Arrests loom over cash crunch

Source: Arrests loom over cash crunch | The Sunday Mail  May 8, 2016

The Reserve Bank of Zimbabwe is investigating several top companies for allegedly externalising millions of United States dollars, contributing to present cash shortages.

Those fingered in illicit financial flows will be handed over to the police.

And more firms could be outed in “Panama Papers” scheduled for release in coming days.

Platinum giant Zimplats was the first to be fingered in the damning whistleblower papers that recounted how the company’s top management were paid millions off shore and deprived the State of revenue.

The RBZ is now on Zimplats’ trail and has turned its forensic lenses on other companies that could soon be exposed this week.

It is understood monetary authorities have already compiled a list of suspects and will soon wrap up investigations and will give police the names of suspects who are shipping out millions of US dolllars even as ordinary people struggle to withdraw US$200 daily from banks.

Reserve Bank Governor Dr John Mangudya told The Sunday Mail that at least US$50 million had been externalised via wire transfers since January 2016. Cash transported out of Zimbabwe physically is still to be quantified.

The RBZ imported US$15 million last Friday to offset cash shortages.

Dr Mangudya said, “In terms of leakages of foreign exchange from the country through externalisation, it is something that the Central Bank is continuously addressing through monitoring of transfers by the banking public. We are saddened by such activities which are counterproductive and result in the abuse of our hard-earned foreign exchange. Externalisation is worrisome worldwide and needs to be closely monitored.

“And yes, investigations are taking place. It has been very difficult to objectively quantify the levels of externalisation, though, as most of it is externalised as cash by some unscrupulous businesspeople who sell their trinkets and other non-productive low local content items in Zimbabwe. Wire transfers through similar transactions amounted to US$50 million for the first four months in 2016.”

On bond notes, Dr Mangudya said: “Addressing capital flight is one of the major motivations for us to utilise bond notes as opposed to injecting the US$200 million (provided by the Africa Export-Import Bank) directly into the market. That money could disappear into thin air!

“The objective of the notes is to fund the 5 percent export incentive scheme in a sustainable manner that militates against capital flight. This means without the bond notes, there would be no export incentive facility.”

He added, “We want to create a revolution for the use of plastic money in Zimbabwe to ensure that we do not put too much unnecessary pressure on the demand for cash.

“This is why we have announced that all retailers, wholesalers, businesses, local authorities, utilities, schools, universities, colleges, service stations and the informal sector are required to install point of sale machines. Use of plastic money also assists in the development and growth of the economy as this increases the multiplier effect of money.

“Money tends to circulate much more when using plastic money and wire transfers than in a cash economy. Throughout the world, the best practice shows that not all deposits are covered by cash. On an average scale, globally, 10 percent of deposits are cash while the rest is done through plastic money.”

Over the weeks, Zimbabwe have been experiencing cash shortages.

The shortages have been attributed to illicit financial flows and the dearth of a savings culture that has seen depositors keep cash outside the banking system.

Other countries and companies in Southern Africa have mopped up US dollars from Zimbabwe since adoption of the multi-currency system in 2009.

The RBZ will soon introduce bond notes and actively advocate the use of other currencies like the euro and South African rand to resolve the liquidity problem.

As of last week, 40 percent of all new US dollar exchange receipts of goods and services will be converted to the RBZ at the official exchange rate to the rand and 10 percent to the Euro.

Minimum cash withdrawal limits have been pegged between US$1 000 and US$20 000.

COMMENTS

WORDPRESS: 9
  • comment-avatar
    spiralx 5 years ago

    How about starting with the corrupt ZANU elite, who have systematically been robbing Zimbabwe of millions since they came to power, 35 years ago?

  • comment-avatar
    Diaspora 5 years ago

    ZRP (ZANU Republic Police) are part of the root cause of the problem. While ZANU PF is at the helm, governing brutally, recklessly & selfishly, capital flight is a continued bye-product of their evil ways along with the investor apathy (Chinese Investors included).

    What’s really needed is a ‘little bit’ of introspection on the part of ZRP and ZANU PF, but ofcourse it would be rather foolish to think that the animal that is ZANU PF is capable of anything reasonable – like taking a good look in the mirror!!

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    chimusoro 5 years ago

    These companies are nothing but economic saboteurs!

  • comment-avatar

    Ummm… who is the biggest externaliser of US$??!!!

  • comment-avatar
    Rwendo 5 years ago

    “We want to create a revolution for the use of plastic money in Zimbabwe…”

    This will just free more cash in the economy for the government to mop up…to pay for new Mercs for the Chefs, trips to Dubai and Malaysia, helicopter rides to rallies, birthday extravaganzas etc..

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    ntaba 5 years ago

    Go Zanu, Go! Prof. Scoones says that you (Zanu) have transformed Zimbabwe into a world rated economic power house that makes Dubai and Singapore look like a street vendor! Go Scoones, Go, Go for your life – you and Mugabe are still living legends in agriculture and commerce!

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    johnny b 5 years ago

    Another case of the kettle calling the pot black (oops musn’t use colour!) What can I say, get another straight politician into government and they will change him into a thief in no time. Cut out racialism and greed and you would have a fantastic country !!!

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    amina 5 years ago

    RBZ issued bonded coins worth of $50 million, where is the investment that back up these coins. Now the RBZ is talking of externalization worth more than $50 million, can in the insinuated that RBZ externalized this amount and now blaming the public. Mugabe travels frequently with $50 thousand since 1980, and last year he traveled more than ten times, the amount that is given translate to $5 million, its on record that during the Smith Regime the then Prime Minster will travel and come back with the black bag and account the expenditure and give back the balance to RBZ. When Mugabe took over it was done while there was a white guy and then the was noted an abuse when black man took, from then Mugabe as Prime Minister in 1882/5 took over the pace. There was no more accounting of the expenditure and the remittance of the balance of the entire $50 000, what remains if any goes in Mugabe and Grace.s accounts. Simple mathematics last year he made more than 10 trips, the previous year about 15 trips so that means all these $50 000 are out of Zimbabwe finance system. Thus the money your honorable Governor need to collect where ever Mugabe put it. One year down the line if the Zimbabwe population agree to bonded notes, there will not be a single dollar left, all the people who would want to transact will be doing through the RTGS and EFT monitored by RBZ for all foreign payments, the ZANU PF will be running the parrlel market with $ dollars and the bonded notes. Civil servants will be earning the bonded notes, exchange difference on the bonded notes to $ will start on 1=1 but as time goes on with looting there will not be equal rather it will be escalating monthly. Mugabe is trying means of returning the Zimbabwe dollars, loot all the USD in the country like what he did with Gono.

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    Mazano Rewayi 5 years ago

    This bond note idea is akin to trusting an aeroplane to a combi driver. No matter how noble the idea, no matter how good the intention, a crush is inevitable.