One popular side hustle that street black market traders have engaged in for the past year is the buying and reselling of torn, soiled and sometimes mutilated US dollar notes. You see them on just about every downtown ledge corner sometimes with loudspeakers loudly entreating members of the public to come and sell their torn and worn-out notes to them. Recently we noticed that most black market street traders were no longer paying cash for torn and worn-out notes.

In fact, in our little experiment, we approached as many as 20 plus traders in both downtown Harare and the usually reliable Mbare traders with a torn USD dollar. There was no one willing to pay Zimbabwean dollar cash (bond notes) for that dollar as is usually the practice. Prior to last week most traders’ street traders would buy torn and worn-out notes at rates of between $400 ZWL (50% discount as the rate was $800 ZWL per dollar back then) and $500 ZWL. Now most dealers are only willing to pay $500 ZWL Ecocash/ZIPIT/Onemoney.

Hakuna mari mudhara kwakaoma kunze uko. Most of our clients are not giving us RTGS to change as usual saying they have received their dues. So hatingambotengi mari dzakabvaruka tichishandisa cash because yakosha. Kunze kwaoma kungouya kugraft kungozvishingisa.

[ There is a liquidity crunch out here. Most of our clients are not giving us RTGS (electronic RTGS) to change [to USD on the black market] saying they have not yet received their dues [presumably from the government]. So we cannot spend the little precious cash we have on torn and worn out USD notes. Things are tough the only receiving we are continuing to operate is because we have no choice]
The familiar story shared by one street vendor

The government turns off the tap

The government through the permanent secretary of Finance, Guvamatanga turned off the RTGS tap resulting in an unprecedented RTGS drought that has arrested the rise of rates on the black market. Black market traders were paying as much as $950 ZWL and even $1 000 ZWL per 1 USD back at the beginning of August 2022 but the government brought the hammer crashing down on the market by ordering a freeze on payments to government contractors whom it accused of fuelling the black market. The government also accused the same contractors of using black market rates when creating quotes they submitted to the government.

There had always been anecdotal evidence that most of the rate spikes seen on the black market were a result of massive payments to government contractors. Whenever contractors were paid for work like construction projects, the theory goes, the contractors would get paid mostly in ZWL. Flush with cash they would rush to the black market to convert their precious ZWL to USD as a way to conserve value. Rumours suggested that most black market dealers were contracted to hunt for USD for these contractors. With most contractors still to get paid the black market dealers manning the streets are basically out of a job for now. The few contractors that have been paid have also been lured into converting their payments into gold coins instead of going the black market route leaving very little RTGS lying around.

Most traders have nothing to buy USD with which has forced black market rates to go down. On the other hand, shops and businesses are wary. They cannot help but get the feeling that this is all temporary and that the dearth of RTGS on the market is not a real shortage. They feel the government is engineering a shortage in a bid to game the system. They suspect the government is still holding large pools of RTGS which they have been holding onto and they fear the deluge will come raining down on their unsuspecting selves soon. Most of them have chosen on a solution the government hoped they wouldn’t settle upon. They are demanding to be paid exclusively in USD.