Every time we go out to do our shopping or price surveys we have noticed that dollarisation has become almost universal. While some of it obvious with for example hardware sellers demanding USD payments outright most of the time it’s well hidden as scared traders try to comply with the government rules.
One remarkable case is that of vegetable vendors at Mbare Musika by vegetables we mean real vegetables such as Covo, spinach and Mustard Greens (Tsunga) here. A small bundle of vegetables is now selling for $2 bond.
Now at a glance that doesn’t look like dollarisation at all after all these elderly ladies make it a point of refusing USD. However, if you take a pause and do the math it all comes to you. Again if you use the current black market rate of $16 bond for $1 USD you won’t even see it. That’s easy to understand, Mbare has never been about direct math it has all been about barter and parity. Let me explain.
Right now mealie-meal sells for $5 USD on the black market or $100 bond. You need to sell 50 vegetable bundles to buy 10kg of mealie-meal. If you recall the price of mealie-meal in 2016 was $5/10kg. Back then that small bundle cost $0.10 US. You needed to sell 50 of those little things to buy 10kg.
In fact as the grocery shops within the Mbare area dollars and go back to USD era prices the elderly ladies that sell vegetables are adopting parity in this regard more and more. They will settle at a price that will make sure that they keep getting the same amount of the given item as before.
Still confused? Let me give you another example. Right now bread costs $18 bond at Mbare Musika. You need to sell 9 bundles to get that much. Back in the USD era bread cost $0.90 you needed to sell 9 bundles to get a loaf too.
In fact, you can take sugar, cooking oil and whatever product you want and these vendors will get you every time with their calculations and how they match in terms of the price of those veggies. Naturally, sometimes it’s not perfect but one thing is certain.
What is happening is that prices of everything are being adjusted in such a way that arbitrage opportunities that those with USD used to enjoy are now disappearing. People may still be charging in bond and RTGS but everyone is now keenly aware of the rate and those prices in such a way that everyone is charging prices that are tuned in to that rate.
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