After Delays The RBZ Finally Releases The $20 Note

Based on pictures posted by various daring “money-changers” on social media it seems that the Reserve Bank of Zimbabwe has finally released the new $20 bond note to the public. Originally the RBZ had promised to release the new $20 notes during the first week of June.

“The Reserve Bank of Zimbabwe wishes to advise the public that … the $10-dollar banknote will commence circulating on Tuesday 19 May 2020 and the $20 banknote will be in circulation by the first week of June 2020,” The Reserve Bank Governor said back in May.

However, when the first week of June arrived there was nothing but deafening silence on the issue. Efforts by several publications to get the governor to comment on the apparent delay were fruitless leading to some publishing articles to the effect that the bank had thrown in the towel.

The note makes an appearance on social media
It is well known that illegal-forex dealers never seem to face any problems when it comes to making large cash withdrawals. Notes are scarcely out before these illicit traders start posting pictures of themselves holding large bunches of whatever new currency/note of the day.

In a clear sign that the RBZ is not chickening out and the delays were probably logistical, several dealers have already posted images of themselves with the new notes. In times past other dealers have gotten into trouble for doing this but it seems others are not deterred.

Showers in a desert
No doubt the new note will be a welcome injection into an economy that has suffered from cash shortages for about four years. However even before it arrived the $20 note had already lost its value against the greenback. At the current rate of $58 as to $1 USD the note is worth about $0.35 leading to a familiar refrain that the note won’t even buy a loaf of bread. In fact, to buy a loaf of bread you will need more than two of these new notes.

With the memory of the last economic meltdown in 2008 fresh in everyone’s minds, the bank has been rather cautious when it comes to printing physical money. They haven’t shown any qualms however when it comes to electronic money.

This note is just like a shower in a desert, it’s not going to end the cash crisis, it will barely make a dent.

About The Author
Garikai Dzoma is the founder and editor of

RBZ Limits Internal Transfers To Two Per Day

It seems the Reserve Bank of Zimbabwe has every intention to keep its promise that they would from now on surprise the illegal foreign currency market with drastic measures. Yesterday they dropped another shocker that is likely to have severe ramifications on the entire economy. Internal bank transfers are now limited to two per day.

The full text of the measure
4 June 2020

Measures to prevent abuse of internal bank transfers for illegal foreign currency transactions

Further to our circular to banks dated 26th of May 2020, titled “Enhanced Scrutiny of Transactions”, we have noted the increasing abuse of the internal bank transfers facility for purposes of parallel market dealings.

We have noted a trend where entities are using their bank accounts to buy foreign currency, using a network of “runners”, some of whom have been advertising their services on social media. These illicit transactions manifest in the form of daily multiple payments from one account to beneficiaries who hold accounts in the same bank.

In order to curb this practice, banks are directed to implement the following measures, with immediate effect:

1. Each bank customer shall make not more than two transactions per day by way of internal transfer, regardless of the values involved. There is no restriction on RTGS transfers, but banks should exercise necessary due diligence.

2. Where a customer has genuine and proven need to conduct more than two transactions in a day by way of internal transfers, the customer shall obtain approval from bank management (whether at head office or branch level). Banks shall submit daily returns to the FIU giving details of such transactions and the underlying business purpose.

Individual banks may implement any additional controls on internal and/or inter-bank transfers as they see fit.

Banks shall continue to submit STRs and other regulatory returns as necessary.

This FIU is now adopting strict enforcement measures against banks that are found to be complicit in allowing their clients to conduct illicit transactions.

O Chiperesa
Acting Director-General
Financial Intelligence Unit

All Carrot and no stick

During the last Monetary presentation the Reserve Bank of Zimbabwe recognised the fact that low volumes were being traded at the interbank rate. They rightly accepted that this was probably due to the fact that the rate was lower than parallel markets, thus dissuading those with USD to sell to the formal market. The governor all but conceded that the Reserve Bank had a large role in setting the interbank rate of the day.

They then promised to unshackle the rate and let it trade at pure market rates. Such a move would have severely curtailed the operations of the illegal foreign currency market. Understandably everyone was happy with this announcement. Such a policy change never materialised.

Those days of such lucidity, candour and rationality appear long gone. For some reason it seems the Financial Intelligence Unit operating under the guise of fighting illegal forex trade has essentially assumed the mantle of crafting policy at the central bank. And now with little thought and zero consultations, another broken promise here, is unleashing hell and furry onto the business world.

No one seems to be working to resurrect the dead formal market which is stuck with a fixed rate of $25 ZWL per 1 USD. No one seems to be asking what will become of businesses once they can no longer access foreign currency on the black market. As fists fly between the Financial Intelligence Unit and illegal foreign currency traders no one is thinking about the wider transacting public or companies – the grass is suffering and dying as it keeps getting trampled on.

It’s de ja vu all over again

What is sad is that nothing coming out of the RBZ is new really. This is a well travelled path that we are on and it leads to further economic doom, we should know, we have all been down this path before back in 2008.

On 2 October 2008 the Reserve Bank of Zimbabwe issued a ban on RTGS transfers, something not too different from the limits we are seeing. They wanted to stop burning and save the Zimbabwean dollar. The result was a wholesale rejection of the old Zimbabwean dollar as limited mobility made it a useless currency that required bureaucratic government approval before you could use it.

It didn’t stop the rate from going up. In fact it was quite the opposite, the rates accelerated. Why? The majority of people were loath to keep money they had zero control over, money they could not save, money that businesses were not willing to accept and money that kept losing its value by the second. Fewer suckers wanted that money.

Already in a survey conducted by yesterday more and more businesses seem to be now rejecting the RTGS dollar as it offers few opportunities to converting it to foreign currency. It’s a trend that even the state run Herald confirms.

Eventually we will get to a point where no one wants it. In that case the Financial Intelligence Unit will be faced with two options. Force businesses to accept it and watch them sink and close like they did in 2008 or let them be and watch the Zimbabwean dollar sink into oblivion.

Which will they choose?

The RBZ Says It Doesn’t Participate On The Black Market

It’s a well known allegation that is now more than a decade old. It all started during the first “burning” era in 2008 when the first and second Zimbabwean dollars crumbled to dust. Back then a rumour started doing rounds that the Reserve Bank of Zimbabwe itself has runners that bought foreign currency on the black market on the Bank’s behalf.

It’s a rumour that has surfaced again in recent months as the rate went berserk going from 1 USD: 3 ZWL a year ago to the current 1USD : 70+ ZWL. Whispers have done rounds saying that the central bank has once again engaged the services of runners to mop up foreign currency on the black market.

It’s claimed some dealers openly boast about this. People have pointed to the fact that even though illegal foreign currency dealers openly engage in their trade they are rarely arrested let alone convicted despite various laws making what they do illegal.

There is also the fact that while cash shortages continue and the transacting public struggles to make withdrawals these illegal traders don’t seem to face any hurdles. Whenever a new currency is introduced, such as the latest $10 note, these traders are seen around hurling piles of this new crispy currency.

The Central Bank Denies it

The whisper is not going away

This denial is not going to do much good and a lot of members of the public will just dismiss it as a hollow PR campaign. It doesn’t help that the central bank has issued statements on things in the past that turned out to be the opposite of whatever they said. Those making these claims will probably continue to do so and people will believe them given the points made above.

RBZ Is Printing $10 and $20 Bond Notes, Will This Solve The Cash Crisis?

According to a prominent RBZ Monetary Policy Committee (MPC) member and “chief leaker” Eddie Cross the government is in the process of printing $10 and $20 denominated bond notes. Currently, the highest denomination of bond notes in circulation is the $5 bond note.

“The plans are far advanced and higher denomination notes will be made available to the public sometime later this month. The Reserve Bank will make the announcement.

They (the notes) are being printed and the appropriate date will be announced soon. We had a meeting yesterday of the MPC and the Governor confirmed to us that the rollout will be in stages so it won’t be a full range of notes initially, but it will only be higher denomination notes.” Mr Cross speaking to Sunday News.

The tortoise emerges from its shell

The chaos and pain of 2008 is still fresh in everyone’s minds. Back then Zimbabwe broke all sorts of economic records including having incalculable inflation that is estimated to have been well beyond the one trillion per cent mark. The government has sought to blame everything and everyone for this but even they have tacitly admitted that reckless surges in money supply were the chief reason.

Under the reign of former Reserve Bank governor Gideon Gono, the bank blessed the government with money to fund every one of the government’s dreams under the label Quasi-Fiscal policy. The result was the said runaway inflation that eventually forced Zimbabwe to dump its own currency.

Understandably, therefore, both the Monetary and Fiscal authorities have been rather wary of excess money in circulation. They have been on record multiple times, expressing their reluctance to print higher bond note denominations for this reason.

Their reticence, however, has led to another unique Zimbabwe problem: cash shortages. Since 2016 Zimbabweans have had to queue at banks in order to receive paltry cash allocations from banks. Unscrupulous individuals have made living selling cash at a premium as they masquerade as Ecocash agents.

The discount rate for cash is as high as a 50%  which means if one has $100 RTGS in their mobile money wallet they will get about $45 in cash after charges and the cash seller’s cut. This has led to so much angst and consternation among the general populace.

Will this move solve the cash crisis?

As noted, due to an abundance of caution, the Bank has refrained from printing money even as the cash crisis continues to cause suffering. Will the Bank’s sudden newfound boldness finally solve the cash issue? Probably not.

Six months or so ago a $10 or $20 bond note would have eased the pressure somewhat. Now whatever the bank prints will just be a drop in the ocean. This is all thanks to inflation and continuous depreciation of the Zimbabwean dollar.

When the $2 and $5 bond note denominations were introduced they were on par (or at least close enough to that) with their USD companions. In comparison, the $10 is officially worth US$0.40 and the $20 note $0.80 when using the government’s generous rate of $25 ZWL: 1 USD. Using the black market rates we get US$0.28 and US$0.56 respectively if we are kind enough to stick to the low rate of $35 bond per 1 USD.

When it comes to shopping using this money $20 bond will not buy you a loaf of bread. Bread currently retails at $25 bond on the black market or $28.00 on the formal market. You will need a bag full of money just to buy grocery basics.

The sum of it all

The Central Bank needs to be courageous if it wants to solve the current cash crisis. This latest move is a little on the timid side. However, it will probably ease the cash crisis. The criminals who sell cash will probably have to reduce their asking fee and microtransactions will be easier.

About the Author
Garikai Dzoma is the founder and editor of

Can the Victoria Falls Securities Exchange Work?

Believe it or not, the Zimbabwean government has never been short on good ideas. They come up with them all the time when it suits them. Opening a foreign currency-denominated exchange in the resort town of Victoria Falls is one of those good ideas that actually has a chance of succeeding.

Dubbed the VFEX (from its proposed name Victoria Falls Securities Exchange) the exchange will operate under the umbrella of Special Economic Zones (SEZ) initiative. You see tourists are already allowed to freely use foreign currency in this town. And while they are sight-seeing they are introduced to the idea of investing in Zimbabwe. In a town far removed from the political chaos in Harare some investors might actually be tempted.

“As a global securities exchange, VFEX will seek partnerships with other global exchanges and partners around the world, and become a truly global platform. Foreign Global companies invested in Zimbabwe can now seek a listing on VFEX. Enquiries at ZSE.” Mthuli Ncube on Twitter

In fact, the Government is keen to make sure everyone understands that the exchange is not only geographically removed from Harare but that the normal rules (if you can call the government’s flip-flop regulations that) do not apply to this exchange although it is still under the management of the Zimbabwe Stock Exchange:

“If we are to operate in a special economic zone there are chances of getting tax concessions both for the stock exchange and the issuers.
It’s also treated as a separate country, so you have more flexibility in terms of movement of money in and out of the country.
If you think of other countries, it’s normally good to link an offshore financial services centre with your tourism.”
ZSE CEO  Justin Bgoni

The Zimbabwean government seems to be seeking to create a little Hong Kong in Victoria Falls. A neutral ground where stability is the order of the day as opposed to the murky waters of Harare where drastic policies are announced in the morning and reversed in the evening. Far-reaching orders such as the new regulations governing fungibility of shares are announced on a whim and with little consultation.

It’s all about execution

Again to repeat our opening words, the Zimbabwean government has never been short on good ideas and this falls in the great category. However, it’s all about execution. Having a good recipe to follow does not necessarily guarantee that one will be a good cook, nor does it guarantee that one will get a good meal.

Details are still scant on how the capital raised there will be banked and used. Will funds raised through this exchange be treated as “free funds”? What happens when you use the capital to produce goods and services locally, will you be allowed to sell in forex only? If not when will you get the foreign currency to repatriate back to investors? The government has already given their word that investors will be able to repatriate funds but given the current economic situation and past decrees such as those on fungibility, there isn’t exactly much stock in those words.

In fact, in my opinion, the meal has been scarcely made and already there is a little fly in the ointment. Having the ZSE manage this exchange is a terrible idea. As a show of good faith, the exchange must be independently managed by experts something along the lines of the Reserve Bank of South Africa. Perhaps the government and businesses should select a committee that manages the organisation. A group of people far from the maddening crowd that dominates policy in Harare-driven by technical guidance, not political games.

Again VFEX is a good idea whose success lies in how they end up doing it. Whether it succeeds or fails depends on how well they want to do it or rather how well they are willing to let others do it for them.

About The Author

Garikai Dzoma is an editor at

Rates Retreat as the RBZ Brings out the Guillotine

Last week Friday the RBZ decided to flex its muscles against mobile money operators whom the bank accuses of fuelling the foreign currency black market. This time though the blow was more surgical unlike last year’s clumsy blanket ban on cash-ins and cash-outs.

This time around the Bank’s Financial Intelligence Unit sussed out a list of suspected mobile money wallets from both Ecocash and OneMoney. The list of over a 100 wallets was then sent out to banks with the directive that they freeze the wallets and their linked bank accounts immediately.

The result was a mild firming of the local dollar which hasn’t had a break in a while. In the low volume market rates have this week, most certainly as a result of the RBZ’s actions, gone down to around 1 USD:45 ZWL from as high as 1 USD:50 ZWL. In fact due to muted trading as evidenced by low traffic in a lot of Forex-related WhatsApp groups some people have been offering rates as low as 1 USD: 42 ZWL.

This too shall not last

We have seen this dance countless times before including during the cited blanket ban on cash-ins and cash-outs. In fact, curiously some of the measures put in place after the ban such as limiting cash-ins at $500 ZWL remain in place and yet the rates have continued to climb.

As with the directives and measures before it, this does not address the fundamentals facing businesses when it comes to foreign currency. Despite promises to the contrary the RBZ and the government have conspired to keep the rates fixed at the arbitrary 1USD: 25 ZWL point instead of freeing up the market.

The result has been that most companies even the large formal ones have been left on their own when it comes to raising much needed foreign currency to finance their operations as none is coming from the formal legal circles. For these companies, there are only two options sink and die or swim in the murky world of illegal foreign currency trade. Suffice to say most have chosen to swim.

What will happen to the culprits?

Illicit foreign currency deals are very difficult to prove especially given the fact that one side of the transaction involves cash. In fact with a little bit of creative accounting, something most Zimbabwean entities are familiar with, the RBZ’s Financial Intelligence Unit will be put to their defence quite easily.

It’s not clear what punishment the culprits will face but given the circumstances and past experience, most will probably walk unscathed. Past account freezes have eventually been lifted, again because it is notoriously difficult to prove the charges being levelled here.

About the Author
Garikai Dzoma is the founder and editor of

The Monetary Policy Committee “Tweaks” Meant to Entice Banks to Lend

A week ago, on Friday the 24th of April, the Monetary Policy made some tweaks to Zimbabwe’s monetary policy. These tweaks are meant to prode banks to lend money to the ailing economy and hopefully minimise the impact of the current Covid-19 pandemic that has wreaked havoc throughout the world.

According to Finance Minister Mthuli Ncube Zimbabwe’s economy is expected to shrink by as much as 20% this year. Unsurprisingly he blames the projected expansion on climate shocks which he says impacted on Zimbabwe’s agricultural backbone as well as decimated electricity generation. Surprisingly he also acknowledges the country made some policy missteps.

These tweaks are just the latest Hail Mary

It is no secret that Zimbabwean’s banks haven’t been exactly doling out the loan dough. After dishing out a bunch of non-performing loans at the start of the USD era they got their fingers burnt and since then they have locked their money purses and thrown out the keys, opting instead to subsist on service charges such as monthly fees on accounts.

While these tweaks are academically sound this will probably go down as another case of too little too late. The impact on banks’ willingness to lend is likely to be minimal in any case while these policies would be on point in other economies in Zimbabwe they are not likely to solve some of the most fundamental problems facing the economy.

In fact this will not even solve the capital needs of most of Zimbabwe’s businesses that are mostly informal. This is a fact the government continues to ignore whenever crafting and announcing their policies. Zimbabwe’s economy is mostly informal! Thus far the government has done very little for the informal sector in terms of policy, choosing to focus on the large few businesses that remain.

These latest policy announcements are just the government’s latest Hail Mary and are not going to help the informal sector much. By extension this means they are not going to help the Zimbabwean economy much.

In fact as the lockdown takes its toll the government has taken quite the antagonistic approach as city councils across the country have been razing stalls which the government deems “illegal”. More would be achieved by working with vendors and the informal sector to ratify and formalise some of its activities than setting it back in such acts of misguided zealetory.

In fact such crackdowns not only result in increased unemployment, they destroy critical value chains upon which the more savvy formal sector has come to depend on. Most large businesses depend on the informal sector for critical supplies and even use the informal sector when it comes to selling and marketing their products.

It seems the government remains blind to these facts and the latest measures is the latest shovel of evidence being dumped upon a mountain of ignorant policies.

Price Controls are Back!

Yesterday our esteemed government decided to tackle the issue escalating prices of basic commodities. They decided to respond in the worst way possible. By introducing what are essentially price controls. This has been mentioned a million times before by a million other people so I feel like I am kicking a very dead horse when I say: Price controls don’t work.

They wouldn’t work in economies in much better shape than ours let alone our ailing economy that has been struggling during the best of times. It’s basic economics really. The reason why we are seeing a surge in the prices of basic commodities is that right now demand far outstrips supply.

The situation has been made worse by the current domestic lockdown which has put a damper on domestic production. Normally when domestic production fails or falls South Africa helpfully chirps in as cross border traders rush to satisfy rising local demand for basics such as cooking oil, soap and mealie-meal. Now that is not possible because South Africa like the rest of the world is in its own lockdown.

Clearly, the all-round lockdowns have thrown up bottlenecks that have constrained supply while demand has remained the same or even risen as some people have decided to hoard basics. The government should be working hard to overcome these hurdles and ensure that supply improves.

They could, for example, take on the role of cross border traders and work to import more basics. They could work with the domestic industry to ensure that production is ramped up to reduce the gap between demand and supply.

Corruption, corruption, corruption

One reason why I am so sure the latest price control effort will fail just like the Masimirembwa led efforts during the 2007-8 era is because of corruption. Just as the government has failed to tame the foreign currency black market, it will fail to control prices.

It’s not just because of simple supply and demand. It’s also because those tasked with enforcing are hopelessly underpaid and would be more inclined to receive a bribe than they are to arrest the offenders or enforce the measures.

What are the March prices anyway?

At I try to keep track of prices of various prices including basics in Zimbabwe. One thing I can tell you is that the Zimbabwean retail sector is a mess. Various retailers get their prices through various means and not always directly from the manufacturers who are always operating below capacity. – Garikai Dzoma

A bottle of ZimGold cooking oil sometimes has as many prices as there are branches depending on how that particular branch got hold of that bottle. Oftentimes they have to use a middleman who needs their cut which varies from middleman to middleman as circumstances differ.

The government has ordered retailers to charge prevailing prices before 25 March. All this leads me to ask: What are the March prices being referred to here?

Is this the Death of the ZWL and Why is the Rate Weakening, AGAIN?

Some of our followers on our Twitter page @MarketWatchZW have been asking, rather querying, why the ZWL seems to be on a free-fall again, after a recent show of force. Just before COVID-19 hit our shores, rates were trending towards the 50 mark; certainly above 45! Immediately after the announcement of the 21-day lock-down, the ZWL seemed to have been strengthening and the rate went down to as low as 35 in some instances. In the last week, in the typical topsy-turvy fashion we have become accustomed to, the local currency has started weakening again.

The question is surely why is this happening when companies are supposed to be on a lock-down and therefore demand for hard currency should be diminished?

‘Dummy’ Trades?
While most traders were quoting rates between 35 and 40 immediately after lockdown, it does not seem as if there was much trading going on at those levels, from a volume and value basis. In addition, our analysis revealed that while bids were quite strong at those levels from the main players, selling was very constrained due to a non-market reflective rate. If anything, the players were only buying, but not selling. Those bids were largely speculative while everyone was trying to assess the situation.

Offline trading platform?
Most of the transactions in this business are largely relationship and face-to-face driven. During the early days of lockdown, everyone was unsure of the extent of the lockdown in terms of allowing movements and interactions. A very hard lockdown would have reduced interactions and therefore impacted the trading of FX. However as the situation has progressed and due to the relaxed nature of the lockdown, the players have found ways to interact and continue transacting. We have seen in some groups, traders beginning to be more innovative and now offering de-centralised transacting points in various neighbourhoods.

Everyone is a critical sector!
While initially a few companies were considered critical and therefore to remain open during the lockdown, we have seen in recent days literally everyone being allowed to open as they are a ‘critical’ service. We are not qualified to comment on the impact that has on flattening the curve; so will pass. What this has done is to increase demand for hard currency as players need to retool and produce.

Did I hear you say SI 85?
We are now all allowed to transact in any currency after another policy shift by RBZ. The simple question is are you better off holding ZWL and hoping to transact in local currency or seeking USD that will most likely conserve value and give you transacting flexibility? That’s a no brainer! In fact, this policy alone will push demand for FX and might lead to the death of ZWL!

Insurance Commission’s Guidance Hints on the Temporary Nature of SI 85 of 2020

The Insurance And Pensions Commission (IPEC Zimbabwe) Has Issued Circular Number 7 of 2020 which provides much-needed guidance to the pension and insurance sector with regards on how they are supposed to operate in light of Statutory Instrument 85 of 2020 which brought back the (legal) use of foreign currency for domestic transactions.

A few gems stand out
A few things stand out here. First, it seems the commission and by extension, the government wants to make it clear to the entire industry and country that the provisions of Statutory instrument 85 are temporary and they have every intention of repealing it once the crisis is over.

The entire document is at pains to make sure that this is very clear. Despite the fact that the whole country is gravitating back to the warm arms of the US dollar, IPEC seems intent on dissuading the industry from doing the same by reiterating that the Zimbabwean dollar should be the primary currency that underlies all transactions.

Last year when the Zimbabwean dollar started to rapidly lose its value quite a number of players in the insurance industry started to introduce US dollar-denominated policies. That was an understandable instinct given the fact that insurance is all about indemnity. This circular was crafted specifically to make sure that the industry does not return to this stance.

It’s all about taking and giving nothing in return
In fact, the entire document reinforces the take all nature of Statutory Instrument 85. While policy holders are allowed to pay their premiums in foreign currency at the ridiculously low rate of 1 USD: 25 ZWL, it doesn’t seem like payouts will be made in foreign currency. Why would anyone pay for a policy in foreign currency just so they can be insured in an unstable currency that is the Zimbabwean dollar?

By the time the crisis is over the government will have a nice pot of foreign currency waiting for it in various bank accounts as the circular strenuously charges those who receive foreign currency to follow the letter of the law.