WE welcome President Emmerson Mnangagwa’s decision to use temporary powers for a new law that will see illegal currency traders being sentenced to up to 10 years in jail, while ill-gotten wealth will be confiscated. The move will not only curtail the thriving illegal black market trade in foreign currency but improve the availability of forex in the formal banking system.
It will also arrest market distortions as parallel market rates will disappear bringing normalcy and stability to the economy. Under regulations that come into effect tomorrow, Government will track unexplained movement of money in the financial system. President Mnangagwa’s intervention — which involves amending the Exchange Control and Money Laundering and Proceeds of Crime Acts —is through constitutional provisions of the Presidential Powers (Temporary Measures) Act.
The new law prescribes a maximum 10-year custodial sentence for illegal currency traders, and authorities will be empowered — through the Unexplained Wealth Orders Statute — to confiscate ill-gotten wealth. The Zimbabwe Anti-Corruption Commission and Zimbabwe Revenue Authority have been empowered to pursue perpetrators of financial crime. President Mnangagwa has signed the law which will be gazetted tomorrow. His intervention comes in the wake of a spike in parallel market rates in the past two months which have wreaked havoc in the economy.
At some point, the United States dollar to bond rate soared to 1:6 resulting in a rise in prices of basic commodities, inflation, panic buying and shortages of some goods. Amid the chaos and confusion in the market, a practice known as “burning” took root in the country with people taking advantage of the soaring parallel market rates to accumulate wealth in the form of huge Real Time Gross Settlement balances.
The disproportionately high black market rates allowed them to trade their greenbacks for a premium.
They would then swipe away their windfalls in shops by buying commodities they deemed to have a store of value. Meanwhile, costs of production soared and manufacturers found themselves stranded with no forex to import critical raw materials.
Indeed the economy was under siege and in a short space of time, the lives of Zimbabweans had been turned upside down. On Thursday last week, Reserve Bank of Zimbabwe Governor Dr John Mangudya revealed that to date, Zimbabwe has registered close to $10 billion electronic balances at banks which are not backed by real money.
He said 95,5 percent held by RTGs balances was causing inflation as it increased spending while piling pressure on the little forex the country was generating. This money, whose source is unexplained, is as a result of illicit dealings on the parallel market hence the need to plug this loophole and bring sanity to the market.
The new measures being promulgated by Government through the Presidential Powers (Temporary Measures) Act are just what the doctor ordered to deal with the scourge of illegal currency trading. By tracking unexplained movement of money in the financial system, Government will be able to identify the key drivers of the illegal parallel market and shut them down. We are glad that Government has moved swiftly to arrest the parallel market trade as this will calm the markets.
Speaking to our sister paper, The Sunday Mail, the Minister of Justice, Legal and Parliamentary Affairs, Cde Ziyambi Ziyambi, said: “Our teams have been working tirelessly on the laws for the past few weeks and the legislation is ready for gazetting. It will be issued through an Extraordinary Government Gazette.”
The Secretary for Justice, Mrs Virginia Mabhiza, said the new law illuminated grey areas that were being exploited by criminals to escape culpability. “There have been two legislative interventions which have been made by His Excellency. The first one is amendment to the Exchange Control Regulations (Exchange Control Act). The definition of ‘dealer’ is further clarified to assist judicial officers in interpreting the law and also the general public in appreciating the law.
“The second amendment is to the Money Laundering (and Proceeds of Crimes) Act to provide for unexplained wealth and the respective enforcement agents where a public office holder or someone previously in that capacity fails to account for wealth accumulated in a manner suspected to be criminal,” she said.
“The Exchange Control Regulations have also been amended to introduce a presumption where one conducts themselves in a certain manner to be held liable for dealing.”
Mrs Mabhiza said the Unexplained Wealth Orders would give crime-fighting entities like the National Prosecution Authority, Zacc and the Zimbabwe Republic Police power to seize unexplained wealth. “The President has invoked his powers so that law enforcement agents such as the police, the NPA and the Zacc have more teeth to compel suspects to explain their wealth. All those who fail to give satisfactory answers risk forfeiture of their assets or monies in their accounts.
“This instrument can be in place for six months. Within these six months, Parliament can use its powers to make the law permanent.” We hope illegal forex dealers and money launderers have been put on notice. The long arm of the law has finally caught up with them.