Back when the Minister of Finance announced that civil servants would be getting paid USD Covid-19 allowances we opined that the government had, in essence, introduced another currency of sorts. You see the allowance came with conditions the biggest one being that civil servants would not be allowed to make withdrawals. The money had to be spent in electronic format. Well, civil servants have now found a way to cash out.
The probem with Nostro USD
As already said the allowances are transferred by the government into accounts of civil servants. The money cannot be withdrawn in the traditional sense creating all sorts of probems:
- Spending the money has proven difficult as few POS machines are processing Nostro USD in shops
- In order to spend the money, civil servants have to liquidate the funds at prevailing official rates which are usually lower
- Some banks are charging ursurious transaction charges so the fewer the transactions you do the better
- As long as the money is in electronic format savings are at risk. What if one day the RBZ governor wakes up in a foul mood and introduces a measure that wipes all those savings. The Central Bank has done worse things like ban agents forever on a whim and with little warning.
- Cheaper tuckshops won’t touch Nostro USD they only accept USD cash/ZWL Notes
- Even if you liquidate your funds they will “not accept” ZWL RTGS so you still need cash.
Civil servants turn to the black market
On the other hand one must never forget that there is still a foreign currency shortage in Zimbabwe. There are individuals and businesses who, for one reason or another, cannot access foreign currency at the famous auctions. For these, the black market is still a valuable source of foreign currency. There is a double coincidence of want here. Civil servants want USD cash/ZWL notes and these entities need foreign currency even Nostro USD will do. From what we have seen in several groups it seems the Nostro USD market is now well established.