Chronicle Editor
Local business is generally undisciplined.
This observation, rather fact, has stood since the 2004-2008 era when the economy went on its knees, not only because we were seeking a way around a then new challenge of illegal sanctions but also because of much indiscipline among the business sector.
To some extent, local companies must take the blame for their conduct that worsened an already difficult economic situation at that time. Many of them emptied their shelves and channelled their stock on the black market that ruled the economy at that time. There the goods were sold in foreign currency.
Reports of companies selling sub-standard products at high prices are common as well.
It is a corrupt culture that afflicts retailers, banks, transporters, manufacturers, hotels and so on and has endured over the past 17 years. We wonder if it will ever be overcome.
We agree that the prevailing cash crisis is caused by low export performance amid a challenging economic environment, but it would not have been this bad if foreign currency was not being externalised, particularly by the huge cash movers in business sector. The situation would not have been this bad if companies banked their daily takings as diligently as they must do in terms of the Bank Use Promotion and Suppression of Money Laundering Act.
It is the same business sector that has come up with a three-tier pricing system under which one item has three prices depending on whether a client is buying using bond notes, United States dollars or through point of sale machines.
Yesterday, we carried a report of two Bulawayo retailers who were recently fined for worsening the cash crunch by not banking their daily takings. Greens Supermarket was fined $37 000 while Master Paint and Hardware was fined $27 600. A few others elsewhere have been punished for the same crime.
The Reserve Bank of Zimbabwe has always warned against such deviant behaviour but we argue that these few reported cases are only a tip of the iceberg.
In fact this crime is certainly more prevalent than Greens Supermarket and Master Paint and Hardware.
Reserve Bank of Zimbabwe Deputy Governor Dr Jesimen Tarisai Chipika, speaking early last month deplored the criminal activity in relation to cash handling.
“There is financial indiscipline in Zimbabwe and I think part of it was picked from the era of ‘burning’ (arbitrage in currency trading),” she said.
“Money is now being treated as a commodity, instead of a medium of exchange. Basic economics say that money is a medium of exchange. If we have an economy driven by the parallel market for currency, we are destroying ourselves. We have a problem, because we are drifting back to the era of burning currency, where we also did not bank, but stashed money at home.
“We have been told that the money which we are saying is in shortage, be it bond notes or otherwise, is all stashed up at the country’s border posts. We have been told by our financial intelligence that the bond notes are now hard currency within the Sadc region. . . . As such, a lot of dynamics are happening in our country and we have since invoked the Bank Use and Promotion Act, which many people had forgotten about, to say as businesspeople you must take all your daily cash receipts to the bank.”
It is highly regrettable that we have businesses that must be formal and respectable behaving like they are mafia rings. It is sad that the Reserve Bank is having to spend resources deploying teams to enforce a law, a sort of enforcement that must only be undertaken in isolated, extreme circumstances.
Such behaviour must just stop. It is not a survival tactic, it is simply criminal.
The central bank, working with other law enforcement agents need to worker harder to investigate those who are worsening the cash shortage by hoarding cash instead of banking it. Millions of depositors cannot spend cold nights on bank queues waiting to withdraw money and failing to get it. The businesses must know that the economy, of which they are an integral part, cannot function with such high levels of cash shortage, and indiscipline.
While investigators are urged to redouble their efforts, the courts must continue doing their part as well. Fines must be made heavier than $37 000. That might be a task for legislators to make laws that provide for such tougher punishment, as we don’t think that Greens Supermarket will feel punished by being ordered to pay that sum of money.
We are unsure how the courts handle this one but it looks appropriate also for the money that was being kept in office vaults for too long instead of being banked, to be confiscated by the State. The companies would have to lose when they pay the hefty fines and have the unbanked money seized for the benefit of the State.
Online Reporter