The three-tier pricing system prevailing in the country is very confusing and frustrating, and is making the majority of people wonder if anyone really is in control of the economy. The government appears to have lost control, particularly on the currency situation. It is not certain whether we have gone back to a dollarised economy or we are already there. What is clear, however, is that the government is in tacit agreement and is intentionally looking the other way, hoping things will work themselves out in the end.
MIRIAM T MAJOME
The real status and future of bond notes and RTGS balances is anyone’s guess, but the contradictions are just too many and not for the faint-hearted. Economics and finance are beyond my full comprehension, but the recent adverse report by the global rating index firm Standard and Poor’s is worrisome. The country’s downgrading is extremely detrimental to the country’s fortunes because serious potential investors are informed by such respected ratings. On the one hand, the government says Zimbabwe’s doors are open for business, but it seems the doors have nothing but cracks and crevices, through which only a select few foreign investors squeeze through.
Those who dare squeeze through the cracks know something that not everyone knows about on how to navigate the perilous business environment and make a profit. Having somewhat clarified the Indigenous Act, the government needs to seriously work, installing a credible normal currency and a trading system. Local and foreign investors find it difficult, if not impossible, to repatriate their profits out of Zimbabwe because of the stringent exchange control regulations and laws, which are compounded by the currency confusion. The Reserve Bank of Zimbabwe governor John Mangudya was at sixes and sevens in September last year when he failed to answer the most simple of questions regarding this conundrum. In a CNN interview on the sidelines of the UN General Assembly the whole world watched him spluttering and stammering absolutely nothing when he was asked the very simple question if investors would be able to take their money out of Zimbabwe. He did not inspire any confidence and lost that rare golden opportunity to silence doubters. To his credit, he is not a politician and so he could not even attempt to lie.
Meanwhile, whereas the powerful people are talking politics and playing the Zimbabwe version of accuse, catch and release, the economy continues on auto-cruise. Despite the President using his powers to pass a law that inflicts a decade-long prison sentence on unlicensed foreign currency dealers the United States dollar rates are running riot, oblivious to these threats. In fact, trading on the black market has never been more brisk or lucrative. US dollar notes are being traded in lorries, cars, offices and private homes, all over the country. Market forces are wild and stubborn, and cannot be tamed through pieces of legislation and smouldering threats. Nobody who has the US dollar sells it at the government decreed rate of 1:1, including or especially the very people making the policies. Everyone is looking for the best price for their US dollar. The government knows it is lying when it decrees that a US dollar has the same value as the Zimbabwe bond dollar.
Selling United States bank notes on the informal market for a premium will not stop because of a few ex-cathedra pronouncements issued by the palace. If anything the demand for the US dollar is even higher now because there is nowhere else for the ordinary person to get it when they need it, except from the street. Only the very well connected are still able to get it from their banks at the government rate.
Currently, the United States dollar is being sold at around $3,50 bond dollars though the price fluctuates every day. Despite the street being the only realistic place from where to buy foreign currency, it is illegal in terms of the Bank Use Promotion and Suppression of Money Laundering Act.
Section 14: Unlawful trading in cash
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No person other than a financial institution or money lender shall exchange any negotiable instrument for cash at a premium.
No financial institution or moneylender shall charge any premium for exchanging any negotiable instrument for cash in excess of the greater of the following amounts.
The amount of any fee commission or other charge (exclusive of any tax imposed by the State) imposed by it for such exchange on the fixed or;
The prescribed amount.
Negotiable instruments are any bills of exchange such as letters of credit, cheques, drafts or other negotiable or non-negotiable documents which have been drawn or issued inside or outside Zimbabwe. If the sale is intended to enable any person to obtain either directly or indirectly any sum of money in Zimbabwean (bond notes or RTGS) or foreign currency, it is deemed illegal.
2016 is when the unauthorised buying and selling of foreign currency for a premium resurfaced in a big way since 2008, when the cash crisis reached crescendo.
Retailers and wholesalers, commuter omnibus operators, fuel stations and, individuals are believed to be the main culprits behind the hoarding of foreign bank notes for resale. Cash detainable offences are listed in the Act, and they refer to any one of the listed offences in respect of which cash may be seized from a person in anticipation of prosecuting that person for the offence, and of these are when commercial entities fail to open bank accounts or failure or refusal to deposit surplus cash or failing to maintain trading records and furnishing proof of cash deposits.
The cash can be seized by government agencies and be used as evidence in court. The cash should be returned to the owner after the criminal case is heard, but this may not always be the case as the case of one Mangwiro proved.
In simple words, buying or selling foreign currency or bond notes without a licence is illegal. Only cash dealers and registered financial institutions are allowed to deal in the exchange of cash for a fee.
Cash dealers, other than bankers, are those who are registered to trade in cash such as insurers, brokers, securities dealers, stock brokers or operators of gaming houses like casinos or lotteries.
Cash dealers also include those involved in selling or redeeming travellers cheques, money orders or similar instruments and those who deal in bullion or collect, hold and deliver cash as part of a business that provides payroll services.
So, apart from the registered cash dealers mentioned above, the government has made every Zimbabwean citizen a criminal, and this is wrong.
Nobody, no matter how law abiding they are, deposits foreign currency in exchange for bond notes or RTGS transfers. Everyone selling foreign currency, especially United States dollars, knows what to do and who to call. And the government turns a blind eye and is happy to collect the tax in US dollars..
