Traders Along the busy sidewalks of Harare are doing brisk business out of selling US$1 notes to various business players who are struggling for change by setting premiums of between five and seven percent per US$ 100, 263Chat Business has learnt.
Since government revoked the ban on trading in foreign currency for local transactions in March this year, small denomination American dollar notes have been in short supply creating a serious challenge for businesses when issuing change to consumers.
The situation has become so dire that some small retailers are devising ways to settle change by either giving small treats like sweets to customers or convert the balance to local currency at market rates which most customers refuse.
But for some enterprising vendors in Harare the development has created a window for economic opportunity.
These vendors purchases groceries such as luxury bathing soaps and pasta from big wholesalers in local currency using either bank cards or electronic money and then resale the products, most at US$1 for two items with payments strictly in US$1 notes.
The profitability of the business venture is determined by the volumes in trades, said one vendor who identified himself as Mhofu.
“All we want are US$1 notes. If you want to buy the entire box of these bathing soap with a US$20 note I won’t accept it. I just want US$ 1 notes and I then sell these notes to our customers who do business and are having challenges for change,” said Mhofu.
The development has been exacerbated by the foreign currency shortages in the formal banking channels which have left monetary authorities’ capacity to intervene being limited since most small denomination USD notes are unbanked and largely circulate in the informal sector.
However, the downside of this phenomenon is unfortunately spilling on to the consumers who end up incurring the expense of purchasing the US$ 1 notes for change.
In Zimbabwe it is criminal to sale money without permission from the exchange control authority.
Statutory Instrument 122A of 2017 – Exchange Control (Amendment) Regulations 2017 (No 5) – incriminates the widespread cash vending on the streets.
However, due to a combination of law enforcement officers’lethargy and lack of strong mechanisms to enforce the law, market indiscipline has escalated.
Recently, a local state publication reported an increase in banking sector employees in Mutare conniving with runners who are cashing in on soiled and torn United States dollar notes from the public, buying them at discounted value before reselling.