Speculators fear anti-corruption probes

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Prosper Ndlovu Bulawayo Bureau —
The anti-corruption stance under the new political dispensation has sent shivers down the spine of illegal dealers whose intoxicating influence has led to market distortions in the country’s economy. Economic experts say speculators have been cashing in on the country’s economic crisis to manipulate the market and generate obscene profits through shady deals in the parallel market. These have been blamed for driving the exchange rate premium up, fuelling artificial shortages and contributing to price hikes.

Newly-sworn President Emmerson Mnangagwa has boldly denounced slothfulness and corruption at all levels and threatened tough action on perpetrators as part of measures to restore investor confidence and reverse years of economic stagnation.

With only a week in office, the President has opened a window and given a three-month ultimatum for the return of public funds that were illegally externalised and are stashed abroad by companies and individuals. On expiry of the amnesty in February 2018, Government would arrest and prosecute perpetrators for non-compliance with Chief Secretary to the President and Cabinet, Dr Misheck Sibanda, saying perpetrators are already “known”.

The latest developments have seen a drastic drop in Bond Note/US$ exchange rate in the parallel market, mainly in Harare and Bulawayo, with Osiphatheleni saying their “highly placed” cash suppliers have vanished. The US$/Bond note rate had clocked 1:1.9 at its worst but has since dropped to 1.1.3 with indications it could drop further.

“We usually get cash supplies from people in the banking sector, while others brought it from as far as Harare, but in the past days our suppliers have vanished,” said one of the illegal traders in Bulawayo. “The cross rates have also started declining.”

While some have attributed the drop to the positive perception in view of recent political changes, experts say the new dispensation has put illegal dealers across the board at bay as they now fear retribution. “The sudden drop in black market exchange rates, may not be attributed to perception change and confidence only. Under normal economic conditions the foreign exchange rates should be driven by supply and demand and yet in our scenario the supply and demand gap has not changed,” economic consultant Dumisani Sibanda said.

“This shows that some of these unscrupulous players are responding to the threat by the new administration directed to those involved in clandestine dealings. Because of fear of retribution, some of these players are now shy of continuing their shady deals.”

Information technology intelligence expert, Chris Ndlovu, says Government can engage skilled personnel to nail down all illegal cash dealers and externalisation perpetrators using open data intelligence technology.

Experts say the parallel market effect on the economy was also reflected on the “overvalued” stock market, which also experienced a drastic collapse, shedding $6bn market capitalisation value from $15bn within the famous 8-days of military intervention in the last two weeks. Mr Sibanda said the Zimbabwe Stock Exchange (ZSE) bull run was not backed by productive fundamentals hence the recent crash.

“The trend at ZSE shows there is excess money, which is not coming from the productive sectors of the economy. Authorities need to interrogate this and seek to protect value of money, especially the pension funds, insurance companies. Some economic players and individuals are holding onto cash in respect of foreign creditors, which they are failing to receive due to foreign currency shortages,” he said.

An expert in the stock market business who requested anonymity concurred: “Like I said before, the bull run trend was always going to see reversal at some point. Yes the Bull Run was not backed by production but by other fundamentals. You see people fail to understand that politics is one of the key ‘macro-variables’ and a very big fundamental in its own right! The narrowing exchange rates are probably showing the confidence and optimism that gripped the nation after Mugabe’s fall.”

Economic experts have commended President Mnangagwa’s administration for demonstrating will power to tackle the scourge of corruption and restore business confidence. Zimbabwe ranks poorly in the global corruption index. For the economy to thrive, experts say authorities and those in the private sector need to address the human resource factor and reward personnel not based on partisan loyalty or patronage but performance based on knowledge, skill and integrity.

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