Mthuli Ncube admits vexed by forex dealers

By Nkosana Dlamini

Finance minister Mthuli Ncube has inadvertently admitted government was fighting a losing battle in its attempts to tame a wild foreign exchange conundrum in the country while also trying to account for those fuelling the illicit trade.

He was addressing backbenchers in parliament Wednesday.

There is a wide discrepancy between government’s foreign exchange rate with the black-market rate almost double the official one.

Government, through the central bank, introduced the auction system June 2020 for firms to source for the scarce resource via an official channel hoping this would also help tame spiralling prices of goods and services in the country.

But it has reaped the opposite, something that has placed formal businesses in an invidious position of pricing their goods and services using the official rate or simply run with the flow and use prices pegged by competitors.

Ncube was asked by Harare legislator Rusty Markham if government could up the game in terms of policing the foreign exchange jungle.

The legislator said for as so long as people’s incomes “are working on the official rate and our expenditure is on the parallel market, we have a serious problem and this is unsolvable until it is policed and enforced”.

Ncube admitted government could do more to enforce the law against errant firms but admitted this was not easy.

“It is never easy. You know when there is arbitrary opportunity, often that tends to be shared through the ecosystem.

“So, in terms of collusion of individuals and companies – it is happening. That makes it difficult to enforce the law through a single point and we have to attack the whole ecosystem if we want to succeed, but I appreciate his suggestion and his concern.  We are concerned, I am concerned,” he said.

Asked how authorities should treat companies that benefit from the auction system and proceed to supplement their needs with forex sourced from the parallel market, Ncube said government was only policing the foreign currency that it has provided.

“It is a lot easier to do that. That is what we follow up on but if individuals are doing blended pricing and so forth, again we want to understand it but really, we want to make sure that our foreign currency is not a contributor to parallel market prices that we see prevailing.

“That is really our main concern and it is much easier to prove that than blended prices or the other prices, but the issue of enforcement is never easy at all.”

Ncube added, “We have FIU, the police, we have ZIMRA to an extent, we have all the law enforcement agencies out there, but people are still managing to escape.

“Those are the facts. It just shows you how difficult it is especially if the incentives and the arbitrary profits are being distributed among many beneficiaries, then everyone has an incentive to cover up for each other.

“It is never easy, but we will continue with the hard work especially around the sources that we would have provided ourselves through the auction.”

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