A big ‘No’ to cash externalisation
There are trillions of ways through which foreign currency is being externalised. Underinvoicing, offshore accounts that are opened on the pretext of facilitating international transactions and even the physical transfer of large amounts of cash out of th
“Hell hath no fury like a woman scorned”. We anticipate quite some gnashing of teeth and trembling as Government descends on those that have been externalising foreign currency in one way or the other as stated by Finance Minister Patrick Chinamasa on Wednesday.
Government machinery can be quite sharp and efficient when it sets its mind on something, so we expect quite some activity in this regard.
I read with excitement news in yesterday’s Herald Business that Government has launched a probe into a malpractice that has become quite rampant in recent years.
Minister Chinamasa told Parliament that the days for individuals and companies caught in the act were numbered!
Zimbabwe has been unable to generate enough foreign currency from exports due to a myriad of reasons that have seen more exports and very little exports and the few dollars available are largely taken out of the country leaving the country stranded.
The propensity to self-destruct persists in this economy with a tendency among us to arbitrarily and impudently engage in regressive acts which could pass for sabotage. The defeatist attitude merely perpetuates the challenges we face and yet the state of our economy is the sum of all our efforts.
This has been the order of the day for years and we are more than happy that decisive action is being taken to ameliorate the situation. Major economic challenges currently being experienced stem from foreign currency challenges that have grossly impacted on infrastructure developments, meeting debt obligations, firms’ retooling ventures, procurement of drugs and medical equipment and many other needs that this nation has gone without for too long.
We could also be using foreign currency to further stimulate production and generate wealth and employment in the process. Foreign currency should go to the critical areas that sustain our economy.
Not that the country has ever produced enough foreign currency in the past few decades but that which is makes needs to be retained and allocated to areas with the greatest need. Minister Chinamasa and a few others before him have never had the pleasure of allocating enough resources for projects. They are always short of funds and are oft-times forced to take out begging bowls to keep the economy afloat.
What kind of a legacy are we creating in such a scenario? We all care for our families and by extension we should care for the state of our economy within which our business endeavours operate.
Myopia surely is not a terminal disease, yet we find it so prevalent in our daily transactions.
The Reserve Bank is doing a good job in addressing compelling and competing needs and clearly every government is uniquely positioned to have resources, yet responsibilities are enormous.
Companies such as Pacific, formerly Savanna, conceived value addition a long time ago and we have a number that have taken this route to improve our export earnings but there are those that seek to undo such efforts.
Initiative, resourcefulness, responsiveness and prudence are the essential elements that will see us grow as an economy.
It would not be as painful if every dollar made from exports retained in this country. There are many that have decided to “safeguard” and insure their tomorrow by externalising the very foreign currency that could be used to develop the country, creating an even brighter tomorrow for all of us and for posterity.
In such instances of externalisation, individuals and institutions have decided to be myopic and quite blinkered too in their decision-making processes. To some it would appear they are being witty and that externalisation is a proper strategy to build their wealth but the medium- and longterm effects of such actions have been very harmful to the economy.
There are trillions of ways through which foreign currency is being externalised.
Under-invoicing, offshore accounts that are opened on the pretext of facilitating international transactions and even the physical transfer of large amounts of cash out of the country have dealt a heavy blow to the country’s financial position.
Recently the central bank sent a warning shot to wholesalers and retailers who were not banking their business takings, creating fertile ground for misuse and abuse. Stories have also been told of some nationals who send planeloads of United States dollars and other currencies back to their home countries instead of allowing it to circulate here to generate more wealth in a win-win scenario.
In some instances, diminished confidence in the local banking system has also led to funds being amassed under pillows etcetera only to be externalised or used for the purchase of quite unimportant products by any measure.
While it is important that individuals and institutions be given the latitude to make a choice on what they do with their money, responsible behaviour is expected of them, particularly in times of shortages such as these.
It is common knowledge that this economy needs every dollar it can get and we should all feel obliged to do our part in conserving the little that is there. Of course, sometimes we do understand that stories of Government ministers living large, building palatial mansions and importing flashy cars like confetti may discourage someone from putting it into circulation.
These are instances we really encourage our ministers and other Government officials to lead from the front. Of course, someone’s ill-behaviour can never justify the next person’s but as a country we need to work towards rebuilding our economy.
We must surely feel guilty to spend millions buying artificial hair although it makes us look good, but the same resources could be used to purchase critical drugs for cancer, HIV or some such that the country needs to import. We also need billions to purchase power but we are always sitting on the edge as a country because the resources are hardly there.
What makes it also sad is the fact that people are also externalising bond notes.
We are made to understand that at bus ports in neighbouring countries such as South Africa, traders and other foreign currency dealers wave thousands of dollars worth of bond notes which they exchange with rands for Zimbabweans who will be on their way back home.
How this started and why this happens remains a mystery. But, of course, there should be some gain depending on the exchange rate but this gain is short-lived compared to what this economy would achieve if all these funds were kept within our borders.
This fixation with opportunistic entrepreneurship serves no one save the well-heeled who care neither for the future nor the present challenges.
Productive time is lost in queues and externalisation has a part to play in all this. I remember at some point it was reported that gold worth more than $1 billion was being smuggled out of the country. The effects of such actions on the economy are obvious and quite evident.
What do we feel ourselves in those quiet moments? What will we bequeath our very innocent and vulnerable children? This blame game is simply for losers.
What is it that you are doing in your sphere, notwithstanding the size?
Indeed, we support the aggressive stance that Government has taken and we anticipate great results. Those caught on the wrong side must surely face the full wrath of the law.
This country is not poor at all but pure misallocation of resources and resultant failure to maximise on opportunities has created an underperforming economy.
Of course, we could write books about what has gone wrong but let’s start this first chapter with focus on externalisation. Taming it is a low hanging fruit that could bring changes immediately.
Of course, we should not lose sight on the importance to increase production to generate more foreign currency but let’s also retain the little that we make in the interim.
Philosopher Dennis Waitley eloquently ad succinctly put it: “There are two primary choices in life: to accept conditions as they exist or accept the responsibility for changing them.”
My fervent hope is for each and every one of us to make a difference, to have an impact, no matter how small, in fashioning the Zimbabwe we want.
There is no politics here, and as former US president Bill Clinton famously remarked: “It’s the economy, stupid.”
When we abuse forex then we become like the father who extravagantly spends the few dollars he has on alcohol, leaving the family desperately hungry, with nothing to eat.
I write this fully cognisant that that this is not simply a Zimbabwean problem.
It is quite prevalent in most African states. We need to find ourselves. In God I Trust!