Cash mongers are now a plague

22 Jan, 2017 - 00:01 0 Views
Cash mongers are now a plague

The Sunday Mail

Darlington  Musarurwa Business Editor’s Brief  —
CASH MONGERS, most of whom have perfected the art of arm twisting desperate consumers to opt for cash payment instead of plastic money, have become the latest aberration to affect the local market.

But in a market where the Reserve Bank is now rationing foreign currency by re-directing it to sectors it feels are urgent to the economy, most traders, especially those who do not necessarily import critical products, have been left in the cold.

For them, it has become an existential question, and they have had to resort to methods – most of them highly controversial — to make sure that they remain open.

It is therefore hardly surprising to see supermarkets and traders who have a dual pricing system: a discounted rate for cash and additional costs for plastic money.

Fuel service stations and liquid petroleum gas (LPG) retailers have become some of the players that are moving towards out rightly rejecting plastic money.

Even some pharmacies have callously joined in the bandwagon by declining medical aid cards, which are essentially plastic money, in favour of cash.

In most cases, consumers don’t have a choice; they simply have to cough up. This obviously pushes consumers to continue queuing for cash despite the well-intentioned drive to promote the use of plastic money.

Normally, as history has shown, if such practices go unchecked, there is a danger that they will evolve from being endemic — affecting only a few sectors and businesses –to epidemic proportions, where they become a common phenomenon.

But, again, inviting policy makers to act has more often than not resulted in disastrous and unintended outcomes as they have a tendency to react disproportionately.

And the “sledge hammer mentality”, where every problem is viewed as a nail that needs to be hammered, does not work in the case.

As Harvard economy professor Mr Kenneth Rogoff rightly observes, some market anomalies can be best addressed through the increased use of plastic money and the appropriate technology.

What is quite clear is that some of the money that is harvested by cash mongers is used for arbitrage, which is quite damaging, particularly for an already struggling economy.

A multi-agency approach is definitely needed. The fiscalisation project, which is being spearheaded by the Zimbabwe Revenue Authority (Zimra), has shown the extent to which the market is prepared to go to avoid statutory obligations.

Fiscal devices are naturally temper-proof and record information on sales which is transmitted to Zimra servers in real time.

It is therefore becoming increasingly impossible for businesses that are legally expected to have fiscalised to dodge the taxman.

As a result, the level of tax compliance and, by extension, revenues accruing to Zimra has been increasing.

Government must invest in ensuring that every trader, including one who sales a toothpick, is fiscalised.

Putting transactions on a monitored platform where everything can be accounted for makes it easy for the other Government departments or agencies to enforce compliance.

In particular, it becomes convenient for the RBZ to enforce the Bank Use and Suppression of Money Laundering Act which compels businesses to bank money.

So, there is need for an inter-agency platform that creates an ecosystem within and among the critical arms of Government.

It is a smarter and hassle-free method of formalising businesses and transactions. The benefits clearly outweigh disadvantages.

Revenues to the fiscus will improve; fudging accounts, which has almost become a profession for some, will be become a thing of the past; and as more businesses bank money, there will be more resources for banks to lend, which is their core business anyway.

When the fiscalisation project was proposed in 2010, there was a lot of scepticism but statistics now show that it is thoroughly viable.

Through increased automation, revenues generated by Zimra had risen by more than 50 percent in the first seven months of 2016 despite reduced business activity.

It goes without saying that Government was prejudiced of tonnes and tonnes of money by dithering Zimra officials.

But, there are obviously pitfalls. There is a method in some madness. It is not the sheer incompetence of some bureaucrats that results in inertia is some of the key Government projects, but greed, avarice and corruption.

There are many who benefit from the status quo through leveraging on their standing in Government.

It is not the small-time man who often exploits the system but the chefs who obviously have the clout to do as they please.

For them, complying to paying taxes and other statutory obligations is a burden that should at best be avoided. They will therefore work to ensure that some projects do not materialise.

So, if there is need to serve the greater good, Government must have the resolve to do the right thing. It however has to invest first before getting the results that it desires.

Securing resources to fiscalise and automate all transactions for all businesses seems to be a discouraging expense but it is rewarding in the long run.

The current situation of dual prices in the market is untenable and an indictment to the structural weakness that is inherent to the local market.

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