RBZ shuts out undisciplined businesses

THE Reserve Bank of Zimbabwe (RBZ) says it is moving in to flush out unscrupulous businesses participating at the weekly Foreign Currency Trading System over their indisciplined behaviour.

The monetary authority introduced the weekly Foreign Currency Auction Trading System last year in June with a view to improve forex access to the productive sectors.

Speaking during a symposium hosted by the Confederation of Zimbabwe Industries (CZI) on Friday, RBZ Governor Dr John Mangudya said they have noted financial irregularities perpetrated by some firms participating at the auction system.

"When we come to the auction, we have noticed again with regret some people are coming to the auction creating their shelf companies so that they can participate more.

"We are flushing those ones from the system and we are freezing such accounts so that if we freeze them for six months at least, if we hit you, that way you'll understand that you will not do what you are doing," he said.

Dr Mangudya said some of the companies also have blocked funds at the Reserve Bank, which are required to be remitted out of the country but were still misbehaving.

"So, there shall come a time whereby we will also say that if you have got blocked funds at the Reserve Bank, but you are indisciplined, then it means that you shall suffer for your indiscipline and you also won't get them. Otherwise you can't run the economy, you are against the progressing economy," said the RBZ chief.

In this context, Dr Mangudya said it was imperative for all stakeholders to adhere to good corporate governance practice as the monetary authority does not want to implement punitive measures.

He said RBZ was seized with the crafting of a Statutory Instrument that would empower the Financial Intelligence Unit to charge spot fines.

"We are now saying we have gone beyond the disclosure and compliance orders, so we have requested the Government to put in place Statutory Instrument for those who don't want to behave . . . if you can't have self-discipline someone has to foster the discipline and that is through these institutions (FIU and Exchange Control)," said Dr Mangudya.

Meanwhile, Dr Mangudya said RBZ was fairly bullish about the economy despite the Covid-19 pandemic and the Central Bank wants to restore the essence of the monetary policy in Zimbabwe through resorting to "back to the basics".

"We are very bullish about the economy despite the Covid challenges. We are very bullish about the economy, we are very bullish about what we set ourselves to achieve and we are going back to the basics and we want to restore the essence of monetary policy in Zimbabwe through the back to basics and that is what this economy requires and we need your support mainly on market discipline," said Dr Mangudya.

He said an economy without financial market discipline can not prosper despite having the macro-economic financial stability. Under the Second Republic, Zimbabwe under the leadership of President Mnangagwa has managed to bring macro-economic stability through the implementation of a two-year Transitional Stabilisation Programme (TSP) that ran from October 2018 to December 2020.

Building on the gains brought about by the TSP, the Government is now focused on improving production to stimulate an export-led economy sustained by the first National Development Strategy (NDS1), which would be superseded by NDS2 five-year another economic blueprint expected to deliver the country to an upper middle-income economy by 2030.