MUTARE– Zimbabwe lost hundreds of millions last year leading to the Reserve Bank of Zimbabwe to announce a cocktail of monetary policy measures to stem the illicit flow of finances.
RBZ governor Mangudya said measures would include monitoring of companies with offshore activities, promotion of plastic money and bank transfers as well as encouraging banks to observe customer due diligence.
Mangudya said due to the unsustainable state of affairs caused by non remittance of revenue, translating to a loss of $624 million dollars between January to December 2015, government will seek to plug these leakages.
“What we are very much against and deeply concerned about is the abuse of hard earned financial resources through illicit financial flows (or capital flight), smuggling and misappropriation of bank loans.
“These nefarious activities are short- circuiting or draining the financial system and creating liquidity shortages. We cannot carry on like this as a country. We need to draw a line in the sand and never cross it.
“Bank statistics show that during the period January to December 2015, a total of US$684 million was remitted outside Zimbabwe or externalized by individuals under the auspices of free funds for various dubious and unwarranted purposes,” he said.
Mangudya said the RBZ would be monitoring the operations of offshore related companies, reporting of suspicious transactions, strict customer due diligence and penalties for non-compliance.
The RBZ governor said companies in the extractive industry were the main culprits in the externalization of funds, a situation worsened by susceptibility to regional disruptive due to the openness of the economy, as businesses scramble for the US dollar.
“The current scenario in Zimbabwe, for example, where firms, especially those in the extractive sectors, and individuals are externalizing funds including export sales proceeds defies economic logic.
“In the case of Zimbabwe, the financial hemorrhage from capital flight is exacerbated by the openness of the economy which is susceptible to regional disruptive arbitrage activities (as businesses in the region scramble to get access to US$s from a dollarized Zimbabwe)
“These include remittance of donations to oneself, offshore investments, externalization of export sales proceeds by corporate through individual accounts leading to pervasive tax evasion and externalization. This rampant export of liquidity is not sustainable,” he said.
Part of Monetary Policy Statement also stated that, “In view of the foregoing and in an effort to improve transparency in the utilization of scarce financial resources, the Bank is putting in place, with immediate effect, the following measures to close the gaps and loopholes arising from inconsistencies and inadequate enforcement of rules on financial transparency and accountability, which in some instances, bodes around embezzlement of national resources and ignorance.
On offshore investments the RBZ Governor said, “Each person, subject to the jurisdiction of the Zimbabwean financial system, having an interest in or has authority over one or more financial accounts or securities or investments in a foreign country should report, through normal banking channels, to RBZ if the aggregate value of such accounts or securities at any point in a calendar year exceeds US$10 000. Going forward, any offshore investments would require prior Bank approval.”
