It remains the norm in Zimbabwe that monetary and fiscal policies are mercurial. One moment a new policy is enacted, the next some other contradictory policy comes on board. Presently it needs no rocket scientist to see that the local currency is rapidly losing value. This comes as no surprise because the economy is not producing as would be ideal for a stable local currency. Lately, social media has been awash with civil servant salaries which are just so unbelievable given how meagre they are. How can a student-teacher live on just US$2 per month (which is even less than that in real terms)? Anyways, despite the apparent failure of incessant policies, statutory instruments and the like, the government still thinks the root problem is the parallel market.
The FIU Pounces Further On The Parallel Market
For a while now, the FIU has been rolling out a series of measures meant to weaken the parallel market. It started with freezing certain bank accounts – that seemed to work for only short periods. It proved ineffective in the long run. Then we saw the FIU putting in place transaction limits on EcoCash and ZIPIT. Money changers felt this blow. It has effectively reduced the amount of work they can do per month. However, that has not managed to keep the exchange rates in check; they have continued to spike. In a bid to further weaken the parallel market, the FIU has issued a warning statement.
Statement By The FIU – Action Against Illegal Foreign Currency Trading Adverts
Kindly find below the statement that was recently released by the Financial Intelligence Unit (FIU) on the 15th of June:
“ACTION AGAINST ILLEGAL FOREIGN CURRENCY TRADING ADVERTS
- The Financial Intelligence Unit (FIU) has been monitoring social media platforms where foreign currency dealers have been advertising and promoting their illegal trade. The FIU is aware of WhatsApp groups that have mushroomed in the country for the specific purpose of promoting and facilitating illegal foreign currency trade.
- The FIU, in collaboration with the police, banks, mobile money / mobile phone service providers and relevant regulatory agencies, has embarked on an exercise to identify and take action against individuals who create, advertise on or participate (actively or passively) in WhatsApp groups or other platforms for illegal foreign currency trading.
- The FIU and relevant institutions will take the following immediate actions:
- The mobile phone numbers used to join or advertise on the illegal groups will be shared with mobile phone operators and POTRAZ for barring;
- Other mobile phone numbers registered in the names of such persons will also be identified and barred;
- Any mobile money wallets registered in the names of such persons will be frozen and the persons barred from accessing mobile money services with any operator;
- Bank accounts owned by a person so identified will be frozen and the person will be blacklisted and barred from accessing banking services with any bank; and
- Identified persons will be investigated and prosecuted for illegally trading in or advertising illegal trading in foreign currency.
- Members of the public are requested to report to the FIU any person, mobile phone number or bank account that continues to be used to engage in or advertise illegal foreign currency activities, using the following contact details:
FIU mobile and WhatsApp number: 0714039897”
A Critique Of The Above-Mentioned Measures
The statement points out two major talking points. One, measures that will be taken against those found in WhatsApp groups meant for advertising and participating in foreign currency exchange deals. Two, it also points out that one can ultimately be arrested. The most interesting is that this will apply to both those who are active participants and those who are passively there in the groups. How this is supposed to eventually curb illegal foreign currency dealings makes one wonder. Even if WhatsApp were to be abolished that would never stop the normal operation of the parallel market. Quite frankly these are hardly potent measures in seeking to weaken the parallel market. Majoring on signs and symptoms (rather than the root cause) is what is being done here.
Time To Address The Economy Not Secondary Issues
The parallel market is the result of a compromised economy. The irony is that top-ranking government officials (even the central bank) bankroll most of the heavy-hitting money changers on the parallel market. When you consider that you realize that warning statements are at best just window dressing. If the fundamental ethos of a healthy economy is not addressed then anything done will yield no fruit. The stability of a local currency heavily depends on a healthy trade deficit. That refers to the difference between imports and exports – in Zimbabwe imports far outweigh exports. For as long as the local currency is unstable the parallel market will live on.
Knowing Zimbabweans all too well, this warning statement hardly moves anyone. People will always figure out ways to circumvent prohibitions and continue business as usual. Serious firefighters seek to direct their efforts towards the very root of where the flames are stemming from. Sadly the government knows this yet if they do that most of their pockets will run dry because they are benefiting from the prevailing chaos. This is the reason why common sense does not seem to reign in policymaking. The working principle is to always make sure some pockets benefit and that is why voodoo economics is on the throne locally.