BUSINESS is booming on the parallel market despite numerous government efforts to kill the market through a spirited crackdown by the law enforcement agenci
The parallel market now actually has well-established trading points, which include Roadport in the capital, Lobengula Street in Bulawayo, popularly known as “World Bank”, and the country’s border points.
The existence of uniformed police officers at these places poses no threat to the illegal foreign currency dealers.
The dealers now openly advertise their highly prized and sought after commodities.
“There is no need for us to hide. Even the law enforcers trade their foreign currency here,” said one of the traders at Roadport.
While the official interbank market has struggled to raise volumes of US$5 million per trading day since January this year, hefty amounts of major currencies like the US dollar, the British pound and the South African rand change hands on a daily basis on the parallel market.
Zimbabwe Republic Police (ZRP) spokesperson Assistant Commissioner Wayne Bvudzijena said the police had not lost the battle against informal foreign currency dealers. Instead, he blamed the law for having too many loopholes to let culprits off the hook.
“The laws have loopholes and have to be tightened,” said Bvudzijena.
He said it is difficult to arrest a person who is illegally trading in foreign currency unless they were caught executing the transaction.
“We can only arrest (dealers) if we catch them actually trading,” he said.
When questioned on why there had been arrests of illegal foreign currency dealers before and none now, Bvudzijena said the arrests were on the basis of well-documented illegal trading or tip offs from duped individuals.
Last year, a number of company executives from Econet and Telecel among other top companies were arrested for violation of the exchange control regulations. Econet executives were exonerated of any violation of exchange controls by the courts.
Bvudzijena refused to give recommendations on how the law could be improved and tightened.
“The law should be tightened but we cannot give suggestions,” he said.
Local analysts said the parallel foreign currency market was being fuelled by demand and supply.
They said officials could only destroy the parallel market by liberalising the official exchange rate.
In other words the exchange rate should be determined by market forces.
The parallel market is thriving because it trades at rates that are way above those on the interbank market.
Whilst the US dollar and British pound are trading at around US$1:$450 000 and GBP1:$750 000 respectively on the parallel market, on the interbank system the same currencies are trading at US$1:$101 195,41 and GBP1:$184 307,44.