Cross-border traders worsen cash shortages

Source: Cross-border traders worsen cash shortages – DailyNews Live

Gift Phiri      11 July 2017

HARARE – Government is tightening its grip on the bond notes by subjecting
cross-borders to serious scrutiny as the money authorities bid to deal
with a thriving parallel market of the surrogate currency on its borders.

This comes after Reserve Bank of Zimbabwe (RBZ) official Azvinandawa
Saburi told guests at the Zimbabwe National Chamber of Commerce (ZNCC)
annual congress in Victoria Falls last week that in addition to South
Africa, Mozambique and Zambia, bond notes were now being sold on the
Botswana black market.

“Now, on the issue of bond notes being in Botswana, Zambia, Mozambique and
so on, I think, as the RBZ, we are a monetary authority, who have to work
with other bodies who have responsibility at borders.

“So we will certainly talk to them and advise them on how probably they
can handle this issue. On this, I would also want to add this is about the
currency, the United States dollar is the most widely used currency,” said
Saburi.

“So everyone in the world, everyone who is exporting and so on, is looking
for those United States dollars, which is why people play all these
shenanigans.

“But, the bottom line is that we are going to work with Zimra to say that
when people are going out, they should not take bond notes,” he added.

The country is currently experiencing acute shortages of cash, including
the bond notes and US dollars, leading to serious trading on the currency
black market.

Zimbabwe introduced bond notes at the end of last year under a $200
million Afreximbank loan in a bid to mitigate the cash crisis but with
little success.

There is currently $160m in bond notes and an estimated $600m in
circulation in the economy.

Financial research firm Equity Axis said the externalisation of bond notes
to neighbouring countries underlined thriving business by cross border
traders which in turn led to a lively parallel market.

“The four countries stated are a hub for local cross border traders and
naturally markets for the local currency will thrive, starving local banks
which estimate a low ratio of 1:10 in terms of bond notes deposits to
withdrawals.

“Authorities, therefore, have to concentrate on external debt clearance,
fiscal realignment and attraction of credit lines,” Equity Axis said in a
research paper.

The RBZ has established dedicated hotline numbers for the public to report
individuals and firms or traders that may be involved in cash hoarding,
selling or abusing or externalising cash.

It will reward a equivalent to five percent of the reported and recovered
cash amount.

“A whistleblower facility has worked quite well for Zimra in enforcing tax
compliance. Such a facility at RBZ will force the public to bank their
cash and support the flow of cash in the economy. And maybe create jobs
for a few professional whistleblowers,” said Equity Axis.