The Sunday Mail
MEASURES to quell the indiscipline that has made an unwelcome resurgence on the market, need to be tightened and enforced without fear or favour while the necessary controls to tame the galloping prices of goods and services are implemented.
Zimbabwe’s economy has been thrust into a tailspin by a weakening local unit whose value is fast declining on the parallel market while the auction rate remains constant.
It does not help that manufacturers, wholesalers and retailers have deferred to their default mode of indexing pricing of their products to the black market rate even though they get the bulk of their foreign currency requirements from the Reserve Bank of Zimbabwe weekly auction. This should stop forthwith. Since the beginning of the latest turmoil on the market, prices of basic goods and services have shot up as they chase a seemingly unstable exchange rate on the parallel market.
This has not only eroded workers’ disposable incomes, but fuelled inflation at a time the country has been enjoying relative stability on the economic front. This upheaval is not good for an economy that was projected to grow by 7,8 percent on the back of a strong 2020/21 agricultural season, manufacturing and mineral exports.
The stability brought by the auction system which debuted in June 2020 had spurred growth in the economy as industry and commerce could access forex from a formal platform, allowing for long term planning and transparency in the money markets. The system was so efficient it virtually killed the parallel market and stabilised prices of goods in shops.
Of late, the RBZ auction has been battling to clear a backlog of payments for successful bids by industry and other sectors of the economy as it has, for undisclosed reasons, fallen behind in fulfilling its obligations. It has also had to contend with malfeasance from unscrupulous companies that have been engaged in all manner of chicanery and skullduggery as they sought to dribble their way into unlawfully accessing forex on the auction.
The RBZ Financial Intelligence Unit has its hands full as it investigates big corporates which have been fingered in a multi-million dollar fraud involving the country’s foreign currency reserves. There have been reports of exporters tendering fake bills of entry to the forex auction to access cheap funds which they channel to the parallel market.
It is disturbing that a system that was meant to ameliorate a dire situation where the country was headed into an abyss is being manipulated by a few greedy corporate executives to line their pockets. These criminals are not only bidding on behalf of third parties but have been actively submitting inflated bids, making it difficult for the auction to fund allotted amounts, accumulating a backlog of close to two months.
This shows that the system needs fine-tuning and tightening. At the same time, Zimbabwe needs to invest heavily in training of investigators who can uncover sophisticated fraud being committed by criminals in suits who lead multi-million dollar corporations.
We acknowledge the crackdown that has been instituted by law enforcement agencies following the spike in parallel market rates where some executives of financial institutions have been arrested. We also note the arrest of some prominent figures in the black market trade in foreign currency.
However, we urge authorities to go for the big fish manipulating the RBZ foreign currency auction system as they have virtually paralysed the platform with their underhand dealings.
We contend that the auction system is our best foot forward as evidenced by the fabulous results it gave us soon after its introduction. The same figures manipulating the auction are the ones feeding the parallel market with millions which are floating outside the formal system.
It is disheartening that genuine bids tendered by productive sectors of the economy are failing to access scarce forex while wheeler dealers and speculators successfully circumvent the system for their selfish ends. What is particularly galling is that even some reputable firms listed on the Zimbabwe Stock Exchange are dabbling in these dark arts.
Our financial institutions such as banks, micro finance companies and bureau de change are also letting us down by being willing accomplices in these black market deals. We thus call for a collective and concerted effort to rid the country of this vice. For the parallel market to be tamed, the RBZ should be the lead agency as the monetary authorities.
Their FIU should be equipped with competent and diligent people capable of sniffing out malfeasance at the earliest possible opportunity. If need be, their officers should be retrained in uncovering sophisticated white collar crime such as fraud. The same applies to the police, the Zimbabwe Anti-Corruption Commission and the National Prosecuting Authority.
These departments should also be adequately equipped with the necessary instruments to deal with white collar crime. There should be a symbiotic relationship between them such that intelligence from the FIU is passed to either the police or ZACC who conduct further investigations to build a solid case which is then handed over to the NPA for prosecution.
At the moment most of these cases are collapsing before the courts because of shoddy work resulting from either corruption or incompetence. The justice delivery system should also hand down deterrent sentences to these criminals because effectively they are economic saboteurs. Bail should be vigorously opposed for them to send a clear message to like-minded criminals.
Zimbabwe can ill afford another economic implosion at a time when all the fundamentals point to a healthy state of affairs. On this score, we would like to applaud the current crackdown being spearheaded by the RBZ, the police and the NPA. We urge them to up the ante by identifying more culprits behind the latest parallel market activities, arrest them and bring them to justice.
The march towards a middle income economy by 2030 cannot be upended by a few miscreants whose greed knows no bounds.
