Mangudya seeks to plug black market

Source: Mangudya seeks to plug black market – DailyNews Live

BUSINESS EDITOR  12 July 2017

HARARE – The Reserve Bank of Zimbabwe (RBZ) is planning to plug the
parallel financial markets and ease the current cash crisis by
re-establishing Bureaux de Changes, more than 15 years after they were
closed.

Bureaux de Changes were shut down in December 2002 amid allegations that
they were at the centre of illegal foreign currency deals.

However, central bank chief John Mangudya believes that the introduction
of the authorised foreign currency dealers will help “enhance the ease of
doing business and foster financial inclusion and the level of
participation in the financial services sector”.

This has resulted in the RBZ inviting individuals and companies to apply
for a licence to operate as Bureau de Change.

Currently, there is a limited number of licensed Bureau de Change with the
majority of urban centres, including ports of entry/exit, having no formal
foreign exchange markets.

“Accordingly, interested parties are being called to embrace this
opportunity and provide Bureau de Change services to the public and
travellers and enhance access to formal services for exchange of
currencies in the country’s multi-currency system including bond notes,”
RBZ director of exchange control division Farai Masendu said yesterday.

As part of strategies to create more official channels of foreign
currency, the central bank has slashed Bureau de Change licensing fees
from $1 000 for head office to $500, while licencing at branch level now
requires $200 from $400.

Rural Bureau de Change branches now attract $50 from an initial $200.

Economic experts, however, said the introduction of Bureau de Change will
not help address the country’s liquidity challenges.

Zimbabwe, which adopted the multiple currency system dominated by the
United States dollar in 2009, has been experiencing a liquidity crunch
since 2015 due to widening trade deficit, illicit financial outflows and
sluggish growth among other factors.

“Zimbabwe’s challenges are more fundamental than institutional,” economist
Christopher Mugaga told the businessdaily yesterday.

“If these are not addressed, people’s propensity and hunger to take money
out of the country will continue,” he said.

The Zimbabwe National Chamber of Commerce (ZNCC) chief executive further
indicated that the country is suffering from a confidence and perception
crisis.

Economic analyst Francis Mukora concurred with Mugaga and said the ongoing
cash crisis reflects deep-rooted economic challenges that have not been
addressed.

“The cash crisis is more than just a liquidity crunch, but rather a
reflection of a crisis of confidence in the economy and deep underlying
problems. It’s a symptom of fundamental structural problems, not the
problem in itself,” he said.