UNSCRUPULOUS employees in the banking industry working in cahoots with runners are cashing in on soiled and torn United States dollar notes as they circumvent the official channels of exchanging notes, The Manica Post has learnt.
Despite the challenge of accessing lower USD denominations, soiled United States dollar notes are hardly accepted in daily public transactions.
Sadly, some local banks are also not accepting the soiled or torn notes. Holders of such notes are therefore being forced to sell them for a song.
While some dealers charge 40 percent of the marked value, some charge half of it. For a torn US$100 note, one can get as low as US$50 on the black market, depending on the state of the note.
The Manica Post has noticed an increase in the number of such dealers, with some moving around residential areas soliciting for the notes through hailers.
Investigations conducted by this publication also revealed that these runners tender their daily collections to middlemen who then take the soiled notes to various banks to swap them with new notes at the marked value, thereby leaving the syndicate with a 40 to 50 percent profit margin.
One of the interviewed runners in Chikanga, Mutare, Mr Dakarai Dhlamini said they are enjoying brisk business from collecting soiled and torn notes.
“Some people are stuck with soiled money, especially those with $50 and $100 notes. They are getting little joy from retailers who demand clean notes. Such people are actually desperate to get rid of the money so that’s where we come in – to help them. We are working closely with bank tellers and we get a percentage from whatever we would have raised. It is better to get a fraction of your money than to be stuck with it without deriving any value from it,” said Mr Dhlamini.
He highlighted that soiled notes are not accepted across the border, hence their rejection by local traders.
“Those who buy and sell basic commodities need clean notes when they go to Mozambique for restocking,” said Mr Dhlamini.
In a telephone interview, Confederation of Zimbabwe Retailers Association president, Mr Denford Mutashu said their members are rejecting the soiled notes as they are getting a raw deal from banks and wholesales.
“It is a long chain. The challenge is that as a country we do not print the US dollar and our members who accept the soiled notes are having them rejected by banks and wholesales. They are stuck with such notes and they are left with no choice but to also reject them when consumers bring them. The problem is not only being reported in Mutare, but all over the country.
“At times, the general public is to blame as they are not banking their money. Some of the money is torn and soiled during storage in the pillows at home. We need to promote the culture of banking money,” said Mr Mutashu.
An insider in the banking sector who spoke on condition of anonymity said banks incur costs in repatriating the USD notes and then bringing in new ones.
“It depends on the state of the notes. However, you have to keep in mind that it costs the bank some money to repatriate the soiled and torn notes. You are just supposed to take the soiled note to the bank and they will charge you minimally for a new note.
“However the challenge is that most banks do not have capacity to service current foreign currency demands, hence they no longer accept the torn and soiled notes,” she said.
Another source from a local bank said it is easier to exchange soiled notes of local currency with clean ones.
“If it is soiled local currency, the money should be deposited through your bank account. The bank should accept it and exchange it with new notes over the counter. However, if they do not have cash, they will simply credit your account,” he said.
In the statement on June 19, 2020, Reserve Bank of Zimbabwe (RBZ) Governor Dr Mangudya said members of the public who wish to exchange coins and old notes for new ones can do so through their banks.
Contacted for comment yesterday, the RBZ’s relations department said Dr Mangudya’s statement applies to both local and foreign currency.
The cost of repatriating foreign currencies contributes a significant portion to the cost of money and bank services in Zimbabwe.