Legislator proposes jail sentences for exchange control violators

Nqobile Bhebhe, [email protected]

ZAKA South legislator, Dr Clemence Chiduwa, has proposed imposing jail sentences on repeat exchange control violators, labelling them as economic saboteurs, in addition to the suggested 200 000 ZiG penalty.

Dr Chiduwa made the proposal while contributing to the amendment of the Exchange Control Act Notice 2024, a motion introduced by Deputy Minister of Finance, Economic Development,and Investment Promotion, David Mnangagwa.

The motion aims to grant the Reserve Bank the authority to issue multiple penalty orders. 

Furthermore, the proposed amendment includes the removal of a provision in the Schedule that previously permitted sellers of goods and services to sell at a 10 percent margin above the exchange rate.

It also states that sellers will be deemed to commit a civil offence if they offer goods and services at prices exceeding the exchange rate published by the Reserve Bank.

Deputy Minister Mnangagwa said the amendment seeks to, among other issues, have a fixed penalty of ZiG200 thousand for offenders in the Schedule.

The penalty is meant to be a deterrent to those businesses that offer goods and services above the stipulated and market-determined exchange rate.

“This 10 percent margin, while was fit for purpose before the Monetary Policy, is no longer fit for purpose,” Dep Minister Mnangagwa said.

The Reserve Bank of Zimbabwe (RBZ) recently introduced ZiG to be used alongside other currencies as part of comprehensive monetary policy measures aimed at addressing exchange rate fluctuations, reducing inflation and restoring macro-economic stability in the country.

Zimbabwe’s new currency is now supported by a mix of precious commodities, primarily gold and foreign currency reserves, with a total value of around US$285 million.

While many economic players, such as manufacturers, retailers, key suppliers and other stakeholders have embraced the new currency for transactions, some resistance persists in specific sectors of the economy.

Certain service providers, collaborating with speculative illegal money traders, are setting the ZiG exchange rate as high as 1:20 against the US dollar.

The official rate is 13,5 to the US dollar.

In his contribution, Dr Chiduwa said while a 200 000 ZiG penalty would be appropriate for offending individuals and institutions, a jail term would be much more deterrent.

“I am proposing a jail term for repeat offenders. A jail term is very critical for those who are engaged in economic sabotage and those who are harming national interests. I think this is very critical. At this point, in the economic history of this country, we cannot afford to fail with regards to the ZiG,” he added.

Dr Chiduwa noted that the operations of the black market, the parallel market rate is a cancer that is affecting the economic fabric of this country.

“The parallel market rate is fighting the core values that define who we are in terms of where we want to be as a country. If you look at Vision 2030, it has about six pillars and I want to speak specifically on the pillar on macro-economic stability and financial re-engagement. Under the NDS1, there is a priority area on economic growth and stability.

“If you look at NDS1, the Vision 2030, they are giving prominence to economic stability and financial re-engagement. All these will come to note when the core values of our economic fundamentals are being undermined by parallel market activities.

“What we need to define from now on, going forward is, anyone who is fighting the vision of Zimbabwe is an economic saboteur. We need to clearly define that parallel market activities are economic crimes. These are economic crimes that are fighting literally everyone.”