ZiG entry and change dilemma throttling small busi...

ZiG entry and change dilemma throttling small businesses

**Vendors Initiative for Social and Economic Transformation executive director, Samuel Wadzai**

Edmore Zvinonzwa

EDITOR

The ZiG currency, introduced by the Reserve Bank of Zimbabwe aimed at achieving price stability as well as arresting the foreign rate volatility that were haunting the economy, brought with it another unexpected nightmare – change.

The excitement that normally accompanies the introduction of something novel was dampened by the challenges that emerged from the onset.

There has not been enough notes and coins for the market with the hardest-hit being the street vendors and other small traders.

The vendors have a painful story to tell, especially the falling business.

“I started vending over twenty years ago and the changes in currency I have witnessed during this period have been too many. However, unlike the earlier currency changes, this time things have been slow,” said Mai Nyari, whose makeshift stall is at the corner of Mubvumira and Nyenze roads in Zengeza 1, Chitungwiza.

Like many other small traders who rely on small money, Mai Nyari, born Enviolata Mhuru, 40 years ago in the Jichidza area of Zaka before she migrated to the capital after an aunt took her to work as a helper in Mabelreign, Harare.

However, things took a nasty turn when she fell pregnant and had to elope to her man, then a clerk at Colgate Palmolive before he was shunted out in a retrenchment exercise. Colgate-Palmolive eventually ceased operations and relocated to neighbouring South Africa.

Ever since, Mai Nyari has been the breadwinner, taking care of the family’s daily needs, including food and school fees for her four children.

She has, however been struggling to register reasonable sales since the introduction of the Zimbabwe Gold currency by the Reserve Bank of Zimbabwe over a month ago.

The predicament is not hers alone as several of her colleagues in the vending business have been equally struggling.

The very first hurdle has been the availability of change since the decommissioning of the Zimbabwe dollar with the entry of the ZiG, a currency the RBZ says is backed by gold and US dollar reserves.

“Most of our clients are residents of this suburb who come for their daily needs of vegetables and other little purchases which cost way below US$1 and therefore they would expect change.

“Some just leave it behind to cover for the next day’s purchase. These are not many though. We hope government will come to our rescue and bring in the small ZiG currency – the coins, otherwise we will be pushed out of business very soon if nothing changes,” Dorcas Chauke, a single mother of three, said.

Commuters also have to fight change battles in an entirely different setting though. Fares for trips which previously cost 50 cents have gone up to US$1, unless you have change.

The RBZ seems to have released very few notes and coins judging by the troubles people go through everyday.

“I live in Mainway Meadows and my fare to work used to be US$1 a day but this had doubled because the conductors will not give you change. It is their advantage but in the long run, we are in real trouble if things do not change, and pretty soon,” said Darlington Chiumbu, a downtown mechanic, who is physically-challenged.

Vendors Initiative for Social and Economic Transformation executive director, Samuel Wadzai said they do not understand why there is not enough small denominations in the form of notes and coins on the market.

“The shortage of change has significantly affected the operations of our members, especially street vendors. Most of these transactions range between 25 cents and 50 cents and the fact that we do not have the coins circulating means that our members have missed serious opportunities to do business.

So, we call upon the authorities to ensure that we have sufficient small denominations – notes and coins – on the market. We do not understand why you would introduce a new currency and then, at the same time, people don’t have access to the same notes and coins. We urge the authorities to quickly address this and ensure that the supply of these small denominations is improved so that we do not continue to suffer.

“Even if you look at the way it has affected the transport sector, it is a huge challenge and we call upon the authorities to quickly deal with this challenge,” said Wadzai.

Consumer Council of Zimbabwe chief executive officer, Rose Mpofu said although they were happy with the introduction of the ZiG, hoping the currency would maintain value since it gold-backed, consumers have already encountered several challenges.

“We encounter difficulties that make us shun the ZiG and this forces us to think that this new currency is not helpful.

“When you board a commuter omnibus on a trip that costs 50 cents, you end up paying US$1. In shops, some retailers raised prices at the introduction of the ZiG,” said Mpofu, adding that fuel stations have not accepted ZiG for fuel.

The CCZ executive director said the trend has pushed away consumer confidence, which is critical in the success of the new currency.

President of the Zimbabwe United Deregulated Commuter Operators, Fradreck Maguraminga said the issue of change has remained a big challenge although they are fully in support of government’s move to bring in a new currency.

“As an organization, we have made an observation that drivers have been put in a fix because of the change issue. Some might end up remaining with commuters’ change. This new currency should have come with small denominations or even coupons from the authorities. Some commuters are no longer boarding kombis while several fights over change have also been witnessed.

“We support government’s move in bringing in a new currency but it has brought in several new challenges.

**President of the Zimbabwe United Deregulated Commuter Operators, Fradreck Maguraminga**

“We thought of introducing coupons at some point but we are afraid of counterfeit ones and also where will these coupons go at the end of the day. The issue of change is affecting us in a big way, we educate our drivers that they should treat their commuters well all the time,” said Maguraminga.

On its part, the Reserve Bank of Zimbabwe has urged businesses and individuals to withdraw more small denomination ZiG coins to address the growing shortage of change in the market.

In a statement RBZ Governor, Dr. John Mushayavanhu assured the public that adequate supplies of ZiG1, ZiG2, and ZiG5 coins have been deposited in banks nationwide.

“The Bank has noted a breakdown in the cash transmission mechanism,” Mushayavanhu said, attributing the shortage to low withdrawal levels. He encouraged everyone to withdraw coins for daily transactions.

He added that the central bank remains committed to providing sufficient cash while promoting a “cash-lite economy”, which emphasises the importance of digital financial services for financial inclusion.

Dr. Mushayavahu also said the RBZ will collaborate with banks to ensure efficient ZiG distribution.

Moneychangers may have moved off street corners with the coming in of the ZiG and obtaining policing for compliance but authorities must also find ways of dealing with other challenges that have emerged but were not anticipated.