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ZIMBABWE: Illegal Trade Booming – For The Sake of Survival

Ignatius Banda

BULAWAYO, Dec 12 2007 (IPS) - Easily portable, consumable goods from Zimbabwe are increasingly finding their way into neighbouring countries as cross-border traders search for deals to earn much-needed foreign currency.

At the railway station in Bulawayo, the second largest city in Zimbabwe, chaos reigns as large numbers of traders drag enormous bags behind them and crowd into the cheap Bulawayo-Victoria Falls train heading for the border.

This happens despite regulations by the rail utility that bulk goods have to be carried by special coaches with the traders paying for the shipment of such goods. Passengers and goods compete for space, creating pandemonium as traders trek to Victoria Falls where they then cross the Zambezi River in search of foreign currency earnings.

Zimbabwe is battling acute foreign exchange shortages as its political and economic crisis drags on.

This kind of trade is a response to the biting shortages that have led to many businesses and major supermarkets recording massive losses. It was exacerbated by President Robert Mugabe’s controversial government decree to slash prices of basic commodities by half.

The decree came after Mugabe accused businesses of deliberately attempting to sabotage the economy by making unjustified increases which left many here unable access goods and services.

Beer, soft drinks and cigarettes are some of the products which are being exported to neighbouring Zambia by unlicensed traders.

They risk prosecution by law enforcement agents as they smuggle the goods through illegal entry points into the country that shares the world-renowned UNESCO World Heritage Site Victoria Falls with Zimbabwe. UNESCO is the United Nations Educational, Scientific and Cultural Organisation.

For the 29-year-old Jonathan Psvarayi, the lure of the US greenback has just been too much. He has acquired a sixth sense which leads him to the scarcest commodities in Bulawayo’s densely populated suburbs where he dashes to make bulk purchases.

He hangs around shops where these commodities are rumoured to be available and waits patiently before he pounces.

Shop owners have learnt to limit the number of purchases as they are aware that people horde the commodities for resale on the illegal parallel market. But Psvarayi has discovered a way to beat this.

‘‘I ask whoever I see at the shops, especially school children, to buy something for me until I have enough,’’ he told IPS.

He is one of many in this city of more than 2 million reeling from harsh economic conditions who buy beer at cheap retail prices in Bulawayo’s teeming high density suburbs for resale in Zambia. ‘‘The money is good,’’ he said.

A crate of about 12 litres of the locally produced ‘‘clear beer’’ fetches 40 dollars (about 48 million Zimbabwean dollars on the parallel market). The same quantity sells for 6 million Zimbabwean dollars in Zimbabwe’s licensed liquor stores.

Last month the country’s largest beer manufacturer, National Breweries, announced that they were experiencing viability problems due to a lack of foreign currency to purchase raw materials after the government decree to slash prices, power outages and water cuts affected production.

Justin Bhebhe, an economics lecturer at Bulawayo’s National University of Science and Technology says illegal cross-border trade is not surprising given the hardships Zimbabweans are presently going through.

‘‘Zimbabweans now depend largely on foreign currency which still has value compared to the increasingly useless local dollar,’’ Bhebhe told IPS. The local currency is rapidly being eroded by galloping inflation.

Some estimates put the number of economic refugees from Zimbabwe at around 4 million people who have left the country for jobs abroad and in neighbouring countries. Remittances have sustained many families amid the hardship.

Apart from Zambia, neighbouring Botswana is another popular destination for traders bearing cigarettes and other commodities. Botswana’s pula remains one of the most sought after currencies here.

The minister of industry and international trade, Obert Mpofu, warned recently that it is illegal to move goods to neighbouring countries without an export licence.

But Bhebhe points out that ‘‘in Zimbabwe, a lot of things that the authorities say are illegal are what is sustaining many families. We can expect more illegal trade as long the economy remains in this state.’’

Zimbabwe is going through its worst economic crisis since independence from Britain in 1980 as inflation hovers around 10,000 percent and labour union officials put unemployment at some 80 percent.

An official with the Cross Border Traders Association in Bulawayo told IPS it is difficult to document and estimate the volume of trade in Zimbabwean goods being exported to neighbouring countries as the bulk of the traders are not members of the association.

‘‘But what we know is that tariffs at the borders have not fed the national fiscal trough as much of the goods are smuggled into our neighbours – especially into Zambia as border controls appear to be very porous,’’ the official said.

Bulawayo’s unemployed young people like Psvarayi vow that illegal cross-border trade has given them hope.

‘‘There is always the possibility of having these commodities confiscated by customs officials. But as with everything else, we have learnt to beat the system. If it is not beating the system through some other daredevil means like crossing the border illegally, it’s outright bribery,’’ he told IPS.

Traders and shoppers say this is a phenomenon that has come to define many if not most dealings at Zimbabwe’s border posts. Human traffic at the border posts has surged in the past months as people move across borders to buy basics and sell bootleg goods.