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Zimbabwe’s ZiG Crackdown Prompts Street Traders to Switch to WhatsApp - BLOOMBERG
BY , Bloomberg News
An informal foreign currency exchange trader counts US one dollar banknotes in the central business district of Harare, Zimbabwe, on Monday, Feb. 12, 2024. Zimbabwe may back its currency with gold in an effort to end exchange-rate instability, Finance Minister Mthuli Ncube said. Photographer: Cynthia R Matonhodze/Bloomberg , Bloomberg
(Bloomberg) -- Zimbabwe’s street currency traders are abandoning their regular spots in city centers for messaging platform WhatsApp to evade arrest as the central bank and police crackdown on the unofficial market blamed for contributing to currency crashes.
The clampdown is the latest move to defend the new gold-backed currency, the ZiG, from being undermined by the traders who deal in US dollars.
Authorities have accused them of collapsing the defunct Zimbabwean dollar, which the ZiG, short for Zimbabwe Gold, replaced on April 5. When the unit was abandoned, it had lost more than 80% of its value against the dollar on the unofficial market this year.
Read More: Zimbabwe Hypes New Gold-Backed Unit in Search for Investment
The dealers, who were briefly put out of business by the switch from the Zimbabwean dollar to the ZiG as banks and mobile-money operators struggled to convert their systems into the new currency, have roared back to life in recent days. Arrests have also increased, forcing traders to use the Meta Platforms Inc.-owned messenger service to conduct transactions with clients they trust.
On Wednesday, a dollar could be exchanged for 17 ZiGs on the platform, compared with 13.40 on the official market.
Some 224 street traders have been arrested across the country under the ongoing blitz, according to police statistics provided to the state-owned Herald newspaper. The daily publication reported Wednesday that the central bank’s financial intelligence unit has also frozen 90 bank accounts suspected of illicit transactions and fined more than 40 individuals for violation of exchange-control regulations.
On Monday, Neville Mutsvangwa, the son of cabinet Minister Monica Mutsvangwa, was denied bail for allegedly “dealing in foreign currency” since 2019, in violation of exchange-control regulations and the money-laundering act. Mutsvangwa will remain in custody until May 30, the prosecuting authority said.
Finance Minister Mthuli Ncube at the weekend vowed to defend the ZiG currency at all costs. “There are some which try this and that to make it unstable,” he said in a post on X. “But as government we are determined to keep it stable.”
--With assistance from Zimri Smith.
(Updates with latest police statistics of arrests in sixth paragraph)
