Chantelle Bongubukhosi Ncube
Media Studies Student @ZOU Byo Campus
Zimbabwe has had six currency changes since the country attained self rule from the white colonial master in 1980.
At Independence, the currency changed from the Rhodesia Dollar to Zimbabwe Dollar. The value of the Zimbabwe Dollar was more than the United States Dollar and at par with the British Pound.
That, lovely readers, is all but history.
The strongest currency which this country inherited from the white settler was eroded by inflation, and its sisters and brothers have followed the same route.
All the currencies that the government of the day changed to and used were swept away by the tide of inflation.
Research has revealed that the worst of the inflation occurred in 2008, leading to the abandonment of the currency. The peak month of hyperinflation occurred in mid-November 2008 with a rate estimated at 79,600,000,000% per month, with the year on year inflation rate reaching an astounding 89.7 sextillion percent.
Although initially stable, problems in the Zimbabwe economy emerged as early as the 90s due to a combination of factors including mismanagement of the country and its resources, especially untamed spending by government, corruption, and the controversial land reform policies.
The mismanagement of the country, economically, resulted in closure of industries as tenents of trade became impossible. Many people lost their jobs and informal trading emerged.
The more the situation got worse, the more ordinary people found survival on the informal sector.
The informal sector became a median of exchange as the mismanagement of the country continued. History has it that the cause of the Zimbabwe currency losing its power was loss of back up. There was nothing backing the money. No gold to equate our currency with.
Further, history says that the powers that be continued to print and pump more of the unbacked currency into the market.
People lost confidence in the country’s currency as inflation flew away with the buying power that was supposed to weight the local money.
Again history states that foreign reserves that were held in companies and individuals’ bank accounts disappeared and as more printing continued the more Zimbabwe currency lost value.
By default, the country dollarised, on its own.
This time the general populace became clever, they shunned the banks and kept their greenback in pillowcases.
But business had to survive one way or the other. As such another informal banking sector emerged, in full force. Money changers suddenly flooded the streets all over the country and began supplying the US dollars to those who needed it, mostly everyone.
Business would visit the money changers, commonly known as Osiphatheleni. Those in the informal retail sector chose to obtain US dollars to finance their businesses from Osiphatheleni. Civil servants who are paid in the local currency chose to store the value of their meagre salaries in the Greenback.
So the informal bank of Osiphatheleni, flourished.
During the former Reserve Bank governor’s tenure Gedion Gono, the Bank of Osiphatheleni flourished when inflation galloped.
When John Mangudya took over, inflation remained untamed and the local currency nosedived, the Bank of Osiphatheleni flourished.
The RTGS currency resulted in the Bank of Osiphatheleni to flourish further.
Threats of arresting Osiphatheleni were issued, but could not be carried out because, even the Police, who are civil servants by the way, used the informal banking sector to store the value of their money.
No one was guarding the guard.
The introduction of the newest currency to hit the Zimbabwe streets, Zimbabwe Gold, ZiG, has seen a war being waged against the Bank of Osiphatheleni all over the country.
In Harare about 65 money changers were arrested and have appeared in caught facing allegations of flauting the country’s exchange regulation by dealing in illegal foreign exchange.
The net was cast wider and in Beitbridge and Bindura another 12 was arrested for the same offense. In Bulawayo another 12 Osiphatheleni are behind bars pending their bail applications.
Does Osiphatheleni really contribute to the fall of the local currency? Are they the cause?
A banker, who cannot be named for professional reasons disputed this notion.
“Picture this, the beverage company, has most of its products sold in major supermarkets across the country.”
Say per day each supermarket sells about one million dollars of the previous Zimbabwe Dollar, then we have chain supermarkets contributing to this one million. In a day one major supermarket chain would have over fifty million of the useless Zim Dollar. How do they get rid of it? Yes, on the street.” He explained.
“Osiphatheleni are not the problem. The problem are the policies that the Reserve Bank implements.” He concluded.
Already the ZiG had begun to suffer the same fate as the previous currencies because of the policies in place.
As long as the general populace won’t buy fuel from the pump in ZiG or pay for our passport in ZiG, the same fate awaits this new baby.”
He went on to say that whatever reasons the government has given for fuel not to be sold in ZiG, this will contribute to its fall.
“Picture this, the RBZ governor announced that all petrol service stations must pay half of their taxes in the new ZiG. Where are they going to get the ZiG when they are selling fuel in the US dollar.? Somethings don’t need a rocket scientist.”
The banker went on to say that Osiphatheleni have withstood the test of time. They are found in every country but in Zimbabwe they are fueled by authorities high up.
“Only two weeks ago, Osiphatheleni were displaying their money and the police were turning a blind eye on them, what has changed now? And how will it assist the new currency?” He asked.
It is true, the Bank of Osiphatheleni had opened branches all over town, especially in Bulawayo, and they fearlessly traded right in the sight of the Zimbabwe Republic Police.
They have spread their wings into Western Suburbs such as Nkulumane Sekusile, Nkulumane Complex, Entumane Complex, Cowdray Park, Mpopoma Total, Luvuve Chigumira, just everywhere the Bank of Osiphatheleni flourishes.
It is the same with the capital Harare, Osiphatheleni are found at each shopping complex, commuter omnibus ranks, fastfood outlets, hair salons and even homes in eastern and western suburban.
It is yet to be seen if any meaningful convictions will be meted out for those Osiphatheleni that were arrested as the law that is aimed at curbing and alleviating the presence of these money changers is flawed at its own behest.
The law states that “an authorised officer or a police officer acting to enforce any order
(a) may, for the purpose of holding the currency as exhibit in subsequent prosecution, seize any currency upon a reasonable suspicion that the possessor thereof is dealing in it unlawfully, that is, in contravention of any order or any provision of the Act or these regulations by virtue of which the order is made.”
This makes it incredibly hard to catch these illegal money changers as one cannot be certain that any illegal exchange transaction occured without hearing an exchange rate being agreed upon.
Therefore when Osiphatheleni were arrested they wete not taken into custody for the illegal money changing but rather for minor or less heavy crimes such as illegal possession of automated teller machine and bank swipe cards which did not belong to them, such as in the case of the 65 illegal foreign currency dealers who were arrested on Friday last week in Harare.
The suspected money changers were found in possession of various point-of-sale machines and automated teller machine cards proving that they were illegally dealing in foreign currency.
To effect the arrests, the ZRP went undercover, James Bond style as detectives visited shopping centres and streets. There the Police Officers posed as potential clients and the forex dealers there offered them an exchange rate of ZiG 20:US$1 over 7 units above the set rate.
The suspected money changers reportedly transferred ZiG into an account furnished by the detectives leading to their arrest.
Like many Zimbabweans who know how this country operates the question is ”why the sudden change of operations in effecting the law when the police have let these money changers go scot free this whole time?
The government supposes that by removing one of the major factors of inflation drivers in the country it can reduce the chances of the strength of the ZiG fluctuating downward so early at its birth.
Using a similar frame of thought the Central Bank has since set weekly cash withdrawal limits at ZiG3 000 for individuals and ZiG30 000 for corporates to manage the initial roll-out if the hard currency. This in turn controls the money flowing in the market preventing it from spiraling out of control especially into the black market.
The directive however places no limits on cash withdrawals by Parliament, courts and similar organizations forgetting that these same organizations have previously contributed in the dumping of the inflation gnawed Zim Dollars.
The banker said arresting Osiphatheleni was useless because the feeders of local currency into the black market had already begun doing so using theit balances which had been converted from the Zim Dollar to ZiG at the beginning of the month.
He said,
“While Osiphatheleni are in custody, the feeders are still out there.”
The Mayor of Bulawayo, addressing business delicates at the just ended Zimbabwe International Trade Fair said to the new RBZ governor, John Mushayavanhu,
“Confidence into the new currency cannot be forced unto people.”
The government does not have confidence in its new currency, how does it expect the citizenry to have confidence in it?
Zim GBC News©2024