Sta­bil­is­ing the econ­omy: Tack­ling the par­al­lel mar­ket

The Sunday Mail (Zimbabwe) - - ANALYSIS & OPINION -

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.

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