Rand slump fuels ‘World Bank’ return

Rand slump fuels ‘World Bank’ return

Appetite for the South African rand has been rapidly declining in Bulawayo

KASINTSHINTSHE, kasintshintshe!
The word, which loosely translated means “let’s change,” has become the buzzword once again along Bulawayo’s busy Fort Street, dubbed the “World Bank”.
For many of the city’s residents, the hive of activity on the pavements and street corners signals the revival of the black market, which had almost disappeared after dollarisation in February 2009.
At its peak, the “World Bank” was not only an abundant source of scarce foreign currency, but it also had access to large sums of Zimbabwean dollars, despite a biting cash shortage which had crippled the country’s financial services sector at the time.
Under the strain of cash shortages, banks were then forced to impose stringent withdrawal limits to depositors.
The “World Bank” had phenomenally collapsed with the introduction of a multiple currency regime that resulted in government ditching the domestic currency to escape a hyperinflationary scourge.
Now, the poor performance of the South African rand against the strengthening United States dollar has injected life back into the “World Bank” and brought cheers to money changers commonly known as “osiphatheleni”, who had all but scaled back on the currency changing activities.
Wearing a black dotted dress, Primrose Sithole sits under an umbrella in the sweltering summer heat, a stone throw away from one of Innscor’s fast food outlets, situated at the “World Bank”, in Bulawayo’s central business district.
Despite the heat, Sithole smiles and flashes a bundle of US dollar notes from underneath the black handbag on her lap.
“What do you want, US dollars or rands?” she asked.
Sithole is just one of the many hundreds of money changers thronging Fort Street who are now back in business, following the slump of the rand against the US dollar.
Unemployed and with two mouths to feed, Sithole explains that she, like many others, have to do what they can to earn a living.
“It’s (exchange rate) not set by anyone here, we just ask each other…and then we take it from there. We also have to make ends meet,” she said.
And it is not hard to see that the good times are rolling again at the “World Bank”.
Two years ago, at end of 2014, the exchange rate between the US dollar and the South African unit was pegged at US$1 to R9. But by the end of December last year, the official exchange rate was hovering at $1/R15,5, a slump of more than 30 percent in the value of the rand.
Cashing in, osiphatheleni, with their own exchange rate, keenly have their hawk eyes trained on locals based in South Africa, known as injiva — who flock to the ‘World Bank’ in search of the greenback.
At the “World Bank”, the exchange rate between the US dollar and the rand is as high as US$1/R16,5.
“If you have the rands, you must change them fast before the rate falls to less than US$5 for a R100,” Sithole urged a motorist in a South African registered vehicle.
Official figures from the Immigration Department suggest that the volume of travellers who passed through Beitbridge Border post in December last year dropped from 1,1 million in 2014 to 680 000 in 2015.
Economists intimate that the weakness of the rand may be linked to the low volumes of travellers from South Africa, which traditionally peak during the festive season.
The appetite for the South African rand has been rapidly declining in the country’s second largest city, once known to have a strong affinity for the rand due to its proximity to the country’s neighbour south of the Limpopo River.
Social commentator, Zibusiso Dube, said osiphatheleni were exploiting a situation, which appears unlikely to go away anytime soon.
“They now have a gap to take advantage of. Since the South African rand is unstable and many shops are no longer accepting the rand, there is room for a booming black market.
“Unfortunately this is leading to distortions in rates, with members of the public often getting ripped off,” said Dube.
“The scenario is not good and it would be good for the government or other relevant authorities to step in and address the problem of the rejection of the SA rand in Bulawayo. It may also be necessary to address the resurgence of the black market,” she added.
With Zimbabwe having no currency of its own, the continued weakening of the South African rand and talk of the increased usage of the Chinese yuan in the multi-currency, the debate on currency is likely to be a major talking point this year.


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