be advised that the Reserve Bank of Zimbabwe (“the Bank”) is working closely with the Bankers Association of Zimbabwe to address the challenge of the shortage of small foreign currency denominations through arranging for the procurement of the requisite small denominations into the country,” he said.
“In addition to this, the central bank is also encouraging banks to withdraw ZW$ cash from the Bank, that the public can use as change, especially given the stability of the local currency that the economy is experiencing.”
Economist Mr Eddie Cross, who is a member of the RBZ Monetary Policy Committee, urged people to embrace plastic money for smooth transactions.
“There is a gradual improvement in the supply of local currency because we have increased supply of local currency from about $400 million last September to $1,4 billion today and that process is continuing slowly,” he said.
“We have a $50 note coming, but it will take some time.”
Confederation of Zimbabwe Retailers (CZR) president Mr Denford Mutashu acknowledged the change challenge and said some retailers had gone to the extent of designing coupons of smaller denominations to mitigate the challenge.
“There isn’t sufficient smaller US$ denominations across retail and wholesale sector,” he said. “Some players have designed USD$0,10c, 0,20c, 0,50c, $1 coupons as the problem mounts.
“Customers prefer the coupons than being forced to buy extra items in lieu of change. The refusal to accept change in local currency after purchasing in forex is prevalent. It is symptomatic of an economy that has skipped the banking sector as customers keep their money at home and take it directly for purchases. Cash is not circulating.”