Last month the Minister of Finance promised that civil servants will be given an allowance of US$75 while their fellow pensioners are set to receive US$30. According to the Finance Minister everything is now in place and civil servants and pensioners are set to start receiving this allowance soon. It is important however to remember that the cards do not allow one to withdraw cash, the money within those cards has to be used in electronic form.

Yes, the modalities for accessing the money have now been put in place. Banks were supposed to come up with ways to open accounts; that has been done, that was the first step.

The second step was to make sure retailers are able to receive payments for goods and services, so that has been put in place.

Please note that there has been progress and that allowance is tax-free as previously announced and we will capture that in the Finance Bill.

Finance Minister Mthuli Ncube

Not “real” USD

The ridiculously named card/accounts

The funds in these accounts ought to be called Nostro USD (another bizarre moniker brought about by Zimbabwe’s unique Economic History). You cannot withdraw the funds, you cannot make international payments with these funds and you only have the government’s word that this is USD in there. As the RTGS saga has taught us, just because someone says it’s USD doesn’t mean it’s USD. If you are wondering what we are rambling about read our excellent guide on the issue here.

As far as we are concerned Zimbabwe now has several “mini currencies” each with it’s own quirks:

  • RTGS ( electronic ZWL) and bond notes and coins (these are now being treated as being on par with electronic funds by a wider section of society)
  • Ecocash (electronic ZWL). In recent weeks, the RBZ has severely limited the mobility of Ecocash
  • ZWL notes (these do not include bond coins and notes which are now rejected by a wider sect of society)
  • Nostro USD
  • USD Cash and Free funds

How will payments be handled in shops

If you walk into the shop with your card, you can do your normal shopping. If USD prices are not displayed, you can just divide the ZWL prices by the day’s applicable “official rate”. You can find the week’s rate here. Once you have the items you need you can then pay at the POS. This is how the transaction will be handled based on the information we have:

  • The cashier adds the total Zimbabwean dollar value of the items
  • You hand them your Nostro USD swipe card
  • The card is swiped and you enter your pin as usual
  • The total Zimbabwean dollar value of your goods/services is sent to the bank.
  • The bank converts this cost into USD based on the day’s applicable official rate
  • If you have sufficient funds the USD equivalent total cost (based on the official rate) plus transaction charges is deducted from your account

This is the same way companies such as MasterCard and Visa process payments when one goes to a country with a different currency. For example if you have a USD MasterCard/Visa and go shopping in South Africa. The entire transaction is in Rand (this will be ZWL in Zimbabwe) but the USD equivalent is deducted by the bank from your account. Knowing this exchange rate is useful in these cases but again the entire transaction is in local currency.

Will I be charged the 2% tax?

No. Civil servants allowances are exempt from the 2% tax according to measures passed in the last budget. This exemption is going to last for 12 months although it’s not clear what happens after this it is likely that this exemption is likely to be extended.

Can I use the card to buy electricity and other transactions

Yes. The transaction will be handled as above. Your ZWL bill (e.g. the cost of your token) is converted by your bank into USD. Let us say you buy $510 ZWL of electricity (i.e. 300 units). The transaction will be handled as follows:

  • You swipe your card
  • The bank (your bank) is sent the charge of $510
  • Your bank divides this by the prevailing rate e.g. $72.15 to get US$7.07
  • A transaction fee is added to the total cost let us say the fee is $0.50 for your bank the total cost for the transaction will now be US$7.57
  • This is deducted from your Nostro FCA Domestic Account

All this is done automatically by the POS and your bank. All you see is yourself getting $510.00 worth of electricity and $7.57 being deducted from your Nostro account.

Is the card accepted on all POS?

Yes the Nostro FCA card will be accepted on all POS. The shops charges you in ZWL and your USD is converted to ZWL on the spot by your bank which will give you ZWL.

Did we say this is different from USD?

Nostro USD is a vast improvement from ZWL but USD it is not. If the rate continues to move in line with inflation it provides a stable way to compensate workers. This all depends on the rate. If the government fixes the rate again, then we are back to square one. There is also another problem, while shops convert your USD using the average rate, prices are calculated into ZWL from USD using another higher rate. This is legal because different companies are getting USD at different rates at the official auction. So it’s likely if you have a Nostro USD card you will end up paying more than a person with actual USD paying USD prices.


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