Back in June, the government announced that it will start to dish out a $75 Nostro US dollar allowance to civil servants to cushion them against the rising cost of living. Understandably, public servants received the news with so much excitement.
With immediate effect, all Civil Servants’ Salaries will be adjusted upwards by 50%. This increase also applies to all Government Pensions.
2. In addition, all Civil Servants will be paid a flat, non-taxable, Covid-19 Allowance of USD75.00 per month.
3. Govemment Pensioners will be paid a flat, non-taxable, Covid-19 Allowance of USD30.00 per month.
However, the excitement soon died after they learned that they won’t be able to withdraw the allowance as cash. If they would have it their way, civil servants prefer having the Nostro US dollars as the real US dollar cash in their hands in order to either keep them safe under their mattresses or sell them on the black market which offers a higher ‘rate’ than the official market.
But the Deputy Secretary to the President George Charamba said the government didn’t want to feed the black market with US dollars that’s why it’s not making civil servants’ allowance withdrawable as cash.
Civil servants selling allowance
Consequently, the need by civil servants for having their Nostro US dollars as US dollar cash has created an opportunity for moneychangers on the black market. Now moneychangers are buying Nostro US dollars at a discount with US dollar cash. Currently the discount is between 6% and 8%.
You might wonder how the deal is done. Well, if a civil servant wants US$50 cash, for instance, they send $54 Nostro US dollars to the moneychanger if the discount rate is 8%. And if they want US$100 cash, they send $106 Nostro US dollars to a moneychanger if the discount rate is 8%.
Therefore, according to these deals, the $75 Nostro US dollar civil allowance is actually worth around US$69 cash on the black market. And also the pensioner’s $30 Nostro US dollar allowance is worth around US$27 cash on the black market.
Shortage of buyers
Unfortunately, interested civil servants will be hard-pressed to find moneychangers who are doing this kind of deal as they are not many who doing it. But with the recent abolishment of Agent lines, there’s high probability that more moneychangers will start to buy Nostro US dollars in exchange for US dollar cash.