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People line up for U.S. dollars at banks in Harare, Zimbabwe, early in the morning on Dec. 24, 2021, with some of them having slept there.JEKESAI NJIKIZANA/AFP/Getty Images

Adriana Siwela, a 25-year-old college student in Harare, thought she could dash into a shop for a quick purchase of a US$2 packet of biscuits. But the cashiers sent her away. Her US$20 bill is considered “big money” in Zimbabwe these days – and big trouble for shops, which often cannot provide change for them.

She had to sprint out of the shop and into the car park, where a bevy of unlicensed currency traders offered to swap her U.S. money for a bundle of Zimbabwean bills, known as Real Time Gross Settlement (RTGS) dollars. And they would only exchange the money at the official rate of 115 to the dollar, far below the informal market rate.

“It´s a frustrating situation,” Ms. Siwela said. “A transaction of a minute swells to 10 minutes.”

Fourteen years after Zimbabwe first adopted the U.S. dollar as legal currency, it is still widely used here, in response to a soaring inflation rate that constantly erodes the value of the official RTGS currency. Yet it can be a nightmare for customers to use dollars in local shops, since few have change. Small bills are hard to find, and often reused to the point where they are tattered and worn, while coins are almost non-existent.

A common street joke in Zimbabwe is that a shopper waving a U.S. dollar bill can buy a delicious dinner – but one with a $100 bill will end up with an empty stomach.

The Zimbabwean government’s currency policies are a confusing muddle, reflecting the disarray of its economic policies. Supermarket prices are usually marked in the official currency, but U.S. dollars are routinely accepted, sometimes at separate tills. Fuel stations insist on U.S. dollars, while restaurants provide booklets of prices in U.S. dollars – even as some merchants are threatened with arrest if they quote U.S. dollar rates.

A typical cashier´s day means handling a queue of customers presenting a slew of different payment methods: the official RTGS currency (including an earlier currency known as bond notes), U.S. dollars, electronic money swiped on debit cards, and Eco Cash, an e-money payment system that uses a cellphone PIN.

The result is shopping in Zimbabwe’s retail outlets can stretch one’s patience. In the queues at the cashiers, shoppers can be waving up to four payment methods. A customer who wants to buy an ordinary soft drink can be accosted by strangers, pleading to let them pay for your drink with their bank debit cards in exchange for RTGS notes or U.S. dollars, which they can then use for bus fare or pints of beer.

Many Zimbabweans are reluctant to use the local RTGS currency, since some shops – in violation of laws – give discounts to buyers using the U.S. dollar. The Zimbabwe central bank recently arrested business owners who quoted illegal black-market dollar rates to customers.

When customers use smaller U.S. bills, change is either handed out in RTGS dollars or small unwanted items such as matchstick boxes. Coins, either U.S. or Zimbabwean, are hard to find, largely as a lingering result of the era of hyperinflation in the early 2000s, when Zimbabwe’s economy was heavily damaged by corruption, land grabs, suspension from IMF/World Bank budgetary support help, and U.S.-EU financial sanctions. Even today, Zimbabwe’s annual inflation is close to 60 per cent.

“Zimbabwe does not have a formal agreement with the United States government or its monetary authorities for the supply and use of the U.S. dollar as her currency for transactional purposes,” Dr. Clever Mumbengegwi, a senior economics professor at the University of Zimbabwe, told The Globe and Mail. “Therefore, it does not get the supply of USD directly from the Federal Reserve but from secondary sources such as exports, foreign aid, diaspora remittances and currency imports.”

In 2009, because of debilitating hyperinflation of up to 231,000 per cent, Zimbabwe formally designated the U.S. dollar as a currency. But shoppers were given their change in the form of South African rand coins.

“United States coins hardly circulate more than 100 kilometres beyond the U.S. border because of weight and shipping costs,” said Fanwell Mutogo, chief executive officer of the Bankers Association of Zimbabwe (BAZ), an industry lobby group for retail banks.

If U.S. dollar coins are a rarity in Zimbabwe today, RTGS dollar coins – intended to be smaller denominations of Zimbabwe’s official RTGS currency – are a hard find, too.

When the RTGS was introduced in 2019, domestic coins were widely available and shoppers got them as change at cashier tills. But today, inflation has caught up with it. “Zimbabwe bond coins are now of insignificant value due to the eroding of the purchasing power of the local currency due to inflation,” says Mr. Mutogo, explaining why local banks no longer dispense the domestic coins.

If there is a bright side to the dilemma, it is that the absence of coins in Zimbabwe is edging the country into the global lane of e-money, Prof. Mumbengegwi says. The United Nations Capital Development Fund says 8.5-million residents out of Zimbabwe´s roughly 15-million total population have bank accounts.

“The Reserve Bank of Zimbabwe stopped minting coins in the hyperinflationary era of 2008-9. Coins are heavy, low value, costly to mint. The RBZ is promoting plastic and electronic money transfers as part of the global trend toward a cashless society,” Prof. Mumbengegwi says.

Still, there are limits to what electronic money can do in the country. In 2017, a study by the University of Zimbabwe revealed 66 per cent of buyers and traders still preferred cash transactions. Some traders, especially those in rural areas where the majority of the population lives, only take cash payments and may not have chip-enabled devices to handle debit-card transactions.


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