Source: Tough forex controls loom | The Herald November 23, 2019
Ishemunyoro Chingwere Business Reporter
Importers will soon be required to declare the legal source of their foreign currency under legislation being drafted, as Government takes measures to kill the black market. Those who fail to do so will have their goods forfeited to the State.The move is among a raft of measures to push foreign currency trading into the legal interbank market run through banks and bureaux de change.
The plan was outlined by Finance and Economic Development Deputy Minister Clemence Chiduwa in a post-Budget media interface he addressed yesterday in the company of Minister Mthuli Ncube and permanent secretary Mr George Guvamatanga.
Deputy Minister Chiduwa was responding to questions on why the Government and law enforcement agents appeared to be turning a blind eye to illegal foreign currency traders operating openly in all major cities and towns.
Some business sectors want further consultation before the regulations are promulgated.
The Confederation of Zimbabwe Retailers Association and the Zimbabwe Cross Border Traders Association, while seeing positive outcomes to the move, are worried there could be shortages of some goods since holders of foreign currency could just hang onto their money.
They believe extra efforts were needed to restore confidence in the interbank market before full implementation of such regulations.
Cde Chiduwa said it was apparent that some importers were responsible for mopping up a lot of foreign currency on the black market, thus keeping illegal dealers in business.
Confederation of Zimbabwe Retailers Association president Mr Denford Mutashu said the biggest impediment to the success of the regulations was that a lot of business was being conducted outside the formal market.
“The first problem with such a regulation is that most Zimbabweans have of late not been conducting their business through the formal banking channels, so if they were to be asked to indicate the source of foreign currency you will find that most will struggle,” said Mr Mutashu.
“But in terms of impact, I think it can have both be positive and negative: positive in that this will be a step in the right direction towards providing the necessary mechanism needed to monitor the flow and exchange of foreign currency, but negative in the sense that it will limit legal imports as most traders will prefer to pay a kick-back here or there while some will stop trading and keep their foreign currency in their homes rather than being asked to justify its source.”
Zimbabwe Cross Border Traders Association president Mr Killer Zivhu said Government should have implemented the plan when it promulgated the statutory instrument earlier this year defining the Zimbabwe dollar as sole legal tender.
“We are the ones who took the initiative and wrote to Minister Ncube and the Governor of the Reserve Bank of Zimbabwe (RBZ) when the Zimbabwe dollar was introduced and said let’s have a situation where every importer declares their source of foreign currency at our ports of entry because we knew it will deter the black market,” he said.
“Our view was that we would then have people being able to buy goods from outside the country using master cards or visa cards having loaded them with US dollars which they have been keeping under their pillows at home.
“At that time it would have worked because there was some confidence in the banking sector which has somewhat waned at the moment. So, what Government should do is to direct the RBZ to restore confidence in the banking sector first.” Mr Zivhu said the regulations were likely to trigger an increase in corruption where smuggling becomes fully-fledged or shops will run dry again because importers were not keen on such a system.
“So, my take is that Government should consult industry extensively before hand,” said Mr Zivhu.
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COMMENTS
expect more shortages as the zanoids try to get their filthy hands on all the US$ – again.
Especially for used vehicle imports, real trinkets flooding such a poor country and the boys I am told show off these valueless cars all over crowding roads and busy trading in forex. However, forex must come via formal channels in the first place. If it does how come it is ending up on the black market. We now know how ZW$ are ending up on the black market, from well known banks and governor is more concerned that it leaked rather than that it happened, then its business as usual for perpetrators. Could the same be leaking forex? So why put burden on someone else to monitor imports when you are choosing to allow forex leaks in the first place. Now if the guy declares that someone in the diaspora paid for them, or they did piece jobs and got the forex, where does the questioning end? What is they say they kept it under the pillow for years, what if a son in law of theirs flew in from Dhubai with the cash and left it last week, how does one present the evidence. It is the importer against stone faced customs person and someone’s precious time at the border, something noone in this failed state seems to value any more. This is all ill-thought showing the warped intellectual capability manifest in so many decisions over many years, leading to never ending fuel queues, no production and really misery for the population trapped in this gigantic mess. When will rational thought and proper analysis start to inform decisions that impact millions like this?
Donor and charity organizations pay workers in foreign currency. They hold workshops and pay traveling and subsistence in USD. Will you prescribe on how to spend their money? Ney! Well. They burn in bereudechange which have mushroomed in dozens in every street like ecocash agents. One burning a single USD100 will get bundles and bundles of brand new 5bond notes in cash yet from formal banks civil servants can’t withdraw 100bond. What kind of policies are you making? As if you did not go to school.
Backward thinking government that only thinks how they (ministers) can further enrich themselves
In 1961 Exchange control was made into law. Done to stop the flight of capital. Flight because the rates were false. The Rhodesian dollar was way overvalued all this time right up until ZANUPF took control in 1980.
Strangely they continued the silly policy of having an overvalued exchange rate.
In 2009 the ZW dollar became worth nothing. Largely unheard of in the real world. Thank you Comrade Doctor Gideon Gono PhD.
Today, November 2019- we have introduced the new ZW dollar or RTGS ( that was worth one USD on 25 February 2019). It has lost 94 % of its value since Feb 2019 & the USD is outlawed as is the Rand Pula Kwacha etc etc.
So what do we do in ZW – we tighten exchange control in order to rig the currency rate !
What will happen ? – the value of the ZW dollar or RTGS or whatever you call it will continue to fall.
Sadly governments the world over never seem to learn from their mistakes.
My advice comrades – study Greshams Law – hold the USD or the Rands & spend the inferior ZW money asap – thank you Comrade Doctor John “Bond” Mangudya PhD for bringing us ZW inflation 2.0
There is no government running the country. It is just a dictatorship.