Illicit transactions cost Zim $2,6bn

HARARE - Zimbabwe lost approximately $2,6 billion in the nine years to 2012 due to Illicit Financial Flows (IFFs), a study by United States-based Global Financial Integrity (GFI) has revealed.

In the survey — Illicit Financial Flows from Developing Countries: 2003-2012 — the Washington DC research and advocacy group said Zimbabwe recorded alarming imports over-invoicing and under-invoicing during the period. While the years 2003, 2008, 2011 and 2012 recorded no illicit financial flows, GFI says the year 2004 saw Zimbabwe recording $306 million in illicit financial flows (both inflows and outflows), which increased to $354 million in 2005, and further to $1,7 billion in 2006, before declining to $97 million in 2007.

In 2009, illicit financial flows stood at $111 million, which declined to $14 million in 2010.

“Zimbabwe recorded import over-invoicing to the tune of $1,2 billion, while import under-invoicing stood at $1,5 billion, upsetting the country’s trade balance,” noted GFI in the report.

On the other hand, the country experienced export over-invoicing valued at $7,5 billion, while export under-invoicing stood at $1,4 billion while total trade misinvoicing outflows stood at $2,6 billion.

IFFs are a form of illegal capital flight and occur when money is illegally earned, transferred, or spent.

Usually, the transactions can be generated in a variety of ways including trade mispricing and bulk cash movements.

The capital is, by nature, unrecorded and cannot be used as public funds or private investment capital in the country of origin, meaning that tax-paying citizens forgo infrastructure projects or fork out more because of the “user-pay principle”.

This comes as the Reserve Bank of Zimbabwe governor, John Mangudya, recently said rising IFFs have worsened Zimbabwe’s liquidity crisis.

He said the number of IFFs reported by banks was surging on a daily basis.

“When transfers are made, they should be bona fide transactions, but the problem with Zimbabweans is while the nation is crying over liquidity issues there are a few individuals busy transacting in IFFs,” Mangudya said.

Comments (4)

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CARTRIDGE GALLERY - 13 January 2015

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CARTRIDGE GALLERY - 13 January 2015

Who are those individuals?Cant they be flushed out?Then we can start talking from there otherwise what is happening could be mere politicking like Mr Gideon Gono did as he contributed also to damaging our economy during his tenure as Governor of reserve bank of Zim.This lame-duck leadership has to be despised as it is worth nothing at all but only disgrace

carson Macate - 14 January 2015

Most of that money was moved by the Government Officials, Army Officials and the Gushungo Clan. How is it possible for the Generals to have property outside Zimbabwe and its not externalisation, whilst others were hunted down for it, these guys believe its their right because they fought for independence. When will all this end. Now their children are claiming their fathers fought, whose family did not fight. It's either we were providing shelter, food and cover. But we got ZERO.

themba - 17 January 2015

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