Back to Index

Cash for sale in Zim
Chris Muronzi, Fin24
November 30, 2007

http://www.fin24.co.za/articles/default/display_article.aspx?ArticleId=0_2230330

Harare - Cash-starved Zimbabweans have finally found a way around the country's cash problems - they are now buying money. Yes, money.

Investigations by Fin24 have revealed that since the cash shortages started, a number of individuals have been buying cash after banks imposed limits.

This is how it works. Say one needs Z$100m (R500) in cash. The person would have to transfer Z$120m or more electronically - a 20% premium on cash received.

The practice has been prevalent for some time, Fin24 has found.

After the central bank imposed limits on cash withdrawals last year, individuals and firms have been courting cash-rich individuals and firms for instant cash at a premium.

The central bank says it is clamping down on illegal foreign currency dealers, who depend on cash transactions, by limiting withdrawals.

Now, even foreign currency dealers have also found a way around the cash problem - they pay a better rate electronically and make out an invoice to avoid trouble with the bank.

Mostly fast foods operators and mobile air time dealers are the "cash barons" smiling all the way to the banks.

State-owned daily, The Herald, also blew the lid on underhand cash deals.

The paper says firms are now doubling the price a customer pays for goods if the person is doing so with a cheque or electronically.

"Due to the current cash shortages, very few customers can afford to pay cash for goods or services. Instead, it is much easier for them to make payment through bank transfers.

However, dealers are enriching themselves by simply doubling the prices of their products," reported the paper.

"The cash withdrawal limit is $40m for companies. Suppose a customer makes a payment, say, for $200m.

"What I would do then is to split the money among my various accounts. I have four shelf companies. This will make it easier for me to withdraw the money quickly and invest it on something else," a company director was quoted as saying.

Others are keeping their funds in foreign currency until the cash situation is resolved. Foreign currency appreciates on a daily basis and is normally a cash based transaction.

The central bank is planning to change the country's currency once again and probably slash three zeroes.

Foreign currency dealers have also taken positions - they have two rates - one for cash and the other for bank transfers.

The US dollar is being quoted at $1.8m while an RTGS is being quoted at $2.5m.

According to the paper other foreign currency delears claim to have connections at the banks but bank officials have since denied links with black market dealers.

"Those limits apply only to (Gideon) Gono (the RBZ governor). My friend, we can get up to $2bn a day or more depending on how much you want," a foreign currency dealer said.

Please credit www.kubatana.net if you make use of material from this website. This work is licensed under a Creative Commons License unless stated otherwise.

TOP