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ABSTRACT
Formal and informal trade and economic enterprise in Zimbabwe have in recent years become more complex due to multi-layered modes of exchange available to the public. This article examines informal currency trade complexities in Nkayi – a district in Zimbabwe – within the context of a multi-tiered monetary system. It traces the complexities through cash, mobile money and point-of-sale transactions. Contrary to the literature on financial participation in Zimbabwe that is characterized by binaries such as inclusion/exclusion and rural/urban, I argue that financial inclusion is a complex process fraught with various price regimes and complex social economies as well as some illicit activity. While inflationary pressure and cash shortages equally typify the complexity, the mitigating factor among actors is trust, which is built on often mutually binding social networks. This trust, I argue, is a key ingredient for engagements with the government, whose past actions continue to be a source of angst.
RÉSUMÉ
Le commerce et les entreprises économiques formels et informels au Zimbabwe sont devenus plus complexes ces dernières années en raison des modes d’échange à plusieurs niveaux accessibles au public. Cet article examine les complexités du commerce monétaire informel à Nkayi – un district du Zimbabwe - dans le contexte d’un système monétaire à plusieurs niveaux. Il retrace ces complexités par le biais de transactions en espèces, en argent mobile et aux points de vente. Contrairement à la littérature sur la participation financière au Zimbabwe, qui est caractérisée par des binaires comme inclusion/exclusion et rural/urbain, je soutiens que l’inclusion financière est un processus complexe comportant divers régimes de prix et des économies sociales complexes, de même qu’une certaine activité illicite. Si la pression inflationniste et les pénuries de liquidités caractérisent, de manière équivalente, la complexité, le facteur atténuant parmi les acteurs est la confiance, qui se construit sur des réseaux sociaux souvent mutuellement contraignants. Je soutiens que cette confiance, est un ingrédient essentiel des engagements avec le gouvernement, dont les actions passées continuent d’être une source d’angoisse.
Acknowledgements
I would like to acknowledge my colleague Admire Thonje for his unwavering support during the process of research for this paper.
Disclosure statement
No potential conflict of interest was reported by the author.
Notes
1. This provincial figure includes both urban and rural branches. Gweru and Kwekwe – the fifth and sixth largest cities, respectively – are situated in the Midlands Province.
2. While mobile money is dominated by Ecocash, One Money (which is a NetOne brand) and Telecash (owned by Telecel) are also active within the mobile money market. Despite mobile money’s importance for many people in the country, it has been disrupted by government regulation and interference. During the peer review phase of this paper, numerous significant changes in Zimbabwe’s financial services industry and especially regarding mobile money usage were made. The first salvos signaling a tense environment came in 2019 from state officials who accused Ecocash of allowing its agents to engage in illicit, exploitative and speculative money activities on its platform. In response, Ecocash suspended 4000 of its agents (https://allafrica.com/stories/201909190156.html). The response by Ecocash was not entirely satisfactory to the government and Zimbabwe African National Union Patriotic Front (ZANU PF) officials, who continued to accuse it of being complicit in inflationary activities and even economic sabotage (https://zimmorningpost.com/zanu-pfs-youth-leader-guns-for-econet/). Although criticism was harsh, little had been done by the government to intervene in the company’s operations until midway through 2020. With the economy under immense strain, some key politicians accused of corrupt practices, resources stretched under the COVID-19 global health pandemic and political unrest threatening to surface, the state once again publicly turned against Ecocash (https://qz.com/africa/1855919/zimbabwes-reserve-bank-says-ecocash-running-ponzi-scheme/). At this stage, in June 2020, the exchange rate on the black market had reached US$1 = Z$100, in stark contrast to the official rate set at US$1 = Z$25. Significantly, not only were cautionary statements made, but a statement was released by the Information Ministry’s permanent secretary Ndabaningi Mangwana that Ecocash had been suspended from operating (https://www.ft.com/content/f0d7ab8a-ea25-4599-b5ab-17cf4c1919a0). The statement was made abruptly, without forewarning to users. In the same statement, the Zimbabwe Stock Exchange was also suspended from trading. Ironically, the state questioned the legal existence of Ecocash. Ecocash responded in defiance of the directive of the statement, arguing that it adhered to regulations pronounced by the Central Bank. A day later, the governor of the Reserve Bank of Zimbabwe issued a statement enabling ordinary users to use Ecocash but maintaining the ban on Ecocash agents (https://zimbabwevoice.com/2020/06/28/mangudya-corrects-nick-mangwana-on-ecocash-ban/).
3. Reserve Bank of Zimbabwe, Exchange Control Division – History of exchange controls in Zimbabwe, http://www.rbz.co.zw/reserve-bank-of-zimbabwe-exchange-control.html
4. I use the term black or parallel market here to distinguish it from the broad informal economy also discussed in the paper. This distinction is purely for descriptive purposes.
5. Pseudonyms are used for all participants to protect their identity.
6. No less than eight currencies are officially recognized in Zimbabwe as legal tender, although the US dollar and the South African rand have been most dominant due to the universality of the dollar and the high trade volumes with South Africa. Currencies recognized include the US dollar, South African rand, Botswana pula, British pound, Japanese yen, Chinese yuan, Australian dollar, Euro and bond notes.
7. The general tenor in the state media is that money changers are a hindrance to economic growth in general and the problem in liquidity shortages specifically (see for example http://www.sundaynews.co.zw/bond-notes-shocker-forex-dealers-exporting-notes-foreign-businesses-not-banking-us-dollars/).
8. For a history of exchange rate controls in Zimbabwe, see: http://rbz.co.zw/reserve-bank-of-zimbabwe-exchange-control.html
9. Annual inflation noted in the fourth quarter of 2017 had risen to 3.5%, from 2.2% in October. See http://www.zimtreasury.gov.zw/index.php/treasury-quartery-bulletins?download=124:2017-fourth-quarter-treasury-bulletin
10. There are many other products such as Ecosure Moovah (offering insurance products) and EcoFarming (offering support in agriculture).
13. This was common where the retailer did not use the merchant facility on Ecocash.
14. A resident of Nkayi, a close friend of Kauleza’s and well connected with some shopkeepers.
Additional information
Notes on contributors
Whitehead Zikhali
Whitehead Zikhali is a Zimbabwean social scientist, currently working for the United Nations in Sudan. He has, over the years, researched and lectured variously at colleges and universities in Zimbabwe. He has also consulted for SADC in areas of peace and conflict, gender studies, poverty reduction strategies, community development, and peace and security. He earned his PhD in development studies from the University of Fort Hare, in South Africa. He is a renowned scholar who has published articles in several peer-reviewed journals and two books.