via Editorial Comment: Deal with reserved sectors’ racketeering | The Herald January 3, 2014
Revelations in The Herald Business’ New Year edition that companies operating in sectors reserved for locals by the country’s indigenisation laws are not banked indeed made frightening reading and smack of grand financial impropriety.
The National Indigenisation and Economic Empowerment Board discovered during a certification compliance evaluation process for both local and foreign-owned businesses that the majority of companies in reserved sectors do not have local bank accounts, meaning proceeds from their operations do not flow into our formal banking system.
Businesses and individuals alike have every right to privacy in terms of their financial affairs, but it becomes the Government’s duty to probe their activities when conduct potentially criminal and detrimental to the economy is suspected or unearthed.
In light of the findings, it could be worth Government’s while to launch extensive investigations into potential widespread and well-orchestrated externationalisation of proceeds from businesses domiciled in Zimbabwe. The fear is that while the country is battling one of the most crippling liquidity crises in its history, the businesses operating in reserved sectors could be contributing to the unwelcome state of affairs.
There are two very likely scenarios to the paradox: the first is that since the predominantly small businesses are not banked they are keeping proceeds generated from their operations stashed somewhere at their offices or at the owners’ homes; and the second being that considering the proliferation of foreign-owned businesses in reserved sectors, proceeds from their operations could be conveniently finding their way into secretive foreign bank accounts at Zimbabwe’s expense.
Cash is being smuggled out or lying idle somewhere thereby complicating Government efforts to put together pieces of Zimbabwe’s economic puzzle dismantled by a decade-long illegal economic embargo imposed on the country by Western states. The liquidity crunch is noted in long winding queues at banking halls and, in stances, rowdy behaviour by depositors frustrated by challenges in accessing their money. But in some, more grievous, instances companies have scaled down operations or closed, throwing thousands of people into joblessness.
Admittedly, confidence in the local banking system slumped during the hyperinflationary period, but a lot has been done to improve the supervision of banks since 2009 to ensure safety of the public’s hard-earned cash.
Beyond this, businesses and individuals resident in Zimbabwe need to realise that it is as much Government’s responsibility as it is theirs to prop up our national economy.
This is because it is now quite evident that Zimbabwe and its people are by and large aloof in as far as resolving the liquidity crisis and economic challenges are concerned, with multilateral financial institutions remote-controlled by Zimbabwe’s Western citing a litany of frivolous excuses not to do meaningful business with Zimbabwe.
As such, it could potentially be quite shocking when it is found out how much liquidity the economy has been deprived of over a long period of time if investigations are instituted into how proceeds from these businesses have been handled all along. Huge amounts of cash have not circulated freely to keep oiling the economy. That much liquidity has been cordoned off the formal banking system, and hence the rest of the economy, is potentially significant in light of findings of Finscope 2013 SMEs survey that the informal sector generates up to US$7,4 billion annually.
Surely, it is a no-brainer to visualise the extent to which US$7 billion would go to ease the liquidity crisis if it is all banked.
There is fertile possibility that the businesses engaged in criminal practice by smuggling proceeds from their oeprations without meeting their obligations to the tax payer at a time central Government is facing severe funding limitations.
The extent of this racketeering could be far beyond than what meets the eye considering that businesses in reserved areas such as saloons, retail, and commuter transport and agro-processing are predominantly small and informalised.
What is also somehow disturbing is the fact that it has taken authorities this long to discover the anomalies yet indigenisation has been on the conveyor belt for a good number of years already.
COMMENTS
When the government of the day has made it clear that it is untrustworthy, does not respect private property and intends to seize 51% of the assets of any non-black indiginous business, then it’s in those business’ own self interest to avoid putting their money anywhere that government will be tempted to take it. As a small businessman, I deal only in cash, and avoid local banks at all costs. Survival of self and family trumps the needs of ZANU-PF anytime!
We are always looking and finding someone else to blame for shortcomings. The list grows metamorphosises at an alarming rate
ILLEGAL SANCTIONS ARE RESPONSIBLE FOR THIS! HA HA HA!
I find it strange that your Headline news has an proportionate content of articles poached from the Herald. The Zimbabwe situation then inadvertently finds itself becoming the mouth piece of the Herald when it writes about “illegal sanctions”
Here, here Phibion. Apa wataura chokwadi. It’s as if this website is slowly becoming a sidekick of the Herald!
My 75year old mum cracked-me-up when she screamed ‘SANCTIONS!!!!’, one morning when she found her vegetables in her garden having been destroyed by pests
How can u defend what is criminal & hurts the economy jus coz u dont like Zanu pf?
Would yo “developed”economies where u have sought asylum allow such bush business practises?certain prosecution!
Grow up
Murimi, the problem is that Zimbabwe is not a developed economy, it’s a bush economy. It’s run by un-educated thieves who care more for their own foreign bank accounts then the needs of the starving poor, and they don’t know enough to make the right decisions even if they had that intention.
In every organization, be it a school, a company or a country, it all starts at the top. The example set by the organization’s leader determines the well being of those below. In Zimbabwe, the leader is a selfish racist, and a demagogue who looks the other way when those under him steal from the citizens. Unlike Mandela, he believes in tribalism and dividing the population to keep himself in power. As such, he has distroyed any sense of loyalty or shared suffering by those who are not his bootlickers. Everyone is simply looking out for their own self interest and should not feel guilty about it because that’s the reality that he has created.
If is known that these companies are not banking their receipts it might well be considered illegal though I am unaware of any law that states one has to trust banks especially when the government is guilty of helping themselves to other peoples money and assets. Why does the government come out with these revelations and in the same breath tell us these foreign companies are now allowed to continue even against their new (and what should be illegal) indigenisation laws? Maybe you should grow up and see the government for what it is!
When a human being’s immune system has been severely compromised by HIV, he becomes vulnerable to illnesses like diarrhoe, headaches etc. The question is, does concentrating on those symptoms of AIDS make the patient any better?
Ha ha !!! lets be serious. Those greedy bigwig politicians and thugs should bring back the money they have stolen from zimbabweans . The funds in their Swiss and foreign bank accounts and the stashes they have robbed should be put back into circulation then there wouldn’t be as much liquidity crunch and maybe with better policies everyone will do the same
Most small businesses in Zimbabwe run on a day by day basis with no spare cash to put into the banks, local or foreign. There is no money in the Zimbabwe economy, and what little there is, it is not in the hands of the small and medium scale businesses.
Try looking into the bank accounts of the big chefs instead. That is where all the money has gone. This is what Zanu PF MP Chinotimba has been saying and he is correct.
The issue is this,fine there is a distrust of the local bankin system,but with locals,even if they dont bank,they will invest locally in infrustructre etc.U know how we like to build houses.
Now these foreigners,have u ever rented a house built by a Nigerian?Do they support local charities?The Chinese r not any better.
They r spiriting the cash outa Zim.
I dare to say the whites were better in that they reinvested
murimi…you beginning to see the light???
Good you mention this, unfortunately our leaders are the first ones to take the money out, Not investing outside for our benefit, but keeping the money idle for their personal egos!!!
the whites only reinvested coz they thought they would become the future native zimbabweans like they are trying in south africa or like they did in australia kuma aborigines or in american kuma red indians. lets grow our economy and guarantee our future generations of a successful country which they will benefit fro in eternity as owners notas spectators.
chicken live in cages while cows have pardocks. Hair saloonist make revenue inflows of $100 to $150 a day, pays rentals per chair daily of $20 to $30 dollars in the CBD, hair pieces of between $60 to $70. the profit or net cash is about $20 a day…..its ridiculous to open a bank account….they operate on petty cash basis which is a practical well known model.
big companies to have gone bankrupt, a sign that there is no enough bank cash to pay outflows…..so both chickens in their fowl runs and bulls in the pardock are designed for same purpose, relish for the chefs’ dinner
Firstly I’d like to say that it is a good thing for articles from the herald to be “Poached” and posted on this website so as we can debate. The writer of this article is mentally challenged as he conveniently fails to mention that it is this very Government that caused the problem in the first place.He has either been asleep for the passed 33 years or he just landed from Mars. We lost all our savings and not a thing has been done to make amends.The very same people that caused all these problems are still in Government. Why should we all of a sudden trust the likes of China -massa and co.
don’t forget to put in the bank charges and the fact that the bank might go bust and chino might introduce the zim $ or something similar….
Let all the ZANU Ministers Chefs, businessmen and go as far as to audit the First Lady’s business operations. Look to see if they have paid any tax over the last 33 years. Look at whose pockets the parastatals,& Councils money went. Publicize where our NSSA, Toll gate and EMA money goes. Put the defrauders and criminals in jail.Then you can look at private businesses. Put you own house in order first. Businesses lost Billions of dollars to collapsed banks like Royal. They also had Gono and the Reserve bank stealing their forex. What is to stop them doing it again??– nothing. ZANU Mbava
And what up tax payments then??
I am really impressed with the comments done so far.Zimbabweans are becoming intellectuals not to be easily fooled anymore.This article is complied by an individual who has been so brainwashed to a level that he cannot see what is right and wrong.The economy of any country is guided by the policies passed by the government of the day,therefore any failures should be directed to the government.Why are individuals and companies not using these corrupt banks?Get the answer from the ministers and leave us alone to use our pillows as banks.We tried the banks and we lost all our life savings.NEVER AGAIN use local banks for my little savings until our government respects our dignity as individual investors.
Zimbabwe is probably the only country in Africa where you can make US dollars from selling mice.Make your own conclusions.Externalisation?We dont even have formal permission to use the US dollar!!
U can’t trust the government, so no banking. Mari yangu pandiri. What if we work up to be told that we no longer use the US dollar. Never again are we going to be fooled.