The multi-currency system used in Zimbabwe is providing people with some unusual opportunities. Of late a new group of money traders specialising in coins have taken over the streets.
During the introductory stage of the multi-currency system, everyone knows how change was a scarce commodity, a fact that in extreme cases even led to fist fights between conductors and passengers in the kombis.
For some time now, coins have been exchanged at a fixed rate of R8 to $1. However, as the exchange rate has fluctuated over the last couple of months, with the Rand weakening, coin traders are cashing in.
One coin trader identified only as Tinashe said that he started as a street vendor selling fruit. He turned to coin trading after realising there was a shortage in the supply of coins.
“As we all know, economic opportunities are fast dwindling so we are just taking advantage of anything that can put money in our pockets. The R2 profit on each dollar makes a big difference to my income at the end of the day,” said Tinashe.
Trading in currencies on the street is an illegal offence under the country’s laws, attracting a fine or imprisonment depending on the gravity of the offence. Only institutions licensed by the Reserve Bank of Zimbabwe are allowed to offer financial services such as those being offered on the streets. However it seems the police are turning a blind eye as coin traders continue their business in currencies unabated.
Coin traders source change at a rate of $1 for R10 in coins. They, in turn, sell these at a rate of $1 for R8 in coins leaving them with a tidy profit of R2. Armed with backpacks full of coins, the traders provide a reliable and much needed supply to sellers and buyers alike. Kombi conductors and their passengers are key clients.
According to the coin traders, coins are sourced from South Africa and Beitbridge. The liquidity crunch currently hitting the country has also seen a high number of coins in circulation as bank notes are increasingly scarce.
Interestingly, the shortage of coins in Harare has seen the solid R5 coin having the same value as R4 in loose coins in the informal trade. This is slowly changing as some informal retailers and commuter omnibuses are now asking for R5 in loose coins.
Garikai Bakasa, who runs a retail outlet in town, admitted that there is now a surplus of coins, “As retailers we have more coins than we need.”
Other retailers such as Miriam Chimubaira, a tuck-shop owner in Mabvuku, have welcomed the sudden increase in coins as it eases the problem of loose change for their customers. “This development prevents quarrels with our customers, who for a long time have been forced to purchase items such as sweets which they might not need because of a shortage of coins,” said Chimubaira.
However, some consumers have complained that they are being forced to accept a large number of coins as part of their change when purchasing goods or seeking small notes. It is now common practice on the street and in some shops to only get a fraction of the change in coins and at the informal rate.
The trading of currency on the street is not something new to Harare. However, it remains to be seen whether coin traders will stand the test of time like their predecessors, the infamous money changers who are still partially active on the streets, especially along First Street, Eastgate and Roadport, offering ‘cross-rate’ for Rands and Dollars.