Cross-border traders worsen cash shortages

HARARE - Government is tightening its grip on the bond notes by subjecting cross-borders to serious scrutiny as the money authorities bid to deal with a thriving parallel market of the surrogate currency on its borders.

This comes after Reserve Bank of Zimbabwe (RBZ) official Azvinandawa Saburi told guests at the Zimbabwe National Chamber of Commerce (ZNCC) annual congress in Victoria Falls last week that in addition to South Africa, Mozambique and Zambia, bond notes were now being sold on the Botswana black market.

“Now, on the issue of bond notes being in Botswana, Zambia, Mozambique and so on, I think, as the RBZ, we are a monetary authority, who have to work with other bodies who have responsibility at borders.

“So we will certainly talk to them and advise them on how probably they can handle this issue. On this, I would also want to add this is about the currency, the United States dollar is the most widely used currency,” said Saburi.

“So everyone in the world, everyone who is exporting and so on, is looking for those United States dollars, which is why people play all these shenanigans.

“But, the bottom line is that we are going to work with Zimra to say that when people are going out, they should not take bond notes,” he added.

The country is currently experiencing acute shortages of cash, including the bond notes and US dollars, leading to serious trading on the currency black market.

Zimbabwe introduced bond notes at the end of last year under a $200 million Afreximbank loan in a bid to mitigate the cash crisis but with little success.

There is currently $160m in bond notes and an estimated $600m in circulation in the economy.

Financial research firm Equity Axis said the externalisation of bond notes to neighbouring countries underlined thriving business by cross border traders which in turn led to a lively parallel market.

“The four countries stated are a hub for local cross border traders and naturally markets for the local currency will thrive, starving local banks which estimate a low ratio of 1:10 in terms of bond notes deposits to withdrawals.

“Authorities, therefore, have to concentrate on external debt clearance, fiscal realignment and attraction of credit lines,” Equity Axis said in a research paper.

The RBZ has established dedicated hotline numbers for the public to report individuals and firms or traders that may be involved in cash hoarding, selling or abusing or externalising cash.

It will reward a equivalent to five percent of the reported and recovered cash amount.

“A whistleblower facility has worked quite well for Zimra in enforcing tax compliance. Such a facility at RBZ will force the public to bank their cash and support the flow of cash in the economy. And maybe create jobs for a few professional whistleblowers,” said Equity Axis.

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.