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ZIMBABWE: Cross-Border Traders Don’t Trust Banks With Their Money

Ignatius Banda

BULAWAYO, Zimbabwe, May 25 2011 (IPS) - A newly available electronic banking service has received a lukewarm reception from cross-border traders in Zimbabwe’s second largest city Bulawayo, despite it alleviating the need to move around with large sums of cash.

Cross-border electronic card services in different currencies were launched in April in Bulawayo as part of efforts to ease transactions for traders who source their wares in neighbouring southern African countries.

The Rand card loaded with the South African currency is valid for use in South Africa while another card is used in Botswana.

According to the chairperson of the Cross-Border Traders’ Association, Killer Zivhu, the Rand card enables informal cross-border traders to deposit their cash with a Zimbabwean bank and then access the funds at banks in South Africa without using informal moneychangers, as has been the case thus far.

The city of Bulawayo has always had a thriving parallel market for foreign currency due to its large numbers of cross-border traders who make frequent trips not only to neighbouring countries but also as far afield as the Democratic Republic of Congo and United Arab Emirates.

As in the rest of Zimbabwe, Bulawayo’s cross-border traders use multiple currencies that include the U.S. greenback, the South African Rand and Botswana’s Pula.

Cross-border traders, of which the vast majority are women, typically use informal cash systems to purchase currencies. This practice, which had become widespread due to the collapse of the Zimbabwean dollar, was illegal before the politically beleaguered country suspended its currency in 2009.

These are the traders that the sponsors of the cards expect to tap. With the Beitbridge border post into South Africa being the busiest in southern Africa, the potential of cross-border traders as a source of foreign currency for Zimbabwe is enormous.

“This is part of efforts to bring cash back into the formal banking system while, at the same time, protecting traders who carry huge sums of money during their cross-border trips,” Zivhu said at the launch of the service in Bulawayo.

Stories abound about Zimbabweans losing money to tricksters in neighbouring countries when seeking to purchase local currencies. The electronic cards are presented as the panacea for such problems.

But, while the new service was launched with pomp and fanfare in the city, cross-border traders were less than enthusiastic.

At the bustling flea markets littered across Bulawayo, selling wares ranging from clothes to cheap electrical appliances, some of the women who spoke to IPS pointed out that they would lose money if they used the official exchange rates.

The city’s sidewalk moneychangers traditionally offer better rates than banks.

“It makes little sense to me to get my money through the bank when we already know the official exchange rate is lower than what we get in the streets,” said Mavis Maravanyika, from her stall outside the Bulawayo revenue hall where traders sell an assortment of imported goods.

“I will wait for others to hear what they have to say about this card,” she added.

Said another trader Sibatshaziwe Ndlovu, “we understand the dangers we are exposed to when we travel with a lot of cash across the border, but I cannot afford to lose even a few cents to banks.

“Many people complain about bank charges, which is the reason why many of us gave up putting our money in the bank in the first place,” Ndlovu noted.

Economist Takura Dzimuto thinks it will take a while for Zimbabweans to again trust banks with their money.

“It is a grand plan only if we ignore attitudes that have emerged in this country about putting money in the bank. A lot of mistrust in these institutions has bred over the years. The traders will need convincing,” Dzimuto said.

Tax may be another reason why traders may want to remain under the radar. Poor border control means that Zimbabwe loses much-needed revenue as traders move goods without paying customs duties.

“There are people who cross borders with goods that they want to sell but claim that they are for personal use. It’s against the law,” said Patrice Silamulela, a Zimbabwe Revenue Authority official who was also present at the launch of the card service.

According to officials at the Cross-Border Traders’ Association, which has a membership of more than 15,000, up to 2,000 traders cross into South Africa everyday.

Cross-border traders are among the interest groups that have lobbied for liberalised trade in the Southern African Development Community (SADC) as part of the region’s broader economic integration plans, which include one common regional currency.