THE Institute of Chartered Accountants of Zimbabwe (Icaz) has recommended that the government withdraw police officers from hunting down foreign currency dealers on the parallel market, saying the mass arrests are not inspiring confidence in the newly introduced Zimbabwe Gold (ZiG) currency.
RUVIMBO MUCHENJE
Icaz technical director Owen Mavengere told parliamentarians sitting in the Joint Parliamentary Committee on Budget, Finance and Investment Promotion as well as Industry and Commerce, who were canvassing for views on the impact of the newly introduced ZiG that the government should address the root cause rather than dealing with symptoms.
Since the introduction of ZiG, the government directed police officers to round up foreign currency dealers lurking in the streets of Harare accusing them of inflating the exchange rate of the new currency.
“A soft approach, the use of the police sends an incorrect message and causes panic. We should handle the root cause because remember the parallel market and those dealers on the street are a symptom of a problem. So sending the police doesn’t really inspire confidence,” said Mavengere.
According to the Zimbabwe Republic Police, 65 people (as at 21 April 2024) had been placed in custody and are yet to be granted bail for tampering with the exchange rate.
Icaz also raised concern over the hurried introduction of the currency.
Mavengere said the approach opened room for fraud. Mavengere also suggested that advance warnings and ample transition time would have reduced public mistrust.
“Advance warning on changes would have been very good because sometimes we do need a couple of months to change systems, we have done it but behind the scenes there are still a lot of issues that are still pending. Errors and fraud need to be looked out for so the audit profession will be quite busy this year to make sure that the transition, whilst it was done and we are now transacting, but behind the scenes did we do everything correctly?” he said.
Mavengere also urged the government to stimulate demand for ZiG by accepting the currency.
“I just wanted to touch on the demand for local currency. There must be a roadmap on how to get to 100%. I really liked what Sekai [Kuvarika, chief executive officer of the Confederation of Zimbabwe Industries], spoke about when she recommended things like PAYE, so for us everything that has to do with the government should eventually be paid in ZiG, but there must be a roadmap to say we are starting at 50% all the way up to a 100% so that it sends the correct message. If the government itself is taking ZiG, it forces everyone to be looking for the ZiG because, remember, it’s a supply and demand issue,” he said.
“If the government is confident, then naturally everyone else will be confident as we head towards 2030, but that roadmap should give us a period well before 2030 so that by the time 2030 arrives, it won’t be newsworthy that we have transitioned to ZiG because it would have happened years prior. People’s minds must be conditioned; it cannot be legislated,” he said.
Kuvarika also bemoaned the scarcity of information and the veil of ambiguity around reserves backing the ZiG.
“One of the major missing things in the market has been timeous publication of data from the central bank and we are proposing that in order to build confidence, the frequency of the publication of this data needs to improve. And part of the data that we are proposing be published are weekly reserve manual updates in both ZiG and USD, weekly balances and on Non-Negotiable Certificates of Deposits (NNCDs) that are held by the banks, weekly forex purchases and sales by the RBZ, weekly forex reserves held split by cash and other reserves, weekly interview transactions, government account balances with the RBZ split into forex and ZiG. This data is key for the market, it’s also key for investors that are looking into this economy currently, which is difficult for people to access this data. If this can be made a requirement and then be made public as well,” said Kuvarika.
She emphasised that to boost confidence in the use of the ZiG, the government should charge for services using that denomination.
“And we believe that maybe PAYE could also be paid in ZiG. And we are talking about the requirements that the minister of Finance may have, if PAYE could also be included in that,” said Kuvarika.
