The ManicaPost
THE promulgation of Statutory Instrument 127 of 2021 into law is a welcome development as it is intended to bring order into the market and stabilise the economy.
For years, the country has been witnessing the rampant flouting of the exchange rate by traders and the like, a situation that threw spanners in the works and stalled economic recovery.
In the absence of enabling laws, companies played dirty on the market, competing with illegal money changers to land their hands on foreign currency on the parallel market.
There were no punitive measures in place to curb this wayward behaviour that had become a normal business practice and offenders usually went scot free.
With this new law, the Reserve Bank of Zimbabwe has been empowered to penalise businesses that bend the rules.
This was long overdue because many in the commercial sector were double dipping and hurting the economy.
Simply put, the whole episode was unfolding like this:
A formal business player who was getting foreign currency at the weekly auction system at a minimum rate of about $84 per US$1 was discarding this official exchange rate while doing business on the market.
In their daily business transactions, these companies were pegging their prices using the black market rate of about US$1 to $125, thereby making a killing at the expense of the economy.
After amassing millions of the local currency by selling products using that black market rate, the same companies would take the money to the auction system to buy forex using the lower official exchange rate.
Without investing in anything, these corporates were making a profit of about $40 for every US$1 bought at the auction system.
This is the highest level of financial indiscipline.
It was reversing the gains of the economic recovery initiatives being implemented by the Second Republic.
It is impressive to note that most businesses have positively responded to the new law by adjusting their pricing systems accordingly.
However, old habits die hard.
The crooks who were benefiting from all this rot will definitely try to find new ways to beat the system and continue with the illegal enterprise.
The ball is therefore in the courts of the law enforcement agents and the RBZ’s Financial Intelligence Unit to curb these malpractices.
There are disturbing stories about illegal money changers who have invaded supermarkets to pay for various goods and services on behalf of customers in exchange for higher rates of the USD.
These illegal activities are happening in broad day light.
The police need to get to the bottom of this rot.
In the same vein, banks must assist the Financial Intelligence Unit to monitor dubious transactions that are being done in some accounts.
Accounts that are moving large amounts of cash must be monitored, with the owners summoned to explain the activities.
Where there is suspicion of money laundering, such accounts must be frozen to pave way for investigations.
Otherwise the set penalties will definitely bring order into the market.
