Stabilising the economy: Tackling the parallel market
AS WE work towards improving and stabilising the flow of foreign exchange into the productive sector, we must at the same time ensure and enforce discipline in the market. This means everyone must play to rules and norms, including respecting the laws of the land.
Sadly, events of the past two weeks have shown this is not so. Not everyone is playing to the rules. Partly because of wanton illicit currency deals happening in what is known as the black market, our economy has been disturbed.
We have suffered massive market failures, manifesting in complete collapse of the pricing framework for virtually all commodities, regardless of import component. There has been a run on the bond note.
In all this, there have been no winners, given that at the end of the day we are all consumers who demand and buy goods and services at any one stage for our survival.
Those hit hardest are the sick, the unemployed, the poor and the vulnerable, including our hard-pressed workforce.
Reports and submissions before me on illicit currency dealings point to an intricate network of currency speculators mostly in high places and in places of trust.
In a number of cases which have now been brought to Government’s attention, some of our guardians of the financial services sector have either not discharged their roles fully, or have not done so honestly.
In other cases, some have colluded with negative elements, both inside and outside the banking system, to aid and abet these illicit transactions. Considering that more than $9 billion is passing through different electronic platforms and leaving an “electronic trail”, it is inconceivable that these illicit transactions have and can ever go on undetected or unnoticed.
It simply cannot be. Someone somewhere sees this, or simply winks.
Overall, it is a story of sins of both omission and commission. Our whole financial sector risks disrepute, and therefore sanity has to be restored.
In most economies, sudden huge movements of money or unexplained “swelling” of deposits raise eyebrows. Millions have been moved unexplained in our financial services sector, with no one batting an eyelid.
In the United States of America, they have the Office of Foreign Assets Control (Ofac). We need a similar measure in our financial services sector.
The information before me shows that individuals and shelf companies not involved in any gainful or productive economic activity are engaged in fuelling instability in the economy.
Zimra is neither aware of this, nor does it get its own share of taxes or revenue.
Lately, our law enforcement agencies have been investigating these illicit activities. It has come to light that the money changers we see in street corners are mere “runners” who work for big currency sharks who operate from high places in air-conditioned offices.
The real culprits are not these “runners” who are but a tip of a big and scandalous financial iceberg.
Almost all these runners are on pittance commission from large sharks who are the real offenders we should bring to book. And we will do just that.
Currently we have no legislation to deal with currency manipulators.
We therefore need urgent and robust measures to deal with this financial menace. Of course, I am aware of what else needs to be done by way of policy changes and key adjustments in different sectors and aspects of the economy, including in the public sector.
These changes and adjustments are already being done, and will continue to be done until Government plays its own part in stabilising the economy by living strictly within its means.
But balancing books in the public sector cannot atone for the wanton criminality in the currency market which I have outlined above.
We need to show all offenders that crime does not pay, but that it is painfully paid for by way of compounded grief it visits upon all such offenders.
Accordingly, I have now instructed the Minister of Justice, Legal and Parliamentary Affairs to work closely and expeditiously with the Attorney-General in order to produce a new set of regulations which will be promulgated under temporary law-making powers which I, as President, am allowed by the Constitution.
These regulations will remain in force for a statutory period of six months, during which a Bill will have to be processed for consideration by our legislators.
We face a challenge which requires unity of purpose on the part of the three pillars of the State namely, the executive, the legislature and the judiciary.
We have to end this menace which now threatens the very fabric of our economy and society.
Like I said, there will be a raft of other interventions which, for obvious reasons, I am not at liberty to disclose.
Those who walk the straight and narrow need not fear.