When Is a Dollar Not a Dollar? Inside Zimbabwe’s Labyrinth of Currencies

HARARE, ZIMBABWE — It’s 8:30 a.m. when Malcom opens his downtown shop, where body lotions and other cosmetics are on display.

The shop is busy all day, but no one comes to buy the cosmetics. It seems that everyone knows what’s really for sale here: cash.

Malcom is a money changer. He started dealing in foreign currency in 2016. He asked that only his first name be published, because the work he does is illegal.

“There are no jobs, so I’m just looking for a way to survive,” he says.

These days, he’s more than surviving; he walks away every day with sums of money that are enormous in this country, where literal cash is hard to find and where people lucky enough to have formal jobs are rarely paid in cash, anyway. Banks have for years set limits on cash withdrawals, leaving people with small amounts of U.S. dollars. In October, banks separated accounts and denominated U.S. dollars as RTGS, a pseudo-currency that is worth less than the dollar and is an abbreviation for a bank transaction process called Real Time Gross Settlement. Both bond notes and RTGS units have exchange rates that change in real value from minute to minute.

Mobile money, which is an electronic wallet that many Zimbabweans use via their mobile phones, is a primary resource for everyday payments, but even that money is considered to have a variable street value.EcoCash,a commonly used mobile money platform, notes its currency in U.S. dollars, but the real value of the money exchanged via that platform matches the RTGS exchange rate.

Many shops refuse to take any payment other than U.S. dollars, but dollars are not accessible for most Zimbabweans unless they buy them on the black market – an act that is both illegal and costs a premium.

In this chaotic world of dueling currencies, pseudo-currencies and account balances that may or may not be worth what’s stated, money changers such as Malcom have carved out a lucrative niche industry.

Need dollars? Malcom has them.

Bond notes? He can help.

South African rand or Botswanan pula? Malcom has them all.

There are other jobs in this under-the-table sector, too. Terrence, who also asked that his full name not be used, says he connects buyers and sellers.

“I find someone who wants to buy foreign currency at a higher rate and then find someone who wants to sell at a lower rate, and then I pocket the difference,” he says.

On a good day, he says, he can earn up to $200 in EcoCash.

“That is good money for me,” he says.

None of this is legal. In November, President Emmerson Mnangagwa used his presidential powers to amend the country’s Exchange Control Act to include the potential for 10 years of jail time.

In an op-ed written in a local newspaper in late October, Mnangagwa wrote that “wanton illicit currency deals” were causing economic problems. He added that some powerful finance officials were behaving dishonestly.

So far, the police don’t have on record any arrests for currency manipulation, police spokesperson Paul Nyathi says.

A black market filled with money changers isn’t new – Zimbabwe has a long history of economic trouble. Just before the national currency collapsed in 2008 and 2009, it lost its value so quickly that a bottle of milk or a bag of rice were affordable when a grocery store opened in the morning but were unaffordable by noon.

According to Steve Hanke, an economist who tracks currencies, Zimbabwe’s annual inflation rate in late 2008 reached 89.7 sextillion percent.

Richard Mawarire, an economist who works in Zimbabwe, says Malcom’s form of currency manipulation became more lucrative after the Zimbabwean government introduced bond notes in 2016, which quickly began to lose value against the U.S. dollar.

“The currency manipulators take advantage of the differences in rates,” he says. “They buy a particular currency using another currency at a lower price and then sell at a higher price and pocket the difference.”

Global Press Journal tracked Malcom’s transactions on Nov. 13. Here’s what happened:

8:30 a.m.: Malcom sends $210 via EcoCash, a mobile money platform, in exchange for $70 U.S. Malcom’s profit: $35 in EcoCash.

9:17 a.m.: He gives a woman $55 in bond notes in exchange for $20 U.S. Profit: $13 in EcoCash.

10:25 a.m.: He transfers $450 via EcoCash to a client who gives him $150 U.S. Profit: $75 in EcoCash.

12:06 p.m.: He sends $570 in EcoCash to a client in exchange for $190 U.S. Profit: $95 in EcoCash.

2:09 p.m.: He sells all his U.S. dollars at a rate of $350 RTGS “dollars” per $100 U.S. and gets $1,225 in EcoCash. Profit: $175 in EcoCash.

2:20 p.m.: He sells a client $34 in bond notes in exchange for 200 pula, the Botswanan currency. Profit: $20 in EcoCash.

2:45 p.m.: He sends a client $290 in EcoCash in exchange for $100 U.S. Profit: $60 in EcoCash.

3:19 p.m.: He sends a client $300 via bank transfer in exchange for $100 U.S. Profit: $50 in EcoCash.

4:21 p.m.: He sells a client $270 in bond notes in exchange for $100 U.S. Profit: $80 in EcoCash.

5:16 p.m.: He sells a client $130 in bond notes in exchange for $50 U.S. Profit: $45 in EcoCash.

By the end of the day, Malcom’s profit was $648 in EcoCash. On that day, that was worth about $185 in U.S. dollars. Some days, he says, he earns up to $1,500 in EcoCash in a single day. He takes profit in all forms. On this day, it came in EcoCash.

Linda Mujuru translated some interviews from Shona.