By Thabani Zwelibanzi
Finance minister Mthuli Ncube has suggested more punitive measures for people that continue to trade in foreign currency in defiance of the government’s directive that the Zimbabwe dollar was the only unit to be used for local transactions.
In a press conference on Wednesday, Ncube said the current laws were not effective and there was need to implement more stringent punishment, a sign that the government could be descending on illegal foreign currency traders soon.
“The current legal and institutional framework to curbing of trading on the parallel market is quite inadequate,” he said.
“Government will be reviewing the laws and institutional framework in order to bring them in line with international best practices and importantly monitor the effectiveness of institutions charged with implementing those laws.
“The sanctions framework for illegal foreign exchange trading will be enhanced to provide for a range of effective, proportionate and dissuasive sanctions, including more stringent criminal, civil and administrative penalties.”
In 2018, the permanent secretary in the Justice ministry, Virginia Mabhiza announced that President Emmerson Mnangagwa was in the process of using executive powers to amend the exchange control and money-laundering laws.
Under the amended laws, unlicensed foreign currency traders would face up to 10 years in jail if convicted and would lose their money and assets.
But Ncube reckons this is not tight enough and wants the more punitive sanctions.
Furthermore, Ncube expressed his frustration with mobile money, which he said was being used to fuel illegal foreign exchange.
“While mobile money platforms have made a significant contribution to facilitating trade and payments in the country, they have also become an instrument which is being used by unscrupulous businesses to illegally trade foreign exchange and undermines the economy,” he lamented.
To this end, Ncube said the Reserve Bank of Zimbabwe will soon place limits on daily bulk payer transactions.
The central bank tried a similar limit last year, but it did not yield results and it is not clear how Ncube plans to implement this plan this time around.
Ncube also announced a host of new measures to ensure the stability of the Zimbabwe dollar, which is on a freefall against other currencies on the parallel market.
He set up a currency stabilisation task force, which will include members of Monetary Policy Committee and the Presidential Advisory Council.
Ncube also introduced what he called a managed floating exchange rate system, which will see the introduction of the Reuters System.
The Reuters system of foreign exchange incorporates live market data, trading and automated matching of trades between counter-parties, placement and execution of orders, secure messaging and data analysis that incorporated Microsoft Excel functionality.
The government is also terminating the gold incentive facility for gold miners.
Authorities insist that their de-dollarisation plan is on course, more businesses continue to demand US dollars, as the Zimbabwe dollar continues to collapse and is ravaged by a fresh wave of hyperinflation.