Burning money is a phenomenon which entails the selling of hard cash on the black market to those who are desperate enough to pay a premium for it. It is the "art" of Creating money from other money ,Hence the term burning. 
The practice came into being at the height of Zimbabwe’s protracted politico-economic crises around 2007, which resulted in record hyperinflation, the majority of ordinary people confronted monumental livelihood challenges and complex reconfigurations of social and economic relationships.
The Zimbabwean dollar's continued loss in value against the world's major currencies made it worthless paper , the unavailability of basic commodities in super markets and the difficulties in making international transactions. This prompted Zimbabwean nationals to master the "art" of burning money on the ‘black market’/parallel market or Kubhena Mari in shona .The practice involved the selling of mostly the American dollar ,the British pound and the South African rand at a high rate against the Zimbabwean dollar ,by illegal forex dealers in and around the major cities in Zimbabwe.
Burning money was viewed as a coping mechanism against the financial crisis that was in Zimbabwe during that period.
Foreign currency shortages became acute in Zimbabwe in the early 2000s, largely as a result of sanctions that were placed on the country by the Bretton-Woods Institutions and the western countries. The non-performance of key sectors of the Zimbabwean economy such as agriculture, manufacturing and tourism also contributed to the foreign currency crunch faced by the country.Foreign currency dealing was one of the ways through which some dealers were able to benefit financially from the Zimbabwean crisis.
The central bank of Zimbabwe and most leading financial institutions could not provide the foreign currency in demand and hence foreign currency dealers emerged in huge numbers to fill in the void of providing foreign currency which the Reserve Bank of Zimbabwe and most banks were struggling to do. Foreign currency dealers at the Roadport bus terminus, Ximex Mall and Copacabana taxi-rank would buy and re-sell foreign currency to members of the public at a profit and this wreaked havoc on the precarious Zimbabwean dollar which kept plummeting in its value against the world’s major currencies until it was finally shelved in April 2009.
Foreign currency remittances from Zimbabweans in the diaspora meant that forex dealers always had access to foreign currency as people who received foreign currency from relatives or friends outside the country would sell their forex to the dealers who almost always offered more lucrative exchange rates as compared to the banks.
As Zimbabwe’s foreign currency crisis persisted and worsened in the 2000s, the reserve bank began to actively participate on the country’s forex black market by printing huge quantities of Zimbabwean dollar notes which it would give to its agents known as runners who would buy foreign currency on the black market with the printed money and surrender it to the reserve bank for a commission.
The wanton printing of Zimbabwean dollar notes by the reserve bank stoked the fires of hyper-inflation which officially peaked at 231 million percent in July 2008.
However, one of the world’s leading experts on inflation, Hanke, argues that Zimbabwe’s hyper-inflation peaked at a stupendous 89.7 sextillion percent in October 2008.
Dollarization and the Decline of burning money Activities
The dealers’ bubble was, however, burst when the Zimbabwean economy started to dollarize. The widespread dollarization of the Zimbabwean economy from September 2008 by the Reserve Bank of Zimbabwe in response to the weakness and volatility of the Zimbabwean dollar and official dollarization which saw the Zimbabwean dollar being abandoned by the Government of National Unity (GNU) in April 2009, had devastating effects on the livelihoods of many forex dealers, fuel dealers, cellphone airtime dealers and RTGS speculators who were still ‘burning money’.The approval of the widespread use of foreign currency by the Zimbabwean government, effectively ‘killed’ the beleaguered Zimbabwean dollar and forex dealers’ markets.
Forex dealing business was one of the earliest casualties of the devastating effects of dollarization, as forex dealers saw business disappear overnight when the Zimbabwean dollar was rejected for currencies like the US dollar and the rand, when the government approved the use of foreign currency to designated shops that would have applied to sell their products in foreign currency.
This saw the termination of the use of the Zimbabwean dollar, because even those shops and traders that did not have licences or permission from the central bank to charge in forex began to do so, thereby rendering the Zimbabwean dollar unwanted legal tender.
The suspension of the RTGS system (‘burning money’) of transacting proved to be a blow to all forex dealers. To the dismay of many forex dealers and speculators, the RTGS system was suspended by the Reserve Bank of Zimbabwe on 3 October 2008, due to the fact that a lot of speculators were making fast money overnight and becoming instant trillionaires and quadrillionaires in Zimbabwean dollars, thereby stoking hyper-inflation.Too much liquidity was being created on the market that was disconnected with production and the sale of goods.
Effects of dollarization on fuel dealers
The dollarisation of the economy, and the removal of price controls by the National Incomes and Pricing Controls Commission (NIPCC) in September 2008, saw the fuel service stations suddenly awash with petrol and diesel because they could now openly charge fuel in forex without fears that the government would prosecute them.
This development saw the fuel traders who would sell fuel in the streets or bushes, away from the glare of the police get out of business, as most consumers opted to buy fuel from the fuel stations where one was guaranteed bona fide fuel which had not been mixed with water or paraffin, as some of these fuel dealers were notorious for doing.
Fuel dealers were also hurt by competition in the latter part of 2008 from workers who were now increasingly being paid in the form of fuel coupons which they could dispose of, for a price of their liking on the market. Consequently, the influx of fuel coupons on the market and the fuel in the service stations put the fuel black market into jeopardy.
The end of money burning in 2009
When the Government of National Unity officially adopted the multi currency system in April of 2009 , burning money and most activities associated to the practice suffered a natural death.
Resurfacing of money burning
Panic induced by cash shortages and the impending introduction of bond notes hit the banking sector and saw the return of the “cash burning” phenomenon, which characterised the financial sector in 2007 and 2008, as depositors rushed to clear out their bank balances.
Depositors with large sums in their bank accounts who had been failing to withdraw the money in their accounts resorted to Real-Time Gross Settlement (RTGS which had since been re-introduced) payments to groups of people, who in turn withdrew the cash and remitted for a fee.
The escalating liquidity crunch in 2017 characterised by severe cash shortages took money burning to another level in Zimbabwe. The Bond Notes which had been introduced as a surrogate currency with a similar value with the United States of America Dollar influenced the rampant money burning.The Bond note did not permit international transactions and for people to buy goods and services on the international market this forced people to trade the bond note for the United States Dollar. The government introduced measures to guard against the resurfacing on money burning including arresting forex dealers.The measures did not do much as the market forces that is demand and supply of foreign currency prevailed over the government's measures. People wanting to make international transactions and storing value of their money shunned the bond note and took strides to secure foreign currency at any expense .
Today's Top Pindula News2018-12-18T09:59:05Z
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- Hanke, S , Hyperinflation: Mugabe Versus Milosevic . Page: no page,Globe Asia , 2008. no ISBN.
- Chagonda T, The Response of the Working Class in Harare, Zimbabwe to Hyperinflation and the Political Crisis, 1997-2008.” PhD diss. Page: NO page, University of Johannesburg , 2011. no ISBN .
- Central Statistical Office,August Report on July Inflation Statistics. Harare . Page: NO PAGE, CSO, 2008. no ISBN .
- Hanke S,Mugabe Versus Milosevic , GLOBE ASIA, 2008
- [ https://www.newsday.co.zw/2016/06/cash-burning-returns/ ], ‘Cash burning’ returns , Published:June 4 2016 , Retrieved: DATE_ACCESSED_HERE