Mangudya seeks to plug black market

Published: 12 July 2017

The Reserve Bank of Zimbabwe (RBZ) is planning to plug the parallel financial markets and ease the current cash crisis by re-establishing Bureaux de Changes, more than 15 years after they were closed.

Bureaux de Changes were shut down in December 2002 amid allegations that they were at the centre of illegal foreign currency deals.

However, central bank chief John Mangudya believes that the introduction of the authorised foreign currency dealers will help "enhance the ease of doing business and foster financial inclusion and the level of participation in the financial services sector".

This has resulted in the RBZ inviting individuals and companies to apply for a licence to operate as Bureau de Change.

Currently, there is a limited number of licensed Bureau de Change with the majority of urban centres, including ports of entry/exit, having no formal foreign exchange markets.

"Accordingly, interested parties are being called to embrace this opportunity and provide Bureau de Change services to the public and travellers and enhance access to formal services for exchange of currencies in the country's multi-currency system including bond notes," RBZ director of exchange control division Farai Masendu said yesterday.

As part of strategies to create more official channels of foreign currency, the central bank has slashed Bureau de Change licensing fees from $1 000 for head office to $500, while licencing at branch level now requires $200 from $400.

Rural Bureau de Change branches now attract $50 from an initial $200.

Economic experts, however, said the introduction of Bureau de Change will not help address the country's liquidity challenges.

Zimbabwe, which adopted the multiple currency system dominated by the United States dollar in 2009, has been experiencing a liquidity crunch since 2015 due to widening trade deficit, illicit financial outflows and sluggish growth among other factors.

"Zimbabwe's challenges are more fundamental than institutional," economist Christopher Mugaga told the businessdaily yesterday.

"If these are not addressed, people's propensity and hunger to take money out of the country will continue," he said.

The Zimbabwe National Chamber of Commerce (ZNCC) chief executive further indicated that the country is suffering from a confidence and perception crisis.

Economic analyst Francis Mukora concurred with Mugaga and said the ongoing cash crisis reflects deep-rooted economic challenges that have not been addressed.

"The cash crisis is more than just a liquidity crunch, but rather a reflection of a crisis of confidence in the economy and deep underlying problems. It's a symptom of fundamental structural problems, not the problem in itself," he said.
- dailynews