She abandoned her shopping cart and headed for a nearby street jammed with traders offering bargains in U.S. dollars. From the trunk of a car, she picked toiletries, rice and soups. For her two children, a young street vendor dodged traffic to offer her a box of candy.
“I can’t keep up with those Zim dollar prices in the supermarket — it’s insane,” Nyoni said, referring to the local currency. “For the price of one in the supermarket, I am getting two soaps in the street.”
A yearslong currency crisis that forced the 2009 adoption of the U.S. dollar — one of the world’s most reliable assets — is changing shopper preferences in this southern African nation of 15 million. Many people are shunning brick-and-mortar stores, where prices must be charged in local currency and rise frequently.
On the street, costs are more stable because shoppers pay exclusively in U.S. dollars.
With greenbacks scarce at banks, many people and businesses get them on the black market, making the official exchange rate — 1,000 Zimbabwe dollars to one U.S. dollar — that retailers are required to use artificially low. It’s double that on the street, so to break even, stores are forced to make their products more expensive.
“Zimbabwe dollar inflation on the black market is on a rampage, so retailers have to constantly change their prices,” economist Prosper Chitambara said.
Other countries like Lebanon and Ecuador also have turned to using the U.S. dollar to beat back inflation and other economic woes, with mixed success. Facing Lebanon’s worst financial crisis in modern history, many stores and restaurants there are demanding dollars.
Similarly, manufacturers and suppliers are now pushing for payment in U.S. dollars from stores that are forced to sell the same products using the freefalling Zimbabwe dollar, said Denford Mutashu, president of the Retailers Association of Zimbabwe.
“It’s currently impossible to purchase goods in U.S. dollars and sell in local currency and recover the money spent,” said Mutashu, adding that manufacturers are increasingly preferring informal traders over formal retailers to avoid using local currency.
“The informal market is ready to pay in U.S. dollars. The Zimbabwe dollar is being squeezed out,” Mutashu said.
Zimbabwe’s economy is inching toward “full dollarization,” with the local currency facing collapse, local investment firm Inter-Horizon Securities said. It slumped by 34% in April alone.
Street traders in cars, on bicycles or on foot clog sidewalks, roads and parking spaces. They sell items ranging from groceries to cosmetics, brooms, dog chains, car parts and medicines.
Many young people, including college graduates, end up becoming street vendors, said Wadzai Mangoma, director of the lobbying group Vendors Initiative for Social and Economic Transformation.
“Our prices are not subject to the artificially low official exchange rate, so we have taken over the supply of basic commodities,” Mangoma said. “However, competition is also very high because the majority are turning to informal trade for employment.”
Source: Nehanda Radio
In other news-British Airways cancels dozens of Heathrow flights after IT problem
There has been a second day of chaos for thousands of travellers at London Heathrow after British Airways (BA) cancelled at least 42 more flights due to the impact of an IT failure.
BA said cancellations are still happening due to the “knock-on effect of a technical issue” resulting in staff being in the wrong location.
Around 16,000 passengers have been affected by the cancellations.
It comes on the busiest day for UK air travel since 2019. Learn more
