BY MTHANDAZO NYONI RESERVE Bank of Zimbabwe (RBZ) governor John Mangudya says the arrest of company directors for contravening the Exchange Control Act last month was never a “key result area” but a way of bringing order on the market.
Several company bosses were either caged or quizzed by the police and Financial Intelligence Unit (FIU) of the central bank for allegedly sourcing foreign currency from the black market or pricing their goods at parallel market rates in violation of the Exchange Control Act.
Statutory Instrument 127 of 2021 prohibits trade in goods and services at an exchange rate above the foreign currency auction system rate.
According to a newsletter published by the Association for Business in Zimbabwe, Mangudya said the blitz was meant to bring order on the market.
“The purpose of doing that exercise was just to tell businesses that they should behave,” the RBZ chief said.
“If they were behaving, there is no one who was ever going to arrest them. You mean that if someone comes up and advertises that US$1 is equal to $200, you want the government to just keep quiet? That’s bad behaviour and it’s not good for anyone, even the companies themselves.”
“All we are saying is that arresting people is never a key result area. No, it’s a default function in trying to bring other people to behave themselves.”
“Those arrests were trying to put the business to order because we all agreed that it’s not good for anyone, so why should someone do it when it’s not good for anyone? The Bible says ‘thou shall not steal’ and if you steal, you are going to be punished. Why should we arrest people who are behaving themselves?” he said.
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Mangudya said the central bank was working on tightening money supply and reducing the backlog on the foreign currency auction system.
He said the government would continue to fund the auction system and manage the informal market, including monitoring people who abuse bank cards.
“We are happy that those measures that we put in place with the business community so far have made the market remain stable. Going forward, our prayer is that stability will continue to persist in Zimbabwe for the benefit of everyone in this country,” he said.
Turning to the depreciation of the Zimbabwe dollar against the greenback, Mangudya said: “That’s the price discovery by the business. It’s an auction and it means people come to the auction with their bids. This is what the market is saying.”
“The market has spoken and we, as the central bank, don’t do anything about that rate. The market has spoken and we are a messenger of the bids that have come to the bank through the banks. It’s a market-driven exchange rate,” he said.
The local currency this week fell 5,4% to trade at $105,7 against the United States dollar from last week’s rate of $99,9.
Mangudya pleaded with businesses to have empathy for consumers, and shun rent-seeking behaviour.
“Let’s have a system of respecting each other and also respecting governance issues. Let us not abuse the auction system and not manipulate the exchange rate for selfish gains,” he said.
