The Sunday Mail
Clemence Machadu
Insight
We might not even need to borrow money from Bretton Woods institutions or any other international lenders as that money alone could be enough to do the trick.
We just need to bring back the money so that it oils the local financial sector and, resultantly, quench thirsty productive sectors.
Howdy folks!
The next 90 days are going to be interesting following President Emmerson Mnangagwa’s ultimatum regarding externalisation of funds.
We now have a situation where the new dispensation in Government is flexing more political will, which was a scarce commodity before, to deal with underlying causes of our subdued economic performance.
It should be noted that lack of clear-cut political will to deal with corruption partly led to socio-economic evil becoming an entrenched culture in our country, resulting in the economy experiencing a plethora of challenges.
This is why the new tone is laudable as it will accelerate Zimbabwe’s pace in turning the corner.
Regarding the issue of recovering illegally externalised funds and assets, President Mnangagwa gave a three-month moratorium for those who externalised money to return it home with no questions asked.
He also emphasised that externalisation constituted a very serious economic crime against the people of Zimbabwe, adding that Government will never condone such practices.
The effects of foreign exchange shortages, partly due to profuse leakages through externalisation, now manifest wherever one sets his/her eyes – from the long queues at banks to parallel markets that have proliferated and rising prices of goods and services.
The interesting reality about President Mnangagwa’s call is that we are likely to see funds being repatriated back to Zimbabwe to help cushion foreign currency shortages.
This issue is being systematically implemented.
You may remember on June 24 when Finance Minister Patrick Chinamasa told legislators in Parliament that, “Some of our challenges are a result of externalisation and in this respect, we are in touch now with the authorities in countries where our money is being externalised. So, sooner or later, we should have information on who is externalising money.”
The fact that these perpetrators of economic sabotage are known, as indicated by the Office of the President and Cabinet, already means there is a good chance of getting the money back.
Trying to ascertain the amount of money Zimbabwe has lost so far can only reveal that it may run into billions of dollars.
According to the Reserve Bank of Zimbabwe, the country lost nearly US$2 billion through illicit financial outflows in 2015.
Of that amount, about US$684 million was externalised by individuals through activities that include donations, investments and account transfers.
The other US$1.2 billion was externalised by firms under the guise of export sales proceeds and highly-inflated management, technical and professional fees.
Put together, that money alone is enough for Zimbabwe to clear all its outstanding arrears with multilateral funders and have a clean balance sheet and lower risk premium.
We might not even need to borrow money from Bretton Woods institutions or any other international lenders as that money alone could be enough to do the trick.
We just need to bring back the money so that it oils the local financial sector and, resultantly, quench thirsty productive sectors.
The RBZ’s estimates might actually be understated, considering how other people externalised physical cash.
This can only point to the need for measures to ensure that this money is accounted for.
While the new leadership is aggressively moving to rebuild the economy, it must also pay attention to enhancing confidence in the financial sector and improving the business environment in general.
Otherwise, as long as the country continues to be ranked poorly when it comes to ease of doing business, it will continue to be used as a conduit for siphoning money and other resources to other places with favourable economic fundamentals.
Even the Bankers Association of Zimbabwe has highlighted that the huge sums held by Zimbabweans in foreign banks through the Bank for International Settlement might indicate low confidence in the local financial sector in general and the banking system in particular.
BAZ president Dr Charity Jinya is on record saying that the amount of money held by Zimbabweans in banks outside the country stands at US$940 million.
In light of the above, it is imperative for Government to ensure measures are also put in place to make the local financial sector conducive and attractive for people to bring their money back.
Later folks!
