Zimbabwe’s illegal currency traders use WhatsApp to find clients and evade police | police news

Harare, Zimbabwe – The front door entrance to Budiriro Mall, a busy shopping center south of Harare, Zimbabwe’s capital, used to be a hive of activity where informal currency traders had set up makeshift “offices” on the sidewalk.

Now the area is practically abandoned.

The smartly dressed young men and middle-aged men who quietly exchanged currency with shoppers have not set foot there for weeks to avoid police raids.

In Zimbabwe, which has been plagued for decades by an economic crisis characterized by hyperinflation, a 54 percent unemployment rate and highly volatile local currencies, the more stable US dollar is the preferred medium of exchange.

Everyone from utility companies to street vendors accept payments in US dollars. Due to the popularity of the dollar, black market currency trading is a thriving sideline with thousands of people making a living from the practice.

In April, in the government’s latest attempt to stabilize the economy, Zimbabwe’s central bank launched a new currency, Zimbabwe Gold or ZiG.

Soon after, Zimbabwe police began cracking down on informal currency traders and arresting them in large numbers. Authorities blame illegal currency trading for distorting the exchange rate and devaluing the local currency, and want to ensure that the ZiG is accepted and does not quickly lose value like its predecessor.

To date, more than 70 mobile currency traders have been arrested. But instead of stopping them, it has driven them underground and toward more creative means of doing business.

Forex trader Darlington Murazva* was sitting working in a candy shop about a kilometer from his previous center in the Budiriro shopping centre.

The burly 30-year-old navigated the WhatsApp messaging app on his Samsung smartphone and pressed play on a voice note that arrived in a group chat where he meets other forex traders and sellers.

“Police are in Glen View right now. “They didn’t find anyone,” the voice said.

Murazva, who has been a foreign exchange trader for 11 years and operates mostly informally, used to have a vantage point at the mall entrance where he would sit on a plastic stool to look out for passing shoppers.

When the police raids began, he and the other merchants fled. They are now posted all over Harare and warn each other about police movements.

“Now the police can’t find us. We are always two steps ahead,” she stated with a wry smile.

“We know where they are in real time from our fellow merchants in the surrounding area.”

Pockets of opportunity

The largest sources of foreign exchange in Zimbabwe are remittances and exports from the diaspora. Zimbabwe allows its citizens to open US dollar accounts where they can deposit or receive dollars. They can also withdraw US dollar bills from banks. Companies can also obtain foreign exchange from the official auction market.

However, outside official channels, people regularly buy and sell dollars to informal currency traders according to their needs. Because street traders offer better and more market-oriented exchange rates, Zimbabweans prefer to deal with them rather than banks or official exchange houses.

Black market trading is illegal, so the exact number of traders is unknown. But it is believed that there are a couple of thousand. The WhatsApp group to which Murazva belongs has 247 members.

Although they normally compete with each other, traffickers have put aside their rivalries to join forces and help each other avoid arrest.

Recent reports that went viral on social media saying that 60 arrested traffickers were sentenced to three years in jail have also created jitters in an already nervous community.

Going online has not only been a safety measure for distributors, but also a new way for some to continue doing business.

Steven Tambudze*, 40, who has been a forex trader for almost half his life, said WhatsApp has been a real blessing in recent weeks.

“Although it has been a very difficult time for other dealers, business has been very good for me,” Tambudze told Al Jazeera at the Highglen cross-border bus terminal, where he was waiting for a customer.

“Most of my offers now come through WhatsApp,” he said.

Some of his former clients whom he lost track of because they began trading with other merchants in the city also returned, he said, explaining that with raids people prefer to deal with someone they know and trust, and now communicate with him directly. . by phone and messaging application.

Tambudze said he never meets random people and only deals with clients he knows personally.

Murazva also uses WhatsApp to continue working. However, he is cautious. He never mentions the word ZiG in an actual phone call and never talks about exchange rates or anything that would identify him as a trader, for fear that the authorities are listening to him.

When he gets a call, he tells potential clients to chat with him over WhatsApp, which he said he trusts a little more because of its end-to-end encryption.

“Security should never be given a day off,” he told Al Jazeera.

‘Keep your head above water’

On the streets, all Forex traders have their own ways of approaching clients. At the mall, Murazva would sit in his plastic chair at the entrance until he saw a potential customer. In a low voice, he would approach the passerby and whisper an offer to exchange dollars for local currency or vice versa.

Through WhatsApp, customers now communicate with a dealer they know when looking for currency. The trader then posts a message to the WhatsApp group to inform other traders that they would like to make a currency exchange.

Other interested traders get in touch by email with an offer and a fee is agreed.

From there, a payment is made in local currency electronically through a bank account and a physical meeting is arranged to collect the cash in USD.

The group’s distributors form a community that knows each other and therefore has a level of trust.

Other merchants also use WhatsApp’s broadcast feature, which allows users to send a single message to multiple recipients simultaneously with a single click.

Recipients of a transmission cannot see each other, ensuring privacy. This is useful for Forex traders who are trying to keep a low profile and still make a little income.

“Retransmissions also help a lot and are much more convenient because you can reach several distributors,” said Tambudze.

Murazva thanks messaging apps for helping dealers make a living amid the turmoil.

“If it weren’t for WhatsApp groups, we would have died of hunger. We keep our heads above water,” she said.

The veteran trader feels that the police attack is a passing phase.

He said this was because when the central bank introduced bond notes, a currency that forms part of the Zimbabwe dollar, in 2016, police launched a similar blitz.

“The police operation is not new. We are used to them. Every time they introduce a coin, they arrest us,” Murazva said. “But they will stop soon.”

Provisional measures

The new ZiG currency is already devaluing against the US dollar. To date, the coin has depreciated up to 25 percent on the black market and is trading at Zig20:USD1. Officially, the exchange rate is approximately Zig13.5:USD1.

Harare-based economic analyst Rashwhit Mukundu said the rapid devaluation speaks to a lack of confidence in the local currency.

However, authorities blame the decline of ZiG and the collapse of its predecessor on black market currency traders. They say merchants pay far more than what is offered at the official exchange rate, driving down the currency as it depreciates against the U.S. dollar.

Informal traders reject the idea that they are to blame.

Meanwhile, economists and critics accuse the central bank of flooding the market with local currency that is then used to buy US dollars from mobile currency traders. Local government contractors, who are typically paid in local currency (which is equivalent to billions in banknotes), then exchange these notes for US dollars on the black market, causing an oversupply that fuels the inflation.

“The real challenge in this economy is the lack of confidence in the local currency because people have lost their savings and capital due to hyperinflation in the past,” said Gift Mugano, visiting professor of economics at the University Business School. University of Zimbabwe.

He told Al Jazeera that the arrest of currency traders was a stopgap measure to deal with the currency crisis, but not a good idea.

“The question is: how do we regain trust? People are not arrested to build trust. The moment you force people, you lose your way,” he stated.

For Mugano, the crackdown is a sign that authorities have simply “run out of ideas” on how to address the currency problem.

“The black market continues to thrive. The government refuses to use its own money to pay for passports, fuel and other services,” he stated.

Mukundu, meanwhile, said the police crackdown was an exercise in futility.

“It’s about stitching your butt to stop diarrhea. “The Zimbabwe government and the central bank are not addressing the fundamental issue of lack of confidence in the Zimbabwe currency,” he told Al Jazeera.

For Mukundu, past experiences with inflation and current economic crises make people want to hold onto US dollars and other currencies stronger than their own.

“The people of Zimbabwe now see the value and wisdom in storing economic value in foreign currencies,” he said. “It is a culture and an economic system that has been built over the years that supports the storage of value in such currencies.”

*Name changed to protect privacy.