Buddie issues

Buddie cards are top-up cards for ‘pay as you go’ cell phone airtime, for one service provider (Econet). These are usually sold by vendors on street corners and at traffic lights, as well as various outlets. I purchased mine from vendors, as I think most people did. Selling Buddy cards became a very important source of income for thousands of informal traders. Vendors would go into the service provider, and buy their cards at a ‘wholesale’ price, and they then sold the cards to the customer at the retail price printed on the card, resulting in commission for them.

Just before Christmas the Buddie cards stopped being printed. I believe that other service providers also stopped printing their top-up cards around the same time. This meant that thousands of vendors suddenly found themselves in a situation, just before Christmas, unable to buy cards to sell to their customers. They were effectively left unemployed.

Rumours abounded that the system would be switching to forex.

I bought top-up cards this weekend for the first time. The new cards have a US dollar value printed on them and the card I bought was for US$5. The vendor charged me US$6 which obviously prompted question over why I was being charged a figure over the retail price. He told me that he was now buying the cards over the counter at the face value, so was forced to add his commission on top. That vendor made US$1 on that deal, but if vendors are setting their own commission then it is possible that the price paid will vary from vendor to vendor. I won’t know until I buy my next cards.

The second problem we had at the traffic light that day was change – not political change but the money change! Not many people have small change in forex and US$6 is one of those figures that usually requires US$4 returned out of a US$10 note. I waited at the robots while two other vehicles purchased their cards from my vendor, with him doing his best to get small change from them, but each of those customers paid the full price. Eventually we negotiated that change issue by converting the US$ he wanted into Rands, and me scrabbling around for money kept over from my last trip to South Africa.

My friend in the car with me had kept quiet through the transaction and dryly joked as we pulled away from the pavement, “I wonder if that guy bought himself a forex licence?” There is simply no way a vendor would have been able to buy themselves a licence. My friend’s point raises a range of potential problems for the vendors. For a start, they run the risk of arrest for illegally trading, they also run the risk of the Reserve Bank forex police simply stopping alongside them and seizing their hard-earned cash from them, or they may find themselves being asked to pay bribes to keep the Reserve Bank off their backs. These are all the same dilemmas and stresses that formal traders have to deal with.

We wondered if the forex licence issue might explain why the vendors could no longer sell on commission. If the service provider holds the forex licence, it is only they who can sell this product in foreign currency (which they need to be able to do to ensure the service continues). So they ‘legally’ sell the cards to the vendors, and thousands of decent people who previously scrapped together completely legally, now have to do it ‘illegally’.

That’s only the start of their problems.
Forex is hard to come by and for Zimbabweans who protect every last bit they have, buying from the vendors is no longer simply a convenient obvious thing to do. It’s still convenient and obvious, but it also comes at a cost. Why would someone short of cash buy from a vendor, if they can go to a service provider outlet and pay the face value? The only reason I did on that day was because I decided the extra US$1 was worth paying to avoid the queue at the outlet. But the length of the queue also indicated to me that a lot of trade had drifted from the vendors to the service provider outlet. So business to the vendors will be down.

Consider too that most of the vendors were unable to sell cards around Christmas time – an expensive time of year for most people – because the cards were not being printed. Those guys probably used the money they would have held back for stock to cover their cost of living. This means that most vendors probably found themselves in an impossible situation when the next cards came out, because to buy stock on foreign currency, they’d need to spend a LOT of Zimbabwe dollars (very hard to come by) on the black market to raise the foreign cash they needed to re-stock.

I feel very sorry for the many vendors who have probably lost a way to keep surviving in this economy. But I also feel sorry for the customer. Lengths of queues aside, the cost of sending an sms, in forex, is scarey. One message now costs about 22c to send locally, and 47c (US, not Zim) to send an sms outside the country. I have no idea what it costs in other parts of the world, but my gut feeling is that we are probably paying a lot more, in a currency we have to go to the black market to get.

Everyone I spoke to is saying that cell phones will now only be held for emergencies only because sms’s are simply too expensive to use socially anymore. But we have to be careful. The moment you scratch a Buddie card and add the money to your phone, you have one month to use it. If you don’t use it within the month, then your line will be cut off and you will have to go into the service provider office and pay a reconnection fee to be able to use your phone. To avoid this, customers buy more airtime and add it to their phones before the previous card expires, to ensure they always have ‘active time’ on their phones. It has always been a bitter pill to swallow, but much harder when the pills come at such a high price.

If this is how complicated it is just to buy and sell airtime, imagine what it must be like trying to manage a massive company in Zimbabwe.

This entry was posted by Hope on Tuesday, January 13th, 2009 at 11:37 pm. You can follow any comments on this entry through the RSS 2.0 feed. Both comments and pings are currently closed.