I remarked not long ago that the Reserve Bank of Zimbabwe has been fairly quiet. Not a bad thing or a good thing just an observation. Well as the saying goes be careful what you wish for you might just get it. The RBZ is back to business as usual, naming and taking action against 30 individuals who were named for abusing telecommunications and social media channels to influence the parallel market rate. The timing is ominous as exchange rates on the parallel market are creeping towards the 200 mark with 3 months to go in 2021
The notice put out by the RBZ which you can read here names 30 individuals who stand accused of “abusing mobile phone services and social media to promote and facilitate illegal foreign exchange transactions and money-laundering activities”. There is a lot to unpack so we may as well just go step by step and find the true meaning of words used by Reserve Bank of Zimbabwe Governor John P Mangudya.
Of the charge of using “mobile phone services and social media” this seems to mean those using Mobile money and/or WhatsApp to advertise and conduct foreign currency dealings. We can confirm that many of the numbers that appear on the list are prominently used on platforms like WhatsApp to advertise exchange rates.
The Financial Intelligence Unit has instructed financial service providers to freeze the accounts of the alleged perpetrators for 2 years. This means an effective two-year ban for these individuals from using financial services before there has been any legal action taken against these individuals. Some questions should be raised over publishing the names and identities of these people before moving through legal channels. The FIU has only forwarded the names of the people to law enforcement agencies for prosecution. They have also been handed bans from using mobile services.
I will reserve my opinion on whether or not seeing the RBZ being active again is a good thing and rather focus on the timing. Parallel market rates have been running away in recent months after what was a fragile relative stability fell apart. The RBZ foreign currency auction system was facing trouble with delays in providing foreign currency after buyers had been matched on the auction. This many believe sent businesses back to the parallel market for their foreign currency needs and the result is an exchange rate that is dangerously close to doubling by year-end. Buying rates are 160 at the highest and selling rates are currently 170.
Questions
As has become the norm when the RBZ and FIU take such action some questions come up naturally. If we take it at face value that these individuals are all guilty we must then surely ask what the RBZ and FIU plan to do about the traders on the street. This is not to say that these people and traders on the street are different people but rather that those who do not publish rates on public platforms are safe from the reach of the RBZ and FIU, for now. Will legal action follow? We still have a list of money laundering companies and auction system abusers against who no further action has been taken. Finally, will any action be taken against the cause of the problem or will the focus remain on symptoms?
