NOT so long ago, we heard from Reserve Bank of Zimbabwe governor John Mangudya that there was a cartel of 10 individuals operating in Zimbabwe which controlled the southern African nation’s foreign currency market. These, we presume, very rich and powerful people control US$11 billion and half the country’s deposits. It then comes as a major shock to hear that government now wants to gain control of this money by targeting cross-border traders.
“… we are all aware that most of the people buy money on the parallel market and they go to buy goods outside the country. But when you are coming back, before you declare the goods, you have to first declare the official source of the foreign currency.
The moment you declare goods, in the event that you are not able to declare the official source of foreign currency, you forfeit whatever you have to the State. So this will deal with black market operations,” Finance deputy minister Clemence Chiduwa told the nation last week.
It really boggles the mind to try and understand what exactly government is hoping to achieve by this move when it knows exactly who has the foreign currency.
The real foreign currency is not on the streets, but in plush homes in the leafy suburbs and in offshore stashes, which government failed to raid many times before. What is also perplexing is that it appears as if Chiduwa is suggesting that those people dealing in forex on the parallel market are somehow stealing the money from government.
Has government bothered to even find out the source of the money on the black market? Has government failed to rein in the 10 cartels that control all those billions of dollars, now that it has decided to raid hapless individuals trying to make ends meet under very difficult economic circumstances?
Or is government now targeting the small cross-border trader because it has failed to raise enough foreign currency through exports and duties on imports? What is happening to the foreign currency being raised by government, anyway? There is no bank in this land that is currently giving out foreign currency to its clients and so what is the rationale in government of raiding cross-border traders?
Is it then not more prudent for government to tighten control on what it owns, which is the land and resources such as gold, platinum, chrome and diamonds. The world over, Zimbabwe is famous for its wholesome food and horticulture products which can easily raise enormous amounts of foreign currency.
Need we keep reminding government that the land and minerals are very low-hanging fruits that can easily boost Zimbabwe’s foreign currency reserves; not the pittance United States dollars that are currently exchanging hands on the streets whose source is largely diaspora remittances.
The foreign currency black market can only be controlled once the country is productive and able to earn enough forex to supply banks which would ultimately lead to individuals being able to walk into their banks where they are given travellers cheques or foreign currency.
Once this happens, there would be no need for anyone to sell money on the streets. Unfortunately, the country’s systems are leaking like a sieve to a point that even if it raids the cross-border traders government will raise peanuts.
It would be a real shame if government decided to implement this measure because it would be tantamount to robbing the hapless citizens who are currently trying to escape the extortionary prices being charged by companies and individuals by crossing the borders to buy basics at lower prices.
Government is simply barking up the wrong tree and putting the cart before the horse, so to speak.