eBusiness Weekly
HARARE – Zimbabwe is earning enough foreign currency to sustain the economy, but much of it is being misdirected to unproductive uses, and siphoned outside formal systems, Treasury bosses said on Friday.Foreign currency shortage is among top challenges blamed for much of the economic ills the country has faced over the last two decades.
The challenges mounted after the adoption of multi-currencies in 2009, with the United States dollar being the anchor trading currency.
But Finance and Economic Planning Minister, Mthuli Ncube and his permanent secretary, George Guvamatanga told captains of industry at a post 2019 national budget meeting that the country’s foreign currency earnings from exports and other sources were either being misused, or somehow disappearing into informal markets.
“Zimbabwe has no shortage of foreign currency, the foreign currency is being dissipated,” Professor Ncube said.
“If you really work out how much is coming into the country,there is a lot of foreign currency but it is being dis-intermediated, not being netted in by the financial sector.”
Guvamatanga said between January and October this year, Zimbabwe had earned about $5.2 billion in foreign currency, including diaspora remittances.
“A country like Kenya, with maybe three times our population, if you check, you will note that they had merchandise exports of $4.7 billion (between January and October 2018) but, they do not have foreign currency shortages in Kenya,” he said.
“So we really need to re-examine and see what exactly is happening to our foreign currency.”
Observers have for years encouraged authorities to look at areas where the country was losing millions through leakages.
In the 2019 budget, Ncube imposed a raft of measures to curtail importation of unnecessary goods to save foreign currency.
Meanwhile, Guvamatanga said government must come up with systems that allow the foreign currency market to operate efficiently without criminalising trade.
He said at least 25 percent of the country’s hard currency inflows, estimated at between US$70 million and $100 million, comes into the country through informal means.
“It is also very difficult to criminalise the trading of foreign currency because 25 percent of our foreign currency actually comes informally into the market because we do receive between US$70 million and $100 million from the diaspora,” he said.
“That money comes as $100, $200 so the people we are calling money changers, if you read economic books they are called aggregators. They are simply aggregating the small amounts so that it is moved to the formal system, so we need to understand exactly what our concern is as government and as monetary authorities and try and come up with a system that allows the market to operate efficiently.”
Government recently announced plans to put in place regulations criminalising illegal trade in foreign currency with jail sentences of up to 10 years. – New Ziana
