Oliver Kazunga , Senior Business Reporter
Foreign currency abusers and money laundering kingpins continue to defy the law despite recent arrests, a situation that has resulted in the eroding of incomes and unnecessary suffering.
The exchange rate on the black market has persistently been spiralling and is now trading at US$1: ZWL$180 compared to margins between ZWL$150 and ZWL$160 in the past three weeks.
This week, the Zimbabwe dollar is trading at 88,55 against the United States dollar from 87,67 last week at the official rate.
As part of measures to stop the madness in the parallel market, the Reserve Bank of Zimbabwe (RBZ), last week named 30 alleged money launderers.
Yesterday a new list with 47 individuals was released.
Between January and June last year, a total of eight companies are alleged to have handled transactions valued over $1,5 billion in illegal foreign currency deals that involved transferring huge amounts of money from corporate bank accounts into mobile money agent and bulk payment lines.
Finance and Economic Development Deputy Minister Clemence Chiduwa yesterday said Government will continue taking action to arrest the madness.
He said the Central Bank yesterday released a new list with 47 names of individuals from across the country who were abusing forex and involved in money laundering activities.
“If you check today, they (RBZ) released another list which has an additional 47 individuals and it’s covering all cities, so it’s not just confined to Harare but it’s covering every corner of the country.
“And what is interesting this time around because of the WhatsApp that we provided, which we are using as a hotline number we are actually getting a lot of leads and reports coming from members of the public telling us the people who are dealing in foreign currency,” said Deputy Minister Chiduwa.
Economic analysts who spoke to Business Chronicle yesterday said due to corruption, some businesses and individuals were channelling their foreign currency to the black market for arbitrage opportunities causing the continued spiralling of parallel market rates.
Economic analyst, Mr Morris Mpala said: “We are also seeing increased money supply chasing fewer United States dollars in the market. The other issue causing the spiralling of parallel market rates is because they are yet to clear the backlog at the auction system and what we are seeing now possibly is some guys trying to come onto the market to survive because they haven’t been getting that money from the official market, so they are trying to survive.”
The central bank announced last week that significant headway is being made in clearing the backlog of foreign currency allotments and going forward all disbursements will be made within two weeks.
Already, the clearing of the estimated US$200 million in outstanding bids at the Forex Auction Trading System has started.
Recently, Treasury released US$70 million towards payments to bidders as part of efforts to restore confidence in the platform.
In addition, the monetary authorities have assured the nation that the backlog would be cleared this week.
Mr Mpala said the scarcity of foreign currency in the formal market has also been worsened by the gradual re-opening after the economy from the Covid-19 third wave.
“The other issue is that the economy has opened up a bit and those that are not getting forex from the official market, they are also now going to the parallel market for their raw material requirements and by so doing, they are also pushing the rate up,” said Mr Mpala.
The monetary authorities have in recent weeks allowed individuals to secure foreign currency from the formal market through the bureaux de change where people are receiving a weekly allocation of US$50.
However, individuals were struggling to access that money with some people flouting the curfew regulation under the Covid-19 lockdown as they were sleeping over at bureaux de change trying to access the forex.
Mr Mpala noted that while the US$50 per week from bereaux de change is a good initiative, the money was not enough to arrest what is happening on the black market.
“I am sure we have seen one or two companies or individuals that have been taken to court for engaging in parallel market activities, but for as long as people are not going to get the money from the official market, the parallel market rates will continue going up; that is where the biggest challenge is,” he said.
Traditionally, Mr Mpala said, around this time of the year, there was always a challenge in terms of export proceeds.
“There isn’t much money that is coming in through exports and what we are banking on now is once the forex backlog is cleared, within two weeks we should see the exchange rate stabilising around 150 or somewhere there.
“So, what is happening now when the exchange rate on the parallel market is at 180, the pricing of goods in the retail shop will be at 200 or thereabout, which is to the detriment to someone who is earning in local currency and that’s inflationary on its own.”
A financial market analyst, Mr George Nhepera added his voice saying the arrest of forex abusers and money laundering kingpins was supposed to narrow the exchange rate.
“However, the opposite has happened and we may attribute that to uncertainty in the way the policy is being perceived by the market players in that alternative market.
“Once there is uncertainty that becomes a factor within the risk or the difference between the two rates, so that cloud of uncertainty, I think is the major contributor to the widening of the rates,” he said.
“There is need for clarity from the policy makers so that they remove that cloud of uncertainty.”
Due to weakening of the Zimbabwe dollar against the greenback in the informal market, Mr Nhepera said, the purchasing power for consumers earning their income in local currency was being eroded.
This is because some retailers are selling their products using black market rates.
“For those earning in local currency, it means the purchasing power for their local income already is being eroded every day because remember there are shops that are pricing their goods using the black-market rate,” he said.
Association for Business in Zimbabwe chief executive officer Mr Victor Nyoni echoed similar sentiments adding that it was now imperative for the authorities to devalue the local currency.
“So, there are two things that we need to do to harness the spiralling black market rate; we need to devalue our Zimbabwe dollar as well as looking at how we can improve the supply side of foreign currency.
“We also need to bring in the regulation under the circumstances to ensure that market stick to reasonable levels of the exchange rate,” he said.
RBZ Governor Dr John Mangudya could not be reached for comment as his phone continuously went unanswered by the time of going to print yesterday. — @okazunga