With election near, economy free-falling, Zimbabwe survives on black market

Runaway inflation in Zimbabwe has created a thriving new class of people: black market money changers.
Runaway inflation in Zimbabwe has created a thriving new class of people: black market money changers. Frederic Courbet / MCT

HARARE, Zimbabwe — On a typical workday, Lovemore Vambe will make dozens of clandestine phone calls that lead to a handful of illegal transactions. He'll conspire with colleagues, sidestep police or bribe them if necessary, and come home in the evening with a few dollars in his pocket.

That's enough to make the rent and keep his eldest child in boarding school. In Zimbabwe's free-falling economy, the slight, mustachioed 31-year-old holds a rare steady job: He's a money dealer on Harare's thriving black market, helping Zimbabweans trade foreign currency for their increasingly worthless local cash.

With inflation estimated at 200,000 percent — easily the highest in the world — Zimbabwe's currency is barely worth the paper it's printed on. (The largest Zimbabwean note, 10 million dollars, can't buy more than a couple of sodas.) Foreign currency runs this economy now, mainly the U.S. dollar and the South African rand, nearly all of it traded on the black market.

The government of longtime President Robert Mugabe, who faces a critical re-election test on March 29, has pegged the exchange rate at $1 to 30,000 Zimbabwean dollars. But the currency is losing value at such head-spinning speed that on the streets of Harare, one U.S. greenback will soon fetch about 2,000 times that.

Since no one can afford to do business at the official rate, Vambe says that the thousands of informal dealers have become Zimbabwe's lifeline.

"If you want Zim dollars, you have to buy it on the parallel market," said Vambe, seated on an overstuffed sofa in the comfortable suburban home he shares with his wife and three children.

"The banks don't allow you to pull out more than 500 a day," he said, meaning 500 million Zimbabwean dollars, the six zeroes on the end being essentially meaningless in a figure that equates to less than $10. "And that is when they have cash. Me, I can always find cash for a customer."

But he has to hustle. Even though the police regularly crack down on the illegal trade, in a country where nine in 10 people don't hold regular jobs, money-dealing is a rare chance to make a buck and is therefore highly competitive. In a good week, Vambe can make $100 in commissions, more than enough to cover the month's rent.

Vambe worked at a private bank until it collapsed in 2002. He used his savings to open a small business selling herbal medicines, but with prices rising so fast he could barely afford to keep any inventory. About two years ago some friends roped him into the money trade.

He'd always been good with numbers, able to juggle big sums in his head. Now he also juggles cell phones, one for each unreliable mobile network so that he's rarely too far out of reach. He has about 20 regular clients — local shop owners and businessmen, mostly — and when one sends a text message requesting funds, he calls back immediately.

Zimbabwe's economy began failing a decade ago after Mugabe launched a politically motivated land reform scheme that bankrupted the farm sector, the country's main source of income. Now, remittances from Zimbabweans living overseas drive the economy, pumping as much as $1 billion in foreign currency into the country each year — nearly all of it coming through the black market.

"There is absolutely no way that the economy could function without the inflows of money via the black market," said Tony Hawkins, a leading independent economist in Harare.

Finding money on the streets is easy, Hawkins said, because the government prints so much of it. With Mugabe facing a close election race, Hawkins believes that the Reserve Bank of Zimbabwe has dumped more than 1.5 quadrillion dollars onto the market over the past month — "to buy votes for the ruling party in one way or another," he said.

That's how cinderblock-sized wads of cash find their way eventually into the hands of the small-time dealers who are seen every day loitering around Harare's dingy Roadport bus terminal, staring into passing cars looking for clients. Police regularly sweep the area, so now Vambe and most other dealers have gone underground, making trades via cell phone from homes, cafes and shopping malls.

To evade the cops, every dealer has his tricks.

Vambe's wife sewed extra pockets into the thighs of two pairs of his pants to hide foreign bills.

Another man, Mark, who wouldn't give his last name because of his activities, carries around the brochure for a satellite television service, so that if cops catch him with loads of U.S. dollars he can say he's going to make a payment.

Zivai, a sweet-faced 25-year-old who got into the trade straight out of high school, said he's never been arrested. "I talk very nicely to cops," said Zivai, who also wouldn't give his last name. "One of them became my client."

Vambe was arrested once, a few months ago. An undercover cop found incriminating text messages on his phone — "100 green (slang for U.S. dollars) how much" — and Vambe spent three nights in a downtown jail with two dozen other dealers.

The prison guards tormented them, ordering them to do push-ups and run in place, and the cell stank so badly that Vambe didn't want to breathe. But the worst part of it was that he'd been caught on his way to a deal and had a couple of hundred million Zimbabwean dollars in his pocket.

"By the time I came out of jail," he said, "all the money was worthless."