via Foreign retailers not banking: NIEEB | The Herald January 2, 2014 by Kudakwashe Pembere and Tafadzwa Ndlovu
AT least 90 percent of applicants seeking indigenisation compliance certificates in sectors reserved for indigenous Zimbabweans under the Indigenous and Economic Empowerment Act do not have bank accounts, confirming suspicions the bulk of the country’s cash is being smuggled out of the country.
This startling revelation was discovered during the processing of the applications by both local and foreign business people for the certificates in compliance with a May 17, 2013 Government Gazette regulation making it mandatory for all local and foreign firms in “reserved sectors” to apply for indigenisation compliance certificates by January 1, 2014.
This scenario could help land credence to assertions that an estimated US$2,5 million to US$4 billion could be circulating outside the formal banking system considering that a huge proportion of Zimbabwe’s economy is now informal following the decade-long economic crisis that led to the demise of a good number of large corporate. The revelations also raises eye brows about the contribution of foreigners to the worsening liquidity crisis in the economy in that if non-indigenous businesses operating in the reserved sectors are not banked, they could be siphoning proceeds from their businesses out to foreign havens or have cash stashed in their homes since most foreigners in reserved sectors lack proper documentation required for formal bank account opening.
NIEEB chief executive Mr Wilson Gwatiringa told The Herald Business that the process of issuing out the certificates of compliance was bringing out positive results.
“This programme is bringing out benefits that were not even talked about as these people are being formalised into the economy which hitherto was not the case.”
“These operators where operating without bank accounts, they are (also) not registered with the Zimbabwe Revenue Authority.”
“This means they are not paying tax and that their money is not being accounted for in the banking system,” he said.
Mr Gwatiringa also said that NIEEB wants to ensure that there is order in the reserved sectors particularly the retail sector.
“We are directing that all the applicants must have bank accounts and must be registered with the tax authority and provide a tax clearance certificate so that they are proper business people who contribute to the economy in a manner that it is expected and that they must pay tax and the funds they handle must pass through the banking system,” he said.
Bankers Association of Zimbabwe president Mr George Guvamatanga said that while restoring depositors’ confidence is a challenge, which has also discouraged some individuals and small enterprises from banking their funds, the financial industry is committed to the growth of deposits. “We know it is a challenge and we are working to ensure that something is done for the benefit of depositors,” he said.
According to the Finscope SMEs survey launched in June last year, up to US$4 billion is thought to be circulating outside the formal banking system.
The study also noted that the bulk of Zimbabwe’s urban population is involved in the informal sector, accounting for about 24 percent of the country’s US$10 81 billion gross domestic product which remains largely unbanked.
Furthermore the SMEs sector was found to have created nearly six million jobs in the country and generates about US$7,4 billion annually, but the money rarely finds its way into the formal banking system.
COMMENTS
Instead of demonising foreign-owned companies, can the government tell us where ministers do their banking. How come we do not see these ministers in banking queues. Where do the prophet Angel do his banking ?
There is no law that say foreign owed business must bank all their cash takings, just like there is no law saying the flea market owners must not keep their cash under the mattress.
Ngwarawo mhani iwe, dununu remunhu!!! Have u neva heard of telephone and internet banking??? Fool!!!
I use my own bank!
Unfortunately Zanupf and it,s former reserve bank governor are the ones responsible for the fact that people would rather keep their money under the mattress than in the Bank where, as has been proved, can be stolen at any time by the whims of Zanupf in their imaginary fight against imaginary sanctions, anyone depositing their precious US$ in the Zimbabwe Banking system run the very real risk of losing this money to an increasingly desperate Zanupf who when their backs are against the wall will most certainly not play by any normal world standards, they will most certainly adopt a scorched earth policy to stay in power at all costs, be warned!
Anybody who still has US$ in a bank is on very thin ice, unless you withdraw quickly you will surely lose. The banks are going to close or Zanu will steal from your accounts one way or another. Do not cry when it happens, you have been warned
estimated between 2.5 million and 4 billion, that’s an accurate guestimate? I did not know it was illegal to keep cash and not use the banks? If it is a problem then how many of these companies have already been issued with certificates?
Zimbabwe is a stuffed entity, screwed by its own people and political greed. Cannot take the blame and now lambast it on “foriegners” ..Zanoids are now cock of the dung heap.
The most useless govt in history born out of terrorists in 1980 with gullible naive British and Boer connivance.the proper history books are now being written on the myth and infallibility of African so called liberation movements and sham bogus so called freedom fighters. Total criminal destruction.
There is nothing startling about these figures. Where have you been? How many of the Herald staff do any transaction through the banks? So the rest of the Zimbos are doing honest business… Am i missing something?
In times of hard economic situation, common sense and social sense of security guides the business owners.You work so hard, honestly and then your money is changed to Zim dollar over night.If you deposit US 10000 , you wont withdraw 2000 at a point.Whats the use? The Zimbabwe Bankers association is to blame also.The Banks in Zimbabwe are known to be charging exorbitant intrest rates to the bleeding few industries left.
Even the weathy ministers like Chombo , Mpofu , Moyo will have few hundred dollars there and the bulk in Mauritius.If we are to build the economy, we have to build confidence with every sector which contributes towards economic development.To tell people policese with a clinched fist will never attract friends, it scares away even your best friends