EDITORIAL COMMENT: Descend heavily on banks, individuals diverting cash to black market

The Chronicle

WE are worried that despite the stringent measures put in place by the Reserve Bank of Zimbabwe to safeguard the new notes and coins released onto the market on Monday and Tuesday this week, cash amounting to thousands of dollars has already found its way onto the parallel market with street traders in Harare awash with crisp new $2 notes in sealed packs. 

Excited depositors in Bulawayo flocked to banking halls on Tuesday and Wednesday where they withdrew their $300 weekly allocations, bringing relief to thousands who were at the mercy of cash barons who charge a premium for cash. While some complained that the weekly limit of $300 was very little as prices of goods are high, the availability of cash at banks is a positive development which has already dampened the trade in cash on the black market. 

However, reports from Harare where dealers were seen displaying thousands of dollars of the new notes on the streets are extremely worrying. They confirm widely held suspicions that there is a network comprising rogue officials at banks who work with selected foreign currency and cash dealers on the streets to subvert the system. 

Yesterday, the RBZ said it had conducted investigations into the issue and the findings are that the bank notes in the pictures circulating on social media emanated from Ecobank. “Preliminary investigations by RBZ at Ecobank indicate that an amount of ZW$15 000 was withdrawn by one of their customers. Ecobank, together with their customer, are now assisting the police with further investigations on this matter,” said the RBZ in a statement. It said appropriate disciplinary measures would be instituted against the bank, its customer and anyone else found responsible for such malpractices which bring the RBZ and the entire banking system into disrepute.

We also condemn in the strongest terms, the leakage of thousands of new notes onto the parallel market at a time when the RBZ and Ministry of Finance and Economic Development are trying to bring normalcy to the economy through ongoing currency reforms. We pray that the people behind the leakage will be prosecuted to the fullest extent of the law.

It is discouraging that there are some Zimbabweans who still harbour traits from the past where rent seeking behaviour, arbitrage and illegality were the order of the day. This should never be allowed to flourish and Government must make an example out of them by rendering swift justice with the courts meting out deterrent sentences. 

The bank involved (Ecobank) should also be fined heavily. Clearly, there is something terribly wrong with our banking system if they cannot superintend over the roll out of new notes and coins for just one day. The speed with which the new notes found their way onto the streets speaks to a paucity of internal controls and a general lackadaisical approach to business by some banks. 

What we find astounding is the brazenness of the dealers who were filmed on mobile phones and other gadgets flaunting wads of brand new notes in a vehicle in Harare’s Central Business District. While some may find this naivety staggering, we feel the dealers are exhibiting a boisterous bravado informed by years of illegally trading in foreign currency and cash on the streets without fear of prosecution. 

To them, such behaviour is normal and their clips were just celebrating another victory where they have once again defeated the system. The danger with their lot is that they encourage more Zimbabweans to engage in illegality, nullifying Government efforts to fix the economy. 

We therefore urge the RBZ Financial Intelligence Unit to tighten its supervision of banks and ensure that they comply with bank use and promotion regulations, the Zimbabwe Republic Police to clamp down on cash and foreign currency dealers and Zimbabweans in general to shun such practices. 

One of the fundamental traits of a currency is its scarcity and seeing wads of new ZW$ notes and coins lining the street corners of Harare does not inspire confidence. The new notes are already being undermined by the same people who are benefiting from an illegality. 

To them, a return to normality where Zimbabweans access their cash from the banks, swipe for goods and services in shops without the need to engage dealers, is a misnomer. To remain relevant, they will continue to exploit loopholes in the system so that they subvert it and continue with their nefarious activities. 

We urge Zimbabweans to shun them and stick to legal ways of trading. The RBZ has said it will incrementally inject more cash into the economy until a state of equilibrium is reached. It intends to drip-feed the market until the amount of cash in circulation is about 10 percent of total money supply, which translates to roughly $1,9 billion. This keeps Zimbabwe below the regional average of 12 percent and should be achieved in six months.

Let’s give the RBZ the opportunity to implement currency reforms without distractions. Diverting huge sums of cash onto the black market is akin to sabotage which should not be condoned or tolerated.