Dragnet closes in on black market kingpins

LIVINGSTONE MARUFU AND CLOUDINE MATOLA

The Financial Intelligence Unit (FIU) dragnet has swooped on  at least 181 individuals and companies  in the past 30 days  for  violating the Exchange Control Act as the local currency continues to weaken on both the official and the  parallel market, it has emerged.

Oliver Chiperesa, the FIU director general, asserted that the dragnet was closing in on the kingpins of the black market.

Business Times can report that of the 181 about 13 traders  were found using parallel market rates to price their goods while  9 were found refusing to accept  the country’s new currency, the Zimbabwe Gold (ZiG).

Additionally, there were 77 individuals found abusing debit cards for parallel market dealing. About 64 companies were found abusing debit cards for parallel market dealings. About 14 companies had their accounts frozen for late ZiG configuration. About 4 companies have so far been penalised.

The remaining companies and individuals have been handed over to law enforcement agencies for possible prosecution.

Oliver Chiperesa, the FIU director general, told Business Times that   the crackdown would  get more intense  in the next few days.

“A total of 181 exchange rate manipulators were found guilty for violating the Exchange Control Act, with 64 companies found abusing debit cards for parallel market dealings,” Chiperesa told Business Times yesterday.

The prosecution of the forex manipulators comes as the new currency, which is now backed by a basket of precious commodities, mainly gold and foreign currency reserves, with a combined value of about US$285m, continues to depreciate due to lack of confidence.

Due to the volatility of the currency, a number of economic actors, such as manufacturers, significant suppliers, and other significant stakeholders, have shunned ZiG payments.

This week on Tuesday, the FIU summoned the Confederation of Zimbabwe Retailers (CZR) together with the informal traders to accept payments in ZiG currency.

“We have had some frank discussions with the informal traders on Tuesday and they told us that they will use ZiG as long as the manufacturers start accepting ZiG as a medium of exchange.

“Basing on that information, we will descend upon these key suppliers to accept ZiG payments so that the local currency is accepted across the whole value chain.

“After that compliance will be easier to enforce,” Chiperesa said.

He said there is a special operation ongoing which joint task forces are rolling   out countrywide in all major trading centres.

Chiperesa said  companies cannot justify  their refusal  to accept the ZiG under the guise of reconfiguring their accounting systems as they were provided with ample time  to do so.

The FIU boss warned companies exclusively trading in United States dollars to stop trading altogether until they have configured their systems.

It also coincides with a directive issued on Tuesday by Professor Mthuli Ncube, Minister of Finance, Economic Development, and Investment Promotion, to all ministries, departments, agencies (MDAs), and the private sector to accept and recognize ZiG as the official currency for payment and transactions of goods and services.

He said greenback will be used only when there is specific legislation to do so.

“As government continues to configure its Public Finance Management System (PFMS) to facilitate revenue collection and payment for goods and services in local currency, all MDAs and the private sector alike are hereby advised to accept and recognize the ZiG as the official currency for all financial transactions and payment for all goods and services, effective immediately,

“Furthermore, unless there is specific legislation allowing charges or fees to be collected in United States dollars only, all collections by government and the private sector shall be made in ZiG or any of the currencies in the multi-currency basket without insisting on a specific type of currency or indexing invoices to the United States dollars,” Ncube said.

Ncube added that although the exchange rate is market determined, private and public organization and economic agencies should use the prevailing interbank rate as published by Reserve Bank of Zimbabwe (RBZ).

“It should be noted that since the exchange rate is market determined, there is no basis for private and public organisations and economic agencies to use ant other exchange rate in the pricing of their goods and services other than the prevailing average interbank foreign currency selling exchange rate as published by the RBZ,” Ncube said.

In addition, he said, in order to maintain exchange rate stability, government is going to introduce another regulation so as to ensure orderly pricing.

“To ensure orderly pricing, government will soon be introducing the necessary regulations to ensure that no exchange rate other than the official rate will be used for the pricing of all goods and services,” he said.

Ncube added: “In light of this, the ministry emphasizes the urgency and importance of a swift transition and market adoption of the ZiG by all stakeholders. We call upon all MDAs and the private sector including retailers and service providers to accept the ZiG in all financial transactions including payments of salaries as well as for procurement.”