Zimbabwe releasing new $10, $20 notes for circulation

The Reserve Bank of Zimbabwe announced that it was releasing a new $10 bank note on May 19 and that it will be followed by a $20 note going into circulation during the first week of June.

While updated with current security features, the faces of both notes have the standard design used on all Zimbabwean currency since the 1980s up to and including the legendary worthless $100-trillion denomination — a vignette of the Chiremba Balancing Rocks in Epworth, about 8 miles from Harare.

The back of the orange $10 note shows a quartet of water buffalo and Harare’s 28-story Reserve Bank Tower. The blue $20 note depicts an elephant in front of a rendition of Victoria Falls.

The bank disclosed six of the notes’ obvious security features: a recognition feature for the visually impaired; a latent image showing the denomination; optically variable ink with a color shift from magenta to green or green to azure; a security thread with “RBZ 10” or “RBZ 20”; a watermark with “RBZ 10” or “RBZ 20”; and a see-through window of the golden bird, the national symbol, on either side.

The Reserve Bank has usually refused to disclose where Zimbabwe’s bank notes are printed, but the website Zimlive revealed that a Boeing 747 registered to Air Atlanta Icelandic of Iceland unloaded 66 tons of bank notes after arriving in Harare from Leipzig, Germany, on the morning of May 14.

Zimlive speculates that based on the flight’s origin, the printing was probably done at the Leipzig branch of Munich’s Giesecke & Devrient. The Munich-headquartered company has a history of doing business with Rhodesia and its successor state Zimbabwe as far back as 1965.

An “official request” from the German government compelled the firm to stop printing Zimbabwean bank notes in 2008 in reaction to political sentiments against the human rights violations committed under the authoritarian regime of Prime Minister Robert Mugabe, who resigned in 2017 and died in 2019.

Source: Zimbabwe releasing new $10, $20 notes for circulation (25/05/20)

Weakening Zimdollar wreaks havoc

MARKET forces have caused havoc on the Zimbabwe dollar on the parallel market, with the exchange rate shooting to US$1:$70.

Last week, from Monday to Saturday, the US$:Zimdollar rate plunged nearly 23%, with tobacco farmers reportedly calling on government to urgently address the currency instability.

The rapid deterioration has dramatically exposed the futility of government's decision to reintroduce the local unit as the sole legal tender in June last year as all efforts to curb the rising exchange rate have fallen flat.

Reserve Bank of Zimbabwe governor John Mangudya last week told Parliament that parallel market dealers were like coronavirus.

"The Zimdollar experiment and ‘policy missteps' were never going to succeed because the right institutions, i.e a strong and independent central bank; high productivity and production; trust and confidence among others were and are not yet in place.

Economies are not commanded into prosperity," economist Prosper Chitambara tweeted over the weekend.

To mitigate against the growing monetary challenges, the central bank since 2015 has turned to quantitative easing through the issuance of Treasury Bills to increase money supply and encourage lending and investment.

However, Chitambara said this had not worked due to lack of conditions suitable for it.

"It's very easy to run a nominal budget surplus through quantitative easing. The only problem with quantitative easing when you are a highly consumption-oriented economy in an environment of low productivity is that sooner or later, you will end up in a situation where ‘too much money is chasing too few goods'," he said.

The Zimbabwe dollar continues to fall in value due to the currency lacking foreign currency, commodity or market confidence backing.

And with the global coronavirus pandemic, two of Zimbabwe's sources of foreign currency earners exports and foreign remittances are set to be adversely affected, thus weakening the Zimdollar further.

Renowned American economist Steve Hanke rated the Zimdollar as the second junkiest currency in the world.

The main effect of the continued fall of the Zimdollar has been hyperinflation as well as wage and business income erosion that has greatly slowed the economy resulting in an expected double-digit contraction for 2020.

Former Finance minister Tendai Biti reiterated his call for the adoption of the South African rand to stabilise the economy.

"In July 2010 after a meeting in Boksburg, Johannesburg, with Pravin Gordhan (former South African Finance minister), I briefed my principals on the need and imperative of joining the Rand Monetary Union and Sacu [Southern African Customs Union]. The idea was ferociously shot down purely on the grounds of nationalism. South Africa was said to be brash and arrogant," Biti said in a series of tweets last week.

"Be that as it may, adoption of the rand and joining the Rand Monetary Union is the only viable midterm solution. The US$ is overvalued and has appreciated more than 2% in last two years. Zimbabwe must devalue to a stable international currency which is the rand."

As Finance minister, Biti oversaw Zimbabwe's highest consecutive growth rates between 2009 and 2012 since independence based on statistics of the country's gross domestic product at the World Bank.

"With the US$ now trading above $65 on the parallel market, it is time the regime accepted the failure beyond any shadow of doubt of its monetary and exchange rate policies. We have constantly argued that you can rig everything else, but not the economy. An urgent reset is required," he said.

Source: Weakening Zimdollar wreaks havoc (25/05/20)

Zimdollar wreaks havoc

THE Zimbabwean dollar has continued its dramatic meltdown as it weakened even further against the greenback this week, 263 days after it was made the sole legal tender.

The local unit has plummeted from ZW$29 to the United States dollar to ZW$40 this week on the parallel market as the authorities struggle to defend the increasingly unstable domestic currency.

Government freed the exchange from February 20 last year as part of currency reforms. It then brought back the hitherto demonetised Zimdollar on June 24, unexpectedly banning the multi-currency system which ensured exchange rate stabilisation and ended hyperinflation in 2009. However, the currency reforms have failed to shore up the local unit which is in freefall.

Currency and exchange rate volatility have had a serious impact on the economy and people's livelihoods with a recent wave of price increases of basic commodities such as bread and cooking oil.

Standards of living for ordinary Zimbabweans and business operations have deteriorated, amid tumultuous price escalations and rapid erosion of income with year-on-year inflation nudging towards the 500% mark.

In a desperate bid to stabilise the exchange rate, government this week set up a "Currency Stabilisation Taskforce" among a cocktail of measures.

Finance minister Mthuli Ncube announced this week the formation of the taskforce spearheaded by his ministry and the Reserve Bank of Zimbabwe and which will include members of the Monetary Policy Committee and Presidential Advisory Council. The new taskforce will be chaired by Ncube.

Among the measures announced by the Treasury boss is the introduction of a "managed Floating Exchange Rate System", in which an electronic forex trading platform based on the Reuters system has been put in place with immediate effect.

"Zimbabwe has had no transparent and effective foreign exchange trading platform for a long time. Consequently, official rates have not been effectively determined, while a thriving parallel market has developed. To correct this anomaly, an electronic forex trading platform based on the Reuters system is being immediately put in place," Ncube said.

Source: Zimdollar wreaks havoc (13/03/20)

US dollar returns as Zimbabwe govt wavers on use of local currency

THE Zimbabwean economy is reverting back to the US dollar less than a year after the government reintroduced the local currency to assert economic independence.

Over the past month, local businesses have resorted to using the dollar and civil servants want their pay disbursed in greenback, making the government’s policy useless.

In June last year, Zimbabwe abandoned its multi-currency regime, which included the South African rand, US dollar and Chinese yuan; following a decade of dollarisation that was forced by record hyperinflation.

President Emmerson Mnangagwa’s government at the time said the adoption of the Zimbabwe dollar was meant to breathe life into the economy. Now that experiment has been nothing short of a disaster.

The government is now giving certain sectors such as tourism and the fuel industry permission to charge in dollars.

The Reserve Bank of Zimbabwe (RBZ) argued that it was struggling to harness foreign currency locally to pay for critical imports, this had to endorse the policy reversal. But, it seems the entire economy is going back to the dollar.

Civil servants have, since last year, been pushing the government to pay their salaries in foreign currency, arguing that their incomes are being eroded by hyperinflation.

Doctors working in public hospitals went on strike for over four months demanding to be paid in foreign currency.

They only returned to work in January after billionaire Strive Masiyiwa offered $6.25 million to pay their salaries.

Even informal traders now reject the local currency citing its instability and hyperinflation.

The government already allows for the use of foreign currency for payment of Customs duties on selected products, paying for emergency passports and basic commodities such as food items and fuel.

The hospitality industry is allowed to operate in foreign currency under a special dispensation.

Tony Hawkins, an economist in Harare said the government’s expansion of hard currency exemptions for many sectors was proof that it was fighting a losing battle against the dollarisation of the economy.

“Evidence suggests that de-dollarisation has not worked,” Mr Hawkins said.

The University of Zimbabwe economics professor warned that history was repeating itself citing the 2009 shift to multi currencies where the government had to take a cue from the market.

“Unfortunately, the market decides for the government and not the other way round. So we should stick with the devil we know, which is the dollar.

“The only problem with the dollar is that the authorities can’t print it, but they are spending too much in relation to their revenues,” said Prof Hawkins.

Morgan & Co, a stock brokerage firm said it was clear that Zimbabwe was returning to the dollar instead of cushioning the local currency as shown by the waning confidence in the local currency.

“We are perplexed by the fact the monetary authorities in the country exhibit a lack of touch and appreciation of developments within the broader monetary system,” said Morgan & Co in a review of the RBZ’s latest monetary policy.

“Our concern is that those that follow economic policy developments in Zimbabwe will have to separate fiction from reality so as to make sound investment decisions.”

On Wednesday last week, the International Monetary Fund said Zimbabwe’s economy, which shrunk by 8.3 percent last year, will see stagnation in 2020 with growth of only 0.8 per cent.

The IMF had originally forecast growth of 2.5 per cent in 2020, but revised the projections in the face of another devastating drought.

Morgan & Co said declining exports and low production will put more pressure on the local currency, which might eventually lead to its collapse.

“Industry capacity utilisations have fallen to 27 per cent given that forex shortages are limiting the ability to import critical raw materials,” the firm added.

“We cite that low production volumes will ultimately lead to diseconomies of scale and increase in the cost of production.”

RBZ governor John Mangudya, however, insisted that Zimbabwe’s economy was not dollarising, saying the decision to allow fuel retailers to charge in foreign currency was a strategy to mop up the US dollar that was flooding the parallel market.

“The issue is basically about supply and demand,” Dr Mangudya told Parliament last week. “Foreign currency earned through diaspora remittances tends to go to the parallel market.

“The issue is how do we harness that money into the formal system.

“For instance, we have a fuel bill of $500 million (a month). So it means that if we allow, for example, 30 per cent of the fuel bill to be funded through free funds, it will result in a 30 percent foreign currency saving, monies that will then flow to the interbank market for other uses.”

Zimbabwe has been facing an acute shortage of fuel since late 2018 due to lack of foreign currency.

The country is also struggling to import adequate grain to feed more than half of the population, which aid agencies say face starvation this year unless there is intervention from donors.

Dr Mangudya said the expanding foreign currency exemptions should not be mistaken for a policy shift towards the dollarisation of the economy.

“Allowing the use of free funds within the national economy for payment… should not be misconstrued as going back to dollarisation, but rather, as common good for the country to promote inflow of free funds from the diaspora and necessary to buttress the confidence that is needed under the de-dollarisation process,” the central bank boss said.

Zimbabwe received $635 million in diaspora remittances in 2019, which was a 2.6 per cent increase from the previous year.

President Mnangagwa has been struggling to deliver the swift economic revival he promised at the beginning of his presidency.

His government blames sanctions imposed by Western countries and successive droughts for the stalled economic turnaround.

The European Union, which renewed an arms embargo against Zimbabwe a fortnight ago, says its restrictive measures have nothing to do with the Southern African country’s economic troubles.

On the other hand, the IMF urged the country to fight corrupt “vested interests” and come up with a debt repayment plan in order to win support for its economic reforms. – The East Africa

Source: US dollar returns as Zimbabwe govt wavers on use of local currency (03/03/20)

Nation embraces Zim dollar. . . Country has returned to normalcy, President says

Leonard Ncube in Victoria Falls 

PRESIDENT Mnangagwa yesterday said the removal of the multi-currency regime marks the country’s return to normalcy while assuring Zimbabweans that the Bond note will not be decommissioned.

Finance and Economic Development Minister Professor Mthuli Ncube on Monday removed the multi-currency basket of currencies and restricted domestic transactions to the local currency, now renamed Zimbabwe dollar, to enhance affordability of goods.

This came in the wake of an outcry by ordinary Zimbabweans as the market was choosing to price goods and services in United States dollars when the majority of citizens earn local currency.

Briefing local and foreign journalists on the sidelines of the African Union-United Nations Wildlife Economy Summit here yesterday, President Mnangagwa said the country had properly planned for the decision it took.

“The recent events were indicative of what was coming and what has come is that Zimbabwe has gone back to normalcy which is having our own currency.

“We were living in an abnormal situation and we said we will only move when fundamentals are correct, and we have moved because fundamentals to support the local currency are in place,” he said.

Asked about the rate at which the local currency will start against other currencies, President Mnangagwa said: “People will ask questions because there is confusion but there is no change. All that has changed is that we have removed the basket of currencies.”

He would not be drawn into commenting on how much reserves the country has mobilised to support the new currency. President Mnangagwa said those who want foreign currency would have to buy it from the formal market.

“Our currency denominations are in coins, Bond notes and RTGS and all that is domestic but we have not banned possession of any other currency except that you can’t buy with it. We have removed the basket of currencies and if you want to transact in any shop, if you want to buy your tea in US dollar, then you must go and change at the bureau de change. That’s what is done and that is normal,” he said.

Posting on his Twitter account yesterday, President Mnangagwa conceded economic growth remained a mirage, hence the need to introduce a local currency.

“It has always been clear that for our economy to truly take off, we need our own currency. While the multi-currency regime helped to stabilise the economy, it did not give us control of monetary policy and left us at the mercy of US dollar pricing which has been a root cause of inflation.

“When the majority earn in the local unit, but goods are priced in US dollars, the outcome will only ever be a two-tiered economy: stable and affordable prices for those with access to (US) dollars, while the majority face an unrealistically high cost of living. This is unfair and unsustainable,” said President Mnangagwa.

He explained that before the introduction of a local currency, it was important that “key fundamentals” were first put in place. 

“Central to this was regaining control of our budget through decreased spending, increased revenues and, for the first time in recent memory, budget surpluses.

“Under the careful guidance of (Finance Minister) Professor (Mthuli) Ncube, this has been achieved. As a result, yesterday (Monday) we passed a Statutory Instrument to abolish the use of multiple currencies, and make the Zimbabwe dollar the sole legal tender with immediate effect. 

“This is a key component of our Transitional Stabilisation Programme, and an important step in restoring normalcy to our economy. Government and the RBZ are taking the necessary steps to ensure this move is a success, through increasing the flow of forex into the interbank market while also making forex available to individuals and small businesses through bureau de changes,” said President Mnangagwa.

The country’s prime resort town of Victoria Falls had almost dollarised itself as shops, property owners, transport operators and some dealers were now refusing to accept payment in local currency.

Yesterday shops had stopped accepting payment in US dollars.

Meanwhile, Zimbabweans have embraced the return of the Zimbabwe dollar and by yesterday a majority of businesses in Bulawayo, including those who were previously trading in forex, had indexed their prices in local currency.

The country officially ditched the multi-currency regime on Monday after Government gazetted Statutory Instrument 142 of 2019, which restricts all domestic transactions to local currency terms.

A snap survey conducted yesterday revealed that several retail shops in Bulawayo had already complied with the new policy and were selling their products in local currency. Although others had adjusted prices upwards, they were no longer accepting foreign currency payments from their customers.

The Chronicle visited established shops like Pick n Pay, Greens, OK and Innscor outlets who had complied. Several basic consumer goods outlets, pharmaceutical and clothing shops had also complied. Business was low especially at clothing retail shops due to exorbitant pricing. However, some selected traders were defiant especially flea market traders, stock feed and veterinary product dealers, hair products and cosmetics.

Some service stations like Flo stuck to forex while Busuman service station in the CBD was closed. In most of the shops visited, customers had to ask for prices on the tills as they were not displayed and would be shocked to be told of ridiculously high prices. 

Meanwhile, several illegal forex dealers, Osiphatheleni, had temporarily stopped their operations citing uncertainty over rates. In some instances rates were said to have tumbled to as low as ZW$5.5 per US$1 and ZW$25 for R100. 

Members of the public also expressed relief saying the multi-currency regime had become a haven for currency distortions and profiteering by unscrupulous businesses and cartels. 

“I think this is good considering that people were economically abusing us in the name of the United States dollar and rand. Everything is rated in forex and I think the new intervention will correct the market,” said Mr Effort Tarwirei, a taxi driver.

Recently some landlords had started demanding foreign currency payments despite the fact that most Zimbabweans were earning their salaries in local currency. 

Confederation of Zimbabwe Retailers president, Mr Denford Mutashu, said his organisation fully embraces the local currency and supports measures to stabilise the interbank foreign currency market. He said pricing distortions arising from the inflated parallel market had left most Zimbabweans reeling and on the brink of total poverty. 

Mr Mutashu said the country was right to move on and embrace its own currency for the economy to fully take off. He urged manufacturers, millers, bakers, and all suppliers to comply forthwith. Mr Mutashu warned the business sector against removing goods from shelves, saying such malpractice was retrogressive.

Zimbabwe Teachers Association (Zimta) president Mr Richard Gundane said the new policy should leave workers earning enough money to take care of their families.

“We’re yet to learn and understand the full implications of this policy change. For the teachers the urgent need is a living wage at the bottom line and salaries that are commensurate with one’s rank and qualifications. Any changes that are progressive should achieve this benchmark,” he said. 

However, Great Zimbabwe University (GZU) lecturer, Professor Munashe Shoko said Government should have consulted widely before introducing the Zim-dollar.

“The market may stabilise but there is danger that it can react negatively, again, if there are no checks and balances on corruption as well as money laundering,” said Prof Shoko.

Source: Nation embraces Zim dollar. . . Country has returned to normalcy, President says   (26/06/19)

Zim to abolish multi-currency

PRESIDENT EMMERSON Mnangagwa has revealed that government had resolved to abolish the multi-currency system and ensure that all transactions are conducted using a local currency to be introduced into the market before year-end.

Addressing Southlea Park residents in Harare after a clean-up exercise yesterday, Mnangagwa said the multi-currency regime had been adopted to deal with the hyper-inflation experienced between 2008 and 2009, but there was no longer any basis to retain it.

Mnangagwa said the multi-currency regime had served its purpose and would soon be put to bed, an announcement likely to trigger panic in the already jittery financial market, where the RTGS$ is fast long value against the US$ each day.

“In 2008-2009, for those who were older, you will remember that our money (Zimbabwe dollar) collapsed to a point that one would wake up as a billionaire after going to bed a millionaire. Others became trillionaires,” he said.

“So, the government at that time sat down after seeing that our money was now valueless and came up with a basket of currencies, which included the American dollar, (South African) rand, (Botswana) pula and other currencies used to trade locally, so that we solve the problems which had befallen us at that time.

“But we can’t walk our journey without our own currency. There is no country without its own currency. South Africa has its rand. If you go to South Africa with an American dollar, a euro or any currency, you go to the bank and change it and get the rand. This is what you use in shops in that country. If you go to Botswana, Malawi or Zambia, you do the same.”

Mnangagwa said the current price fluctuations being experienced in the market were being caused by the absence of a local base currency.

“The country can’t prosper going ahead without its own currency. Currency from other countries is printed by those countries. We only get it if we export, then you get paid in foreign
currency, or those with friends and relatives in the diaspora, you will receive it,” he said.

“As a country, we must have our own currency. That journey, we have started. We have started that journey because right now you go and sleep when the US dollar is trading at 1:5 (against ZWL$), the following day you wake up, it will be trading at 1:7 and it (ZWL$) keeps losing value and after they have said that, then they increase prices citing the exchange rate,”

The new currency, according to Mnangagwa, will end 11 years of a multi-currency regime.

“We are going to a point where it will be illegal to trade using the American dollar or (British) pound locally. You can keep it in your pocket, but when you want to buy, you will
have to change it to local currency,” he said.

“In our plan as government and our economics, we are predicting that by year-end, the things that I am speaking of will have happened.”

Former Finance minister Tendai Biti, speaking in London early this week said the only way to save the Zimbabwean economy was to re-dollarise, adding a local currency could not be sustained given the poor levels of productivity.

Source: Zim to abolish multi-currency (8/6/19)

Zimbabwe: U.S.$53m Compensation for Displaced Farmers Reconfigured to RTGS$

The US$53 million that was allocated in this year's budget to compensate white farmers, who lost farms during the chaotic land redistribution exercise of 2000, has been reconfigured to RTGS$53 million, and will only be for "interim relief" purposes and not for the actual damages being sought, the Zimbabwe Independent can report.

This interim relief package would translate to about US$10 million on the interbank market introduced in February under a raft of monetary policy reforms.

Under last year's budget, government set aside US$53 million to compensate the affected white farmers, but cash-strapped Harare devalued it into the local currency.

This week, government said 737 former farm owners were eligible to receive "payments" under the "Relief Payment Scheme", with an evaluation exercise on the farms having been finalised last month.

"The registration of former farm owners for the interim relief payment scheme to the distressed former farm owners has been completed, with 737 farmers having been registered for the payments.

"The verification exercise of the registered farmers by the ministry of Lands, Agriculture, Water and Rural Settlement has begun and will be completed by 31 May 2019.Payments to the former farm owners will start immediately after the verification exercise," read a statement issued by government this week.

Commercial Farmers Union (CFU) director Ben Gilpin told the Independent this week that deliberations with government on the actual compensation amount were still ongoing, and that it would likely dwarf resources currently being disbursed under the Relief Payment Scheme.

"Compensation sounds like the liabilities are settled. In reality this is a start and no more. The exercise referred to is for interim relief. The money allocated comes from the US$53 million in last year's budget allocated to pay for improvements made on acquired farms. As a result of dialogue, this money is now denominated in RTGS dollars," Gilpin said.

"The amounts paid now will help mitigate the circumstances of struggling ex-farmers until a substantive agreement and modalities are in place to meet the actual liability which is much greater than this initial relief payment."

Under the Relief Payment Scheme, about 900 applied out of the 3 300 affected farmers on the CFU records.

Each of the eligible candidates for relief payment is earmarked to receive RTGS$55 000, which translates to about US$10 000 on the interbank market introduced in February under a raft of monetary policy reforms.

Gilpin said disbursements under the Relief Payment Scheme are being hampered by "some administrative delays" arising from farms owned by "multiple shareholders."

Source: Zimbabwe: U.S.$53m Compensation for Displaced Farmers Reconfigured to RTGS$ (7/6/19)

Zimbabwe's Quasi-Currency Continues on Its Precipitous Slide

Zimbabwe’s currency crisis deepened on Tuesday as its quasi-currency, known as the RTGS$, extended its slide against the dollar amid a shortage of hard cash.

The RTGS$, which represents all mobile, electronic and domestic card transactions, reached nine against the greenback, from seven a week ago and three at the beginning of the year. So-called bond notes, introduced by the central bank in 2016 and supposedly backed by hard currency, traded at eight per dollar.

The U.S. dollar, which as been legal tender in Zimbabwe since 2009, has been gaining against RTGS$ and bond notes because traders can’t use them to pay for imports. That forces them to pay a premium for greenbacks.

The result has been crippling fuel shortages, and the re-emergence of black markets for fuel and currency. Adding to Zimbabwe’s woes, the state-owned power utility, Zesa Holdings, is cutting power for as long as 16 hours, three days a week after a drought crippled capacity at its Kariba hydro-power plant.

Large, listed supermarkets, state-owned enterprises like Zesa and listed companies like Econet Wireless Zimbabwe Ltd. price goods at the official exchange rate of about RTGS$5 per dollar. Everywhere else, the black market rate or street rate applies, with retailers offering discounts of as much as 80% for hard currency.

While the official inflation rate was 76% in April, that applies to goods paid for in RTGS$. Dollar prices, by contrast, are declining. The government may step in “aggressively” with measures to correct the divergence between the official RTGS$ exchange rate and the black-market rate, according to Harare-based economist John Robertson.

The measures could include penalties “within days” for banks that keep the official interbank rate low while charging high commissions, he said.

Source: Zimbabwe's Quasi-Currency Continues on Its Precipitous Slide (4/6/19)

RBZ introduces “RTGS Dollars”

Reserve Bank of Zimbabwe (RBZ) governor John Mangudya said RTGS, bond notes and coins are to be immediately denominated as ‘RTGS dollars’.

He said the legal instrument giving effect to this has been prepared and will be gazetted soon. He said RTGS dollars have become one of the currencies in the currency bucket of the multi-currency system of the economy. The RTGS dollars shall be used by all entities in Zimbabwe for the purposes of pricing of goods and services, debts, accounting and settlement of transactions.

Mangudya said the central bank has put in place measures to maintain stability as we establish an interbank foreign exchange market in Zimbabwe to formalise the exchange of Bond and RTGS with USD and other currencies”

Source: RBZ introduces “RTGS Dollars” (20/02/19)

Zimbabwe retailers lose out to desperate street vendors

Harare (AFP) - The cries of street vendors have become the soundtrack to Zimbabwe's collapsing economy as increasing numbers of the unemployed try to eke out a living, leaving shopkeepers -- and the taxman -- poorer.

Redundant workers, school leavers and college graduates have spawned a new phenomenon of "shop-front stores" in major cities, where they peddle anything from medicines to vegetables, pirated CDs and clothes -- often on the doorstep of legitimate shops selling similar items.

For 39-year-old Sherry Njere, a mother of three with an unemployed husband, street vending is a matter of survival.

"I am doing this not because it is something I decided to do in life, but it is because there are no jobs," Njere said at her self-allotted post outside a school uniform shop -- where she also sells school uniforms.

"If I don't do this and just sit at home my children will die of hunger."

Zimbabwe's economy has been on a downward spiral for more than a decade following President Robert Mugabe's land reforms, which broke the country's agricultural backbone.

Laws which require locals to hold majority stakes in all firms are also blamed for scaring off foreign investors.

Mugabe, 91, who has been in power since independence from Britain in 1980, was re-elected in 2013 on the promise of creating two million jobs, but independent economists say unemployment is running at around 80 percent.

The UN World Food Programme says 72 percent of the population live below the national poverty line of less than $1.25 per day.

Njere, whose prices mostly undercut those in the shop behind her, says that on a good day she earns $50, which she splits between ordering new stock and buying daily provisions for her family.

Shop manager Canton Matope bemoans the influx of unlicensed vendors, saying they are taking business away from the formal economy.

"They put their wares on our doorsteps and accost customers, telling them that our prices are slightly higher than their prices," he complained.

Shop owners cannot match the prices of vendors as they are burdened by taxes, rent, salaries and licence fees, he said.

- Cutting the tax base -

The director general of the Zimbabwe Revenue Authority, Gershem Pasi, said the growing number of vendors was eroding the country's tax base.

"We are receiving complaints from formalised businesses that they are no longer able to do sufficient business to meet their tax obligations," he said.

"Most of the vendors we now have are young people and I am sure most of them would not want to be doing vending if they had an opportunity to go into formal employment," Pasi said.

"We are creating a generation which may never know what formal employment is all about and that generation is wasted investment."

Last month, hundreds of street vendors petitioned parliament after authorities threatened to move them off the streets, by force if necessary.

The protestors said they were not vendors by choice and demanded that the government create jobs for them instead.

A June 26 deadline for them to take down their stalls passed without action, and so far it has been business as usual for the vendors, who make use of any available space to display their wares and render some pavements almost impassable.

"I don't know if the authorities will be able to remove the vendors and what force they will use to remove them," Matope said.

If the government uses force to clear out the vendors, it wouldn't be the first time.

In 2005, riot police were deployed to remove informal traders and demolish backyard buildings, a move that was condemned by the United Nations.

The operation, code named "Murambatsvina" or "Drive out filth", resulted in 700,000 people losing their homes and their source of livelihood, a UN report said.

While the official threats of a new crackdown remain, Mugabe's wife, Grace, has urged police not to arrest unlicensed vendors in urban centres.

The call was interpreted as tacit approval of illegal vending and led to a fresh influx of vendors disregarding municipal zoning by-laws.

"We once had problems with shop owners, but when we were given a go ahead to sell then it wasn't a problem," said Brighton Chidehwe, 28, a former security guard who sells books and shoes.

Source: Zimbabwe retailers lose out to desperate street vendors (14/07/15))