Soaring fuel prices are draining the taxi industry

Taxi driver Tawanda Gunde counts fares collected in Victoria Falls, Zimbabwe. He was forced to sell one of his three taxis during the pandemic and another this year when fuel prices rose.

This story was originally published by Global Press Journal.

VICTORIA FALLS, ZIMBABWE — Taxi driver Tawanda Gunde recalls the difficult decision he had to make during the coronavirus pandemic to sell one of three taxis he used to hire. As the worry of a reduced income overwhelmed him, he was comforted by the belief that his situation would once again improve.

But Gunde’s situation has not improved and earlier this year he was forced to sell a second taxi to support his family. Today, he is trying to make ends meet with his only remaining car, has pulled his two sons out of private school and is considering other sources of income.

For taxi drivers, earning a living has become increasingly difficult as, against the backdrop of the pandemic, the price of fuel continues to rise. The spiraling situation is forcing many people out of the industry.

In July, Zimbabwe had the second highest fuel prices in Africa, after the Central African Republic, with the price of a liter of petrol in the landlocked country at $1.88 (over $7 a gallon) . That compares to 46 cents ($1.74 a gallon) in February, just before Russia’s invasion of Ukraine, which affected oil supplies outside Russia and drove up fuel prices. In Zimbabwe, the situation is aggravated by the country’s use of the US dollar as well as its local currency.

The Zimbabwean dollar was introduced in 1980 to mark the country’s independence from the United Kingdom and to replace the Rhodesian dollar. It remained in place until 2009, when it collapsed due to hyperinflation, a devastating and rare financial event that devalues ​​a country’s currency. Hyperinflation – driven by declining exports, political corruption and a weak economy – rendered the Zimbabwean dollar so worthless that a $100 trillion note was printed in 2009. In the same year, a multi-currency system was been adopted, including the US dollar. , the euro, the pound sterling and the South African rand to restore some stability to the local currency.

In 2019, the country reverted to a predominantly Zimbabwean dollar system. But despite the steps taken by the Treasury to enforce the single currency system – at one time prohibiting the use of the US dollar and other foreign currencies – the US dollar has remained an integral part of the country’s currency, providing stability while the Zimbabwean dollar continued to lose value.

Now, with inflation hitting a staggering 256.9% in July, the normally dependable US dollar is also facing inflationary pressures, making the situation worse.

“The Russian-Ukrainian war has affected global economies and Zimbabwe has not been spared, as the war is also affecting the US dollar in Zimbabwe,” said Felix Chari, professor of business and economics at the University of Bindura’s scientific education. “Inflation continues to rise, and this is affecting the US dollar, which has often been stable over the years. The local currency is destined to continue to lose as the year progresses.

While maintaining a relatively stable currency, Zimbabwe’s multi-currency system has proven to be a headache for business owners who are expected to quote prices in two currencies to their customers.

Taxi driver Taura Dube, who on some days earns only half of what he earned before fuel prices rose, says he has to check the rates for both currencies every morning so he can set his prices before driving. start driving his executive taxi, a premium mode of transportation.

“I allow my customers to pay me in US dollars and local currency at the prevailing exchange rate of the day,” says Dube. The father-of-three had to raise his prices after business started to slow in March.

Customers who wish to pay in the local currency lose out because a $10 trip would cost them the equivalent of $11-13 when paying with Zimbabwean dollars due to its daily decline in value. If they pay with local currency, then Dube cannot use the money to buy fuel because it is only sold in US dollars.

“Most of my local customers can no longer afford my fees and they opt for the cheaper local shuttle taxis,” says Dube. “I now survive thanks to tourist customers.”

Some residents were completely excluded from using taxis and opted to walk to their destination. As a small tourist town that only recently gained city status, there are no local buses serving Victoria Falls.

Sanelisiwe Mkhwananzi, a supermarket worker, used to travel to and from work by taxi at a cost of $1 each way. Now the price has doubled and his monthly salary cannot cover it. “It takes me about 30 minutes to walk from home to work if I use shortcuts, which means I cut through the bushes and don’t use the main roads,” says Mkhwananzi. “But the challenge with the shortcuts is that when it’s dark they are dangerous because there are wild animals and sometimes even thieves.”

At the supermarket where Mkhwananzi and others like him work, rising fuel prices also mean that transporting goods has become more expensive.

Oswald Kasi, owner of a mini-supermarket in Mkhosana Township, Victoria Falls, sources most of his supplies from Bulawayo, a town more than 400 kilometers (249 miles) southeast of his store. “When fuel prices go up, I am also forced to raise the prices of my goods so that I can make a profit,” says Kasi.

Country leaders are hoping that a move to scrap the diesel tax and cut the gasoline tax – in a bid to keep fuel prices from rising above $2 per liter (about $7.50 per gallon) ) – will help the situation. Chari, the economics professor, agrees with the move, but says that despite these attempts, “Zimbabwe remains expensive compared to neighboring countries such as South Africa and Botswana.”

Meanwhile, the country’s often complicated multi-currency system looks set to stay for a while. Mthuli Ncube, Minister of Finance and Economic Development, announced in his latest financial statement released in June that the use of the Zimbabwean dollar alongside the US dollar will remain in place for the next five years. Attempts to contact the department for comment were unsuccessful.

For Gunde and taxi drivers like him, change must happen quickly. He no longer has a spare taxi to sell if the dire economic situation persists. “It was a hard blow that I had to take,” he says of his decision to sell the two taxis.

While he lives in hope of one day having a more secure business, his daily thoughts are plagued by worry about whether he has enough money to support his wife and two children. .

“I tried buying and selling clothes to supplement my income, but I didn’t get the results I needed,” says Gunde. “Driving a taxi is the only job I know.”

Fortune Moyo is a Global Press Journal reporter based in Victoria Falls, Zimbabwe.

Article published in: Featured

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