It was another announcement by the Ministry of Finance that we have regrettably become used to. A new set of rules added to the already cumbersome set of rules that govern foreign currency in the country. Importers of goods would be required to declare the source of foreign currency at the entry ports into the country or forfeit their goods. However, no details were offered as a plan was still being worked on for the implementation of such a law said Finance and Economic Development Deputy Minister Clemence Chiduwa.

After introducing an Interbank market, readmitting bureau de change into the system, making the rebranded bond note the official currency and outlawing transacting in foreign currency the government has found no joy against the black market. The things that were wrong with the interbank market are still wrong with it today and no progress has been made in that regard. However, the policy has generally been to focus on destroying the parallel market rather than building the interbank market.

The rules said you could walk into a BDC and buy up to US$500 no questions asked. While this is the rule, it is not practised as BDC are unable or unwilling to sell foreign currency. The stability and holding of purchasing power not to mention the international viability of the US dollar and Rand make them favourable money. When one needs to transact they simply buy what Bond, RTGS dollar or Zimbabwean dollar is required. No sense holding onto it.

This move is touted as a way to encourage Zimbabweans to use their Nostro FCAs. It hasn’t, of course, answered the paramount question as to why Zimbabweans don’t want to use these FCAs in the first place. In simple terms, the rules state that you can put money into a Nostro FCA, you are allowed to pay for a few things with it but to withdraw you must convert to Zimbabwean dollars at the unfavourable interbank rate.

It would be ridiculous to debate if this idea will work because it’s clear it will not. What it will serve to do is frustrate the informal sector which has been importing food and other items into Zimbabwe that are desperately needed and perhaps put a dent in imports. Import volumes are already down as are domestic sales volumes and that all points to contraction.

The devil is always in the details. Many believe this is really targetted at large businesses who tend to go to the black market to find foreign currency instead of using the official interbank channels. All we can say about that is if the large formal businesses are forced to source foreign currency at a premium of 30% the interbank market needs to be fixed as a matter of urgency.

So once again we find ourselves with another rushed and poor idea that will likely be sandwiched into our laws by Statutory Instrument (we are up to 246 in 2019). With no moves being made to address the fact that the interbank market is the problem, it does not serve the people.