Supplies of Zimdollar notes and coins have dried up, forcing Zimbabweans to pay premium for hard cash.
Walker Ishmael Gombingo sits on the concrete pavement outside a bank in Zimbabwe’s capital, Harare. Elderly and looking dejected, he is one of a growing horde of people forming a line on and off the pavement in the late morning sun.
“I am exhausted. I have been in the queue since 6:00am and I didn’t get anything,” Gombingo told Al Jazeera.
By anything, he means Zimdollars. Also known as “zollers”, physical Zimdollar notes have become increasingly scarce since they became Zimbabwe’s sole legal tender in June.
Zimdollar notes are in such short supply, banks are rationing them.
“I don’t have money to go back to my rural home in Zvimba,” said Gombingo. “I only have a dollar twenty left on me.”
Before trying the bank, Gombingo attempted to finagle some Zimdollars from a bus driver.
“I gave the bus driver my bank card and pin code, so he could buy fuel with my card and then give me cash. But he decided to use someone else’s card,” Gombingo said.
If he can’t withdraw cash from the bank, Gombingo says he will have no choice but to look for it on the black market.
But there is a catch. Zimdollar notes are on the black market are only available at a huge markup, which many Zimbabweans end up paying out of desperation.
A shortage of cold, hard cash has dogged Zimbabwe for years.
Back in 2009, soaring inflation prompted Zimbabwe to ditch its failing sovereign currency in favour of a basket of foreign currencies led by the US dollar. But “dollarising” the economy hit a major bump in 2015 when greenbacks started vanishing from the formal banking system.
In a bid to end the US dollar shortage, Zimbabwe’s central bank introduced bond notes – a form of surrogate currency – that was backed by a $200m bond facility from the Africa Export-Import Bank. But black market speculation quickly eroded the bond note value, triggering a shortage that
the central bank tried to offset by creating electronic notes.
Then this past February, bond notes – both physical and electronic – were merged into the Real Time Gross Settlement (RTGS) dollar, or Zimdollar. An interim currency designed to pave the way for a new Zimbabwean dollar later this year, the Zimdollar quickly fell prey to black market
speculation that sent its value plummeting.
In June, the government moved to defend the Zimdollar against speculators by banning all foreign currencies in local transactions. But the effort has largely failed and the value of the Zimdollar has continued to tumble.
Today, Zimdollars trade at a massive discount of as much as 10.7 to one against the US dollar on the black market.
The less the Zimdollar is worth, the more prices soar, which means the more Zimdollars Zimbabweans need to pay for goods and services.
That exacerbates the shortage of physical notes, which has left Zimbabweans paying outrageous premiums for hard cash.
As of Friday, Zimbabweans wanting to get their hands on physical notes on the black market had to pay a markup of 45 percent. For coins, it was 35 percent.
Many retailers have also factored in these premiums. This means an all-cash purchase can be around 45 percent cheaper than one made on a debit card or using EcoCash- a popular mobile money transfer and payment platform run by the largest mobile phone operator, Econet Wireless Zimbabwe Ltd.
“Even the big retailers are also factoring in this premium,” Gombingo told Al Jazeera, “and they don’t allow you more than one item. It’s very challenging.”
