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Smart money is in rural Matebeleland

by Sunday Times
26 May 2019 at 20:54hrs | Views
While Zimbabwe grapples with a foreign-exchange shortage, rural districts in Matebeleland North and South have fostered a thriving South African rand economy.

Since the abolition of Zimbabwe's own currency in 2009, the floundering fiscal system has been underpinned by the use of foreign currency, predominantly the US dollar.

Investment economist Colls Ndlovu said use of the rand flourished in rural expanses of the country, because informal economies have synchronised with that of SA.

"It's a model that should be studied by government if they want to change the economy. Adoption of the rand in these areas as the currency of choice is because it is readily available," he said.

"We work in SA and those incomes sustain families. As a result, businesses have found it worthwhile to peg prices of services and goods as they are in SA," Ndlovu said.

The rand is in common usage in the Bulilima district in Matabeleland South, with traders regularly importing goods from SA.

Nene Ngwenya, a general dealer, told the Sunday Times that he imported all his wares from beyond the Zimbabwean border.

"I can even order bread from SA, where it retails for R10, and sell it for R12," he said. "All my products are slightly more expensive than in SA because I factor in transport and other costs.

"I even sell mineral water from SA," he said.

About 100km north, in Tsholotsho, a rural district in Matabeleland North, shopkeeper Leon Tsheza said that dollars and bond notes were a rarity.

Fuel in abundance

"We hardly see any US dollars and we see bond notes, just not as frequently," he said.

"I think this area has the largest rand economy. Even when shopping for groceries the rand is favoured by my clients."

Tsheza said that fuel, often hard to come by, was available in abundance at rates cheaper than in the major centres.

In the Tsholotsho district, petrol retails for R18.20 a litre whereas in cities such as Bulawayo and Harare, motorists pay an average of R22/l.

At the Tsholotsho growth point, a Commercial Bank of Zimbabwe employee, who would not be named, told the Sunday Times that people tended to avoid the banking system and kept their cash in hand. This included savings of schools and government departments, he said.

Drop in remittances

According to government statistics, remittances (money sent home by expatriates) dropped by 11.4%, from $699m in 2017 to $619.2m a year on.

This drop, according to a Reserve Bank of Zimbabwe report, is attributed to distrust in formal channels of sending money back to Zimbabwe.

This discontent has spawned a new breed of informal moneychangers in rural communities as well as in cities.

Sandra Tshuma, who operates from Plumtree in the Bulilima district, said cash was exchanged outside of formal banking channels.

"If one is sending money to Zimbabwe, the person just walks into my shop in Hillbrow [Johannesburg] and leaves it there," she said.

"Using a WhatsApp message to confirm the payment, the money is ready for collection this side in minutes," she said.

"There are no glitches or computer systems involved. I charge 10% for any amount."

Source - Sunday Times