Abuse of funds obtained from the auction system has always been a topical issue in Zimbabwe. Around June 2021, the Reserve Bank of Zimbabwe (RBZ) named a number of foreign currency auction abusers. These included ZSE listed National Foods (Pvt) Ltd, among others. Fast forward to September 2022, the RBZ again penalized some top banks and firms for abusing allocated auction funds. On the 9th of November 2022, the Finance Minister, Professor Mthuli Ncube issued a press statement. Here are some noteworthy highlights from it:

Finance Minister Ncube Speaks

The Value For Money Process

You may be aware that on the 18th August 2022, the Ministry issued a statement advising the public regarding the institution of a Value for Money Process on all payments to suppliers and contractors to Central Government, Departments and Agencies. After a careful analysis, it was observed that certain pricing behaviours and trends in the supply chain to Government Agencies and Ministries pointed to weaknesses in the procurement framework, and that these loopholes contributed to distorted pricing practices by the market and effectively fuelled inflation in the economy. A ‘Value for Money’ exercise is underway to strengthen procurement systems and to improve management of payment cycles for Government contracts.

Loopholes Are Still There

The Value for Money framework is well and good. However, it has emerged some players are still engaging in illegal practices. The Finance Minister confirmed this by saying:

It has been observed that some contractors after passing through the Value for Money process and having received their payment from government still tend to siphon their proceeds into parallel market thereby causing domestic inflationary pressures. In this regard, this statement today is to give an update on findings from work conducted by the Financial Intelligence Unit (FIU) on monitoring payments made to Government suppliers as well as measures to deal with non-complaint Contractors with a view to plug parallel market dealing.

19 Non-Compliant Contractors Named & Blacklisted

According to the press release these contractors would get their allocated payments and then buy foreign currency from people or entities illegally. Some of them would even channel the received funds to things outside the scope of their business operations. Others would source FMCGs and then sell them in foreign currency only. The 19 Contractors found guilty of any of these illegal activities are:

Nariox (Pvt) Ltd

New Age Marketers (Pvt) Ltd

Pepwit Investments (Pvt) Ltd

Tirumi Investments (Pvt) Ltd

Mwendo Africa (Pvt) Ltd

Alg World Investments (Pvt) Ltd

Lobmer Investments (Pvt) Ltd

Nisbank Enterprises (Pvt) Ltd

Sailgroom Enterprises

Wayvar Investments

Poweride Safaris

Azelion Energy (Pvt) Ltd

Blackdeck (Pvt) Ltd

Paza Buster (Pvt) Ltd

Redan Coupon (Pvt) Ltd

The Best Car Rental

The Legacy Car Rental

Josam Enterprises (Pvt) Ltd

Construction Warehouse (Pvt) Ltd

Getting blacklisted means they will no longer be able to conduct any business with Government.

Interesting Details Regarding The 19 No-Complaint Contractors

I will be honest. I could not help but wonder about the names of some of these contractors. Some businesses or company names make you wonder. I then decided to do some basic digging on all 19 of them.

10 Out of 19 Have No Digital Footprint

I did simple Google searches. The thing is, one of the indicators of a legitimate business or company is having a digital footprint, especially in 2022. Not having any is a red flag in this day and age. Come to think of it; these are businesses that were doing business with the Zimbabwean Government. 10 out of 19 with no activity online is a cause for concern. Two things to ponder: are they legit,imate and do they even exist?

Why Several Travel-Related Contractors? 7 Out Of 19

I noticed 7 contractors there whose services are travel-related. I am referring to contractors that do have a notable digital footprint. There is Mwendo Africa (travel), Poweride (car rental), Paza Buster (car dealership), Redan Coupon (fuel retail), The Best Car Rental (car rental), The Legacy Car Rental (car rental), and Josam (travel). Notice how there is quite a number of car rentals. I believe there is a lot to talk about on these dynamics. Why is this so? I would love to hear your comments below.

That is the latest on contractors channelling funds to the parallel market. I still believe that some fundamental issues are not being addressed. As long as they are not addressed, we will continue to see abuse of funds happening. The authenticity of companies doing business with the Government or receiving funds from the auction is seriously in question. There is a need for such businesses to have public proof to ascertain their authenticity. There is so much we can talk about on these matters, for today, let us end here.