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The
grey economy is the real one
IRIN News
November 04, 2008
http://www.irinnews.org/report.aspx?ReportID=81290
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.
Here
to stay
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
rumor 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.
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