New approach needed to kill off black market

NATIONS are built on genuine patriotism, dedication and hard work and every Zimbabwean has a role to play in building tour great nation.

The economic problems facing Zimbabwe have been hugely attributed to interwoven socio-economic, political and moral fabric.

Below is a simple analysis of the problems that are ravaging our economy and their possible solutions.

Money changers

The introduction of the Zimbabwe bond note attracted the money changers back on the streets. The money changers literally took over the role of financial institutions on determining exchange rates. Several questions suffice. How can a school drop out control such a complicated financial sector, which requires high level of knowledge in monetary issues?

What instruments are being used by the money changers to come up with the exchange rates? Is it the law of demand and supply? Where are these people getting their money from?

How are some banks surviving under these current economic conditions where there are few depositors?

It is up to the Reserve Bank of Zimbabwe to carry out a comprehensive study so that it can be well informed to determine a proper policy to address these issues.

The foreign exchange auction, which has been initiated, could be part of the solutions to determine the exchange rates without relying on the streets, but this largely depends on the availability of foreign currency.

What pains most is the profit margins when trading foreign currency on the black market. Surely, Zimbabwe is breeding a generation of lazy people who want to reap where they did not sow.

What value addition and innovation are we putting into production when we are having thieves masquerading as money changers on the streets?

In most cases, the money changers are making a lot of profit per transaction for US$100.

Some of the victims are the rural population who immediately after receiving their remittances are trapped in the US dollar/rand parallel markets, which are located outside, but along the financial institutions’ walls. Some people have argued that the impact of the money changers on the economy is very small.

But the situation becomes unbearable when retailers start charging prices on the basis of the parallel market rates — it is now about the impact on the population.

RBZ strategy

In a bid to flush out money chang

ers, the RBZ allowed those with free funds to use them when purchasing goods and services, alongside the use of local currency. To some extent, this strategy is beginning to bear the much-needed results. However, it looks like most of the people have not been sensitised about this policy.

The other problem created

In a bid to provide a solution to a problem, another problem has been born. The simple question is: how many businesses are remitting their taxes in foreign currency? Let me give an example of the motor spare parts industry. This industry is charging foreign currency which ranges from the United States dollar, rand or pula. ◆ Read full article on

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