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Economy in the red, black market thriving
Inter Press Service (IPS)
January 09, 2008

http://ipsnews.net/news.asp?idnews=40734

Bulawayo - When you get out of your car at the Ascot shopping mall in Bulawayo, southern Zimbabwe, it is almost certain that you will soon be approached by a black market trader. Do you need soap? Are your windscreen wipers worn down? The shops in the mall may have little for sale; but, one of the traders can arrange for all your needs in a split second. After President Robert Mugabe forced businesses to slash their prices several months ago, shelves were largely bare: manufacturers and shopkeepers did not want to operate at a loss. This scarcity provided opportunities for the black market, with Zimbabweans buying goods in neighbouring countries or directly from Zimbabwean manufacturers, and selling them on the streets. All of this spelt further gloom for consumers, who were already struggling to keep pace with Zimbabwe's mind-boggling inflation rate, now at 8,000 percent according to official figures - but estimated by economists to be around 100,000 percent.

For those Zimbabweans who are out of work - the CIA World Factbook puts unemployment at over 80 percent - the situation is worse still. Some four million people in the Southern African country now require food aid, says the United Nations World Food Programme (WFP). Alongside the economic difficulties, a years-long political crisis persists despite efforts to mediate between the government and the two factions of the opposition MDC. Activists, journalists and others have been the targets of human rights violations. Rumbi*, a former nurse and mother of three, is one of those who have turned to black market trading to make ends meet. Every week she travels by bus from the capital, Harare, to the South African border town of Musina to purchase stock. Lately, she has mainly bought cooking oil and soap, goods that are trucked back to Zimbabwe to be sold from her garage.

While Rumbi sells to friends and neighbours, her biggest clients are other traders. In the course of a month, she spends about 15,000 U.S. dollars on goods, for a profit of some 2,300 U.S. dollars. This money enables her to send her children to a private school - in Zimbabwe public schools are struggling to retain their poorly-paid teachers. "I can't say that I have a good life, but I am doing better than most," she says. But, the profits come at a cost - bribes, for instance, to ensure that the police don't arrest her for illegal trading. As soon as Rumbi has received Zimbabwe dollars for her goods, she changes them for U.S. dollars or South African rands on the parallel market. Because of hyper-inflation, local currency depreciates in value constantly, making it imperative that U.S. dollars be bought immediately to get the best rate of exchange for local money. Rumbi only sells foreign currency for Zimbabwe dollars just before she needs to spend locally.

Rumbi would fare poorly if she tried to change money at a bank. The official government exchange rate is 30,000 Zimbabwe dollars for one U.S. dollar. That same U.S. dollar buys around 2.5 million Zimbabwe dollars on the black market. At the beginning of the year, two kilogrammes of rice cost 323 U.S. dollars at official rates, and not even four U.S. dollars at black market rates. Also, if Rumbi were to deposit her money in a bank account, it may prove difficult to get the money back in cash. Zimbabwean banks suffer from a chronic shortage of cash because most of the money is circulating in the black market. Illegal money changing has become a full-time job for many. Arthur* spends every day at a sprawling parking lot for minibuses along the western border of Zimbabwe, near Plumtree, waiting for people entering from Botswana. He changes their South African rands, Botswana pula, and U.S. dollars into local currency. "This is much better than an office job," Arthur says, while counting out big piles of Zimbabwe dollars.

Arthur has been an illegal money-changer for three years. On average, he takes home 20 million Zimbabwe dollars daily -- about eight U.S. dollars on the black market. According to Zimbabwean economist John Robertson, government is keeping the official exchange rate unrealistically low to buy loyalty from ministers and other officials. While foreign currency might be hard to come by for persons buying at the government rate, it is available to those in powerful positions, who are then able to get far more for Zimbabwe dollars than they might otherwise. "If you are in a good position in the government you can claim foreign currency with which you can import expensive goods and can go shopping in Malaysia and China," says Robertson. For ordinary Zimbabweans, meanwhile, Malaysia and China are just the stuff of dreams - as, in many cases, is shopping.

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