Zimbabwe’s economy might be in the doldrums but there are people there who are making a lot of money. Patrick M at Zimbablog wrote an article on ways of making money in Zimbabwe, “The 13 best ways to make money in Zimbabwe”. He outlines a few things that people have been doing to make themselves ridiculously rich. Some of the methods highlighted in his post include selling fuel, trading in forex and Zim dollars (believe it or not), selling food and alternatives to beating the frequent power cuts. That is not all people are doing to make money. The diamond craze that hit the country a couple of years or so ago is till very much alive despite the efforts of police to try and stop their illegal mining and dealing.

The other day I caught wind of another way in which people are making money called ‘burning money’ where people take advantage of the very wide gap between the cheque rate and the cash rate of the US dollar against the Zimbabwe dollar. If you want to cash your US dollars you will get a much lower rate for it than if you were to go to the bank and exchange it for Zim dollars which are deposited into your account at a much higher rate. For example, if you cash US$50 it would be at a rate of lets say 30 000:1 and if you were to exchange it at a bank with the funds being deposited it would be at a rate of lets say 2,180,000,000:1.

The most obvious choice would be to exchange the money using the bank transfer rate but the problem comes when you want to withdraw your billions of dollars from the bank. If you have contacts at the bank you withdraw the money and then go to parallel market to buy US dollars at a rate of lets say 40,000:1. If you do the math you can see that you end making a very good profit. For those that cant get that amount of money out of the bank, what they do is go to a company and buy some sort of goods such as cement or Econet’s pre-paid buddie top-up cards with a cheque and sell them on the streets for cash.

The kinds of profits that people who ‘burn money’ make can be a bit mind boggling with the number of figures involved in the calculations but those who deal with them on a daily basis are used to it.

One thing though is that with people managing to make huge amounts of money from their forex in both US and Zim dollar terms, a number of industries or should I say those that are left are struggling to survive. They are struggling to survive because everyone is out there trying to get their hands on some of that money and those that have the money are clearing out companies and selling their goods.

Some may see this as being immoral and that the people who are out there carrying out such trades are further destroying the economy. The authorities may be out there trying to clamp down on such activities but as they close more and more loopholes and make it harder to carry out these trades, people are finding other ways of making ridiculous amounts of money. The way I see it, it’s just survival. It’s amazing how people can thrive in chaotic conditions.

At the start of 2007 ZW$10,000 notes were selling for about US$50 on Ebay and a number of people took advantage and sold the notes for more they were worth. With the introduction of the $100 Billion Dollar note ($100,000,000,000), selling notes for more than they are worth is happening again. As of today, there are 111 live auctions for the $100 Billion dollar note on Ebay with the highest bid for a single note being US$152.50 which is well above what one would get for it in Zimbabwe (screen shot below – click on image to enlarge). With the slashing of the zeros taking place the $100,000,000,000 will have a face value of $10 and just about worthless.

Those who have been quick enough and smart enough have capitalized on the introduction of such notes and listed them on auction sites and sold them for very good profits. Right at this moment, the seller running the auction with a high bid of US$152.50 has 9 other auctions for single notes which if the auctions were to close would net him US$717.89 which is an amount you can’t complain about for $1,000,000,000,000 which at last weeks rates would have gotten you about US$2.

If you have a few notes in your possession it may not be too late to get in on the action and take advantage of the situation. Even if you miss out on it this time around it is bound to happen again in the near future with the way Zimbabwe’s economy is running. Sign up to Ebay and try your luck. Take a look below:

50 TRILLION ZIMBABWE DOLLARS & 15 MILLION GERMAN MARKS US $14.99 Auction Ends: Monday Feb-06-2012 7:04:00 PST   | Watch this Item

(6)banknotes-Zimbabwe1&100 dollar,200 million,10,50&100 Trillion-currency A US $11.99 (0 Bid) Auction Ends: Monday Feb-06-2012 7:04:56 PST   | Watch this Item

ZIMBABWE- 100 x 500 -MILLION DOLLARS BANKNOTE,AB UNC US $100.00 Auction Ends: Monday Feb-06-2012 7:06:00 PST   | Watch this Item

Zimbabwe 2 Dollars 1983 XF+ P#1b US $2.99 Auction Ends: Monday Feb-06-2012 8:33:03 PST   | Watch this Item

10 TRILLION ZIMBABWE DOLLARS x 15 BANK NOTES ALMOST UNC US $16.99 Auction Ends: Monday Feb-06-2012 8:44:45 PST   | Watch this Item

One US Dollar will get you One Million Zimbabwe Dollars. That is just ridiculous!! I checked the official bank rate about two to three weeks ago and it was ZW $30,000 to US$1. The official rate doesn’t really mean much for everyday people in Zimbabwe because you can’t get yourself any foreign currency at the bank and it doesn’t make sense to sell your forex to a bank when you can get more for your money on the street. People who do want to know where the bank rates stand are the black market dealers so that they can adjust their prices accordingly.

I can remember the days in the early to mid nineties when you could get the US Dollar for well under ZW $10. It was so readily available and you could pick up your foreign currency from the bank on the day that you ordered it. As the years went by and the economic and political situation got a little shaky it became harder and harder to get your hands on forex. The situation has only gotten worse as time has gone by. I was in Zimbabwe at the beginning of the year when US $1 would get you about ZW $15,000 to ZW $20,000 depending on where you changed your money. I would not have thought that it would reach the levels it has reached. The instability in the economy has made a lot of people very rich and very quick!!

One funny thing is that I kept quite a few notes, in particular the $10,000 bill that does not have a space between the first and second zero. I went on to sell a few of them on eBay! for between US$15-50. A few people are selling an array of Zimbabwe Dollar notes and getting a whole lot more from them than they would get in Zimbabwe.

It is beyond me how the economic situation has reached the level it is currently at.