Osiphatheleni back in full force

GOVERNMENT'S spirited clampdown on illegal foreign currency traders - including the gazetting of Exchange Control Amendment Regulations which carry a 10-year prison sentence for offenders - appears to have come to nought as forex dealers have returned to the streets.

This comes as the shortages of foreign currency have widened since the publishing of the new regulations at the end of September - with many companies relying on imports - hiking prices of their goods.

At the same time, Zimbabwe's import cover is now said to be at critical levels of less than a month.

Exactly a month after the panicking authorities introduced the harsh measures, forex dealers are back on the streets of Bulawayo.

To be precise the illegal money changers are back in full force.

A survey done by this paper this week revealed that it's now business as usual at the city's illegal foreign currency dealers' hot spots which include, TM Hyper, Tredgold and 5 Avenue otherwise known as the World Bank due to its popularity as an illegal forex dealing hub.

"The situation is now better at least we can now afford to work. Of course police officers never cease to come here and there but now the difference is that when they come normally they need money like $5 or at least $10 for them to release you or leave the place," one dealer.

Another female dealer said it was not their choice to be in the streets.

"They can chase us from the streets but they should know that as long as they can't create employment then they cannot kill the trade.

"This will forever be there as long as government is not serious about stabilising the economy.

Economist Butler Tambo said government could be fighting a lost cause by clamping down on the illegal forex dealers.

"Government will not succeed in clamping down on money changers because for starters these people cannot be called ‘illegal' on the simple basis that we are in a multi-currency regime in Zimbabwe.

"And as long as the bank can't change money from one currency to another for instance from rand to USD or pula then the laws of supply and demand come into play and only the one who has access to these currencies will transact and in this case it is the Osiphatheleni who are transacting," Tambo told Southern News.

He said government should stop the blame game.

"Osiphatheleni are not the ones who caused the shortage of cash in banks. These people had disappeared from the streets post 2009 as banks were back to doing their normal business of transacting in various currencies so most Zimbabweans simply used normal banking services for their business and Osiphatheleni lost business over night.

"But the government, because of its huge and uncontrolled spending on non-essentials at a time when industry is not functional and revenue flows are low, later started creating Fiat money in the form of Treasury Bills to fund its huge expenditure and all this has led to the current cash shortages," Tambo added.

Tambo said the only way for government to deal with Osiphatheleni was to demonetise the bond notes and adopt a real currency like getting Zimbabwe to join the Rand Monetary Union (RMU) which the government has rejected.

Affirmative Action Group (AAG) regional chairperson Reginald Shoko said the illegal money changers were on the streets due to the prevailing economic conditions.

"It's not surprising at all. We knew that soon they would be back in the streets. Actually it's now a cash cow for police as they now simply arrest them and get bribed to release them.

"So they are not going anywhere because they provide a service which the formal economy has not been efficiently delivering and the black market is a crucial option at this stage," Shoko said.

He said the major challenge was that government was trying to address symptoms when it's dealing with Osiphatheleni.

"The real issue is economic fundamentals, we need to start producing and exporting to earn the foreign currency or at least push more effort on the global value chains of tobacco and gold which are already big foreign exchange earners for the economy."

Zimbabwe is currently in the grip of a serious economic crisis which has resulted in severe cash shortages and the complete disappearance of US dollars from the formal market.

Apart from failing to access foreign currency at local banks, ordinary Zimbabweans have over the past few weeks been greeted by sharp increases in the prices of basic goods, as retailers hike prices continually in response to the high cost of hard currency on the parallel market.