The recent fall in value of the South African Rand has led to many resorting to the use of the once-rejected Bond coins. Since the introduction of the multi-currency system by the Reserve Bank of Zimbabwe, the country has relied mainly on the US Dollar, the South African Rand and the Botswana Pula. The Pula has however slowly been scrapped out of the system.
In a surprising twist, bond coins have become the preferred legal tender over the past few weeks. Yes, the once rejected bond coins are now preferred to the Rand as the Rand has declined in value, leaving consumers vulnerable to unscrupulous business people and service providers.
This is because the US Dollar is mainly available in notes which means that Zimbabweans rely on Rand coins for change. But the recent fall in value by the Rand has resulted in business people asking consumers to pay more instead of using the usual $1=to R10 exchange rate. For one to purchase an item worth US$0.50 using the Rand, customers are being asked to pay R6 or R7 depending on the place and value for that day.
Last month some public transport operators put up notices on their vehicles informing commuters that they had to pay R6 or 50 bond coins for routes that usually cost US$0.50. Some commuters protested against this move saying the conductors do not use the same exchange rates when giving commuters change.
“It is even more difficult to use Rand notes because the combi drivers insist on their own rates,” said Mark Mabuda a commuter.
“If you use R20 note to pay for a route that costs US$0.50 you will be given R5 change which I think is not fair,” he complained.
Small and large supermarkets have also been accused of applying exchange rates when customers are paying but not doing the same when giving change. This has forced customers to opt for bond coins that are equivalent to the US dollar.
“I have always used R5 to buy a drink for my son each day I take him to school, but recently I am being told that a R5 coin is worth US$0.35 in a number of supermarkets”, said Anne Malaba a mother from Harare. Malaba said she had resorted to buying her son’s beverage from street vendors who still accept R5 as for the value of US$0.50.
An informal survey by Her Zimbabwe showed that most of the major supermarkets in Harare’s Central Business District were demanding that customers pay more when they used the Rand to pay for goods, but were not applying the same system when giving change to customers. Customers in turn have begun avoiding using Rands for purchases, opting for the once unpopular Bond coins.
Her Zimbabwe also noticed that some till operators were avoiding giving Bond coins as change at all costs to customers. This is probably a tactic to get rid of as many Rand coins as possible.Mark Muchadei who owns a grocery shop along Robson Manyika Avenue admitted that he had instructed his employees to apply these unofficial exchange rates because the weaker Rand was reducing his profit margins when he then changed them to US Dollars.
“Even if you go to those money changers outside, they are selling R100 at US$8.50, so if I trade at 1 is to 1, I will soon be broke and go back to Buhera, my rural home”, he justified himself.
It is a fact that the South African Rand has not been performing well on the market. Its value against the US dollar has been unstable for over two months now. Formal banks are also using official exchange rates when conducting all their transactions, but this is not the case with traders.
The problem is that business people are taking advantage of the ignorance of the ordinary person and imposing their own exchange rates. For instance if 5 people are asked to add R1.50 to every R5 they use to pay for goods the supermarket collects an extra R7.5 in total. But if the customer takes R5 to the same shop they are told that it is worth US$0.35. In simple terms, the Rand is of a lower value when it is in the hands of the consumer and is of a higher value when it is in the hands of the shop owner. This has been the nature of transactions in larger supermarkets and shops for the past few weeks.
The absence of continuous regulation by the central bank or any other responsible authority has left the consumer with no option but to accept whatever exchange rate dictated by informal money changers and service providers
In this situation the consumer is vulnerable to people who have decided to take advantage of the fact that consumers do not question how exchange rates are applied. As the responsible authority, the Reserve Bank of Zimbabwe should step in and set standard rules on how exchange rates should be implemented when transactions take place. This will save the consumer from the misfortune of being overcharged for goods or services or failing to transact because the currency they intend to use has been rejected.
Zimbabwe has embraced a multi-currency system. It is therefore important that people are well-informed about the consistent value of their money everywhere they would like to use it.
Photographs used in the article are by Daphne Jena.