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Emigrants boost Zimbabwe's parallel economy
Wilson Johwa, Inter Press Service (IPS)
August 08, 2005

http://ipsnews.net/africa/nota.asp?idnews=29816

JOHANNESBURG - It is enough to distress any new emigrant. Sending money back home is, for many Zimbabweans working in neighbouring South Africa, a frustrating, complicated and costly exercise.

The methods of choice include asking visiting friends or acquaintances to take the cash with them on their way back into Zimbabwe. Another option is having cross-border taxi drivers do it, albeit for a hefty fee. Any method will do; except transmitting money through the official bank channels.

International bone fide agencies, like Western Union, are not a viable option. Under the country's regulations, recipients can only get the money in local currency at the equivalent 'official rate'. Those with U.S. dollar or accounts in other major currencies are also compelled to redeem their money at this rate or else accept travellers' cheques.

It would not be such a problem if the difference between the official and thriving parallel market rates was less colossal. Currently, one U.S. dollar fetches 17,500 Zimbabwe dollars on the official market and almost three times that on the parallel market.

''It's an absolute shortage of foreign currency," says Godfrey Kanyenze, an economist with the Zimbabwe Congress of Trade Unions.

The result is that even bankers, like Kenneth - a Zimbabwean teller in one of South Africa's biggest banks - shun the official channels. ''I hate having to accept the much-reduced rate,'' he says.

In the last several decades, Zimbabweans have joined other Southern Africans who went to work in South Africa's booming gold and diamond mines. But the trek to South Africa intensified with the deterioration of the Zimbabwean economy five years ago. A populist, and damaging, land-reform programme preceded three disputed elections.

Resultant economic problems include a critical shortage of foreign exchange to import fuel, basic food stuffs and medicines. This, coupled with unemployment rate of 75 percent, has forced almost a quarter of the population to emigrate.

Now estimated at up to two million, Zimbabweans are the second biggest group of foreign Africans in South Africa. Some are skilled emigres. The majority, though, are economic refugees who do menial jobs such as farm or house work or waiting on tables. But, together, the money they send home is making a difference to families.

''The work is not as I expected, but at least I can put something on the table every day,'' says 33-year-old Rebecca, a former high school teacher now working as a waitress at Johannesburg's glitzy Sandton shopping centre. Her remittance of South African Rands û sent through cross-border taxis - take care of her parents and also pays for her three children's education in ''better'' schools.

But Emelda has neither the time nor the sophistication Themba has. From Cape Town, almost 3,000 kilometres away from Zimbabwe's second city of Bulawayo, the publishing executive pays for friends' and relatives' satellite TV subscriptions. He also buys - and sends - groceries together with electrical appliances and books.

''I help people who cannot access foreign exchange and it is people I know and will not disappear with my money,'' he says.

The items bought are delivered in various ways. Since there is much human traffic between the two countries, it is easy to find couriers for such things as cell phones. ''For smaller items I sometimes post and the postage fees will be added on to the amount owed,'' Themba says.

Another method is to make a payment at one of the big department stores, sometimes asking that the goods be released at a branch closest to the border, for instance. ''For larger items you can connect with truck drivers too,'' he says.

One can also use ''omalaitsha'' (carry-alls). These are a new breed of van-owning entrepreneurs who make money by carting goods and groceries from Zimbabweans in South Africa to their homes, mainly in Bulawayo.

For his troubles, Themba receives compensation in Zimbabwe, at a rate agreed to in advance. ''They pay me by passing on the money to my folks and also for other personal business like the upkeep of my properties in Zimbabwe.''

For those without the kind of network Themba runs, the only way of sending money home is by handing it over to cross-border taxi drivers.

Their hub is Johannesburg's busy Park Station, the city's major bus and rail terminus where Zimbabwe-bound taxis occupy the northern corner of the upper level. Here drivers compete in attracting the attention of anyone seen as intending to send money home. It is not difficult to see why; commission is 20 percent.

One such driver, Bheki, says carrying money is more lucrative than transporting people. There is no question of the money not reaching its intended destination, he assures, showing several envelopes neatly stacked in his flack jacket. ''Even if you give me 50,000 Rands (7,692 U.S. dollars), I will deliver it,'' he says.

Getting money home is not much easier for Zimbabweans working overseas. Themba, a legal advisor based in the Balkans, says in the last five months, he has been unable to send cash to Zimbabwe via the official channels. Themba is not related to the publishing executive in Cape Town.

''The last time I sent money to my wife into our U.S. dollar account in Bulawayo, she had to withdraw travellers' cheques and drive (80 kms to neighbouring) Botswana to cash them at a loss,'' he says. ''Now I only wait until l know someone going to Zimbabwe, and send the money as a parcel.''

In Britain, which is now home to almost a million Zimbabweans, posting money is relatively easier. That is because a throng of Zimbabwean middlemen has snapped at the business opportunity.

A client deposits British pounds into the middleman's account upon agreeing on a favourable rate. In turn, the middleman deposits the money, in the intended account in Zimbabwe in local currency. This seems to work well.

''It's very convenient and efficient and you know you gain a lot than using the Zimbabwean bank system whereby the folks end up getting rates that are next to nothing,'' says 28-year-old Emelda, a Zimbabwean student in East London.

In at attempt to kill the parallel market and also cash-in on the remittances, the government launched a scheme, called Homelink, which aims to offer a rate slightly better than the official rate.

More recently, the programme was expanded to include a mortgage component, whereby Zimbabweans in the Diaspora may get housing loans which they repay in U.S. dollars or any one of the world's major currencies.

The scheme is largely seen as a flop. ''Human beings are rational and act to maximise their benefits,'' Kanyenze says. ''You'd be very stupid if you send your money at the official rate when you could be getting twice that.''

Some say it is also because emigres are loath to believe in a scheme initiated by a government they blame for their leaving the country in the first place.

Zimbabwe, which faces expulsion from the International Monetary Fund (IMF) due to accumulated arrears of almost 300 million U.S. dollars, is seeking an estimated one-billion-U.S.-dollar loan from the South African government. A delegation led by President Robert Mugabe has just returned from China where it managed to secure a grant of only 6 million U.S. dollars, mainly to buy food.

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