A BLACK market for large denominations of the United States dollar is flourishing in Zimbabwe’s cities with clean and crisp US$100 notes selling for about US$105 as people seeking to export foreign exchange illegally look for portable notes, businessdigest has learnt.
By Taurai Mangudhla
This comes after the Reserve Bank of Zimbabwe (RBZ) announced in February stringent measures including the capping of cash withdrawals without one-day prior notice to US$10 000, restrictions on offshore investment and suspending free funds to tackle illicit money flows and capital flight remittances after nearly US$2 billion evaporated from the capital-starved economy through externalisation last year.
The central bank this week said it was sensing a growing trend in third-party transactions through well-orchestrated schemes that ensure cash deposits do not make it into the banking system.
“Bank tellers are conniving with depositors to sell cash and it doesn’t even get into the bank. For example, a small operator comes to deposit US$5 000 cash and before they do so, a bank transfer equivalent to their cash plus an extra incentive of between 10% and 15% is transferred into their account immediately by a person who then collects the cash,” a source responsible for monitoring suspicious transactions in the central bank said.
“This is mainly done by bank tellers and some managers,” the source added.
Some illegal foreign currency dealers in the usual spots like Harare’s Road Port are also part of a syndicate of the note dealers who get the US$50 and US$100 notes from businesses across town at a premium.
“When people want to travel, they buy the big notes because banks are giving smaller notes like the US$10 and US$20 notes which are now old. As such, the clean US$100 notes are selling big on the market,” one foreign currency dealer in Harare’s central business district said.
“We have people coming from South Africa to buy these notes also because South Africans want the US dollars because the rand is just weakening.”
A Zimbabwe Revenue Authority (Zimra) official at the Beitbridge border post said foreign currency dealers had recently become friends with Zimra officials as they sought to get all the US$50 and US$100 notes paid by travellers for duties and taxes as they enter into Zimbabwe.
The central bank has advised banks to start importing smaller denominations of the US dollar notes in a bid to fight externalisation.
However, this appears to have fueled the black market for larger denominations of the United States currency with banks, according to some foreign currency dealers, getting involved in the process.
Bankers who spoke to businessdigest this week confirmed larger denominations of the US dollar were now scarce on the market while cash deposits fell drastically.
“We have been ordered to import smaller denominations and we are simply doing so, but this has fueled the black-market because we now hardly find US$100 notes in our deposits,” a banker, who requested anonymity, said.
“Some corporates are now reluctant to deposit their cash holdings because they are selling cash to some unscrupulous dealers. This is not necessarily a reflection of the companies’ policy but in most cases that of managers and employees who have found ways to make money just in the same way bank tellers at our branches are also charging customers for cash withdrawals,” another banker with one of the largest local banks said.
“However, the companies, like retailers are getting away with it because they will just claim almost all of their sales are now electronic which is the fact anyway,” the banker added.
Reserve Bank of Zimbabwe governor John Mangudya said the central bank has imported a significant amount of US$10 and US$20 notes for distribution to banks to meet the requirements of their customers as part of measures to fight externalisation of foreign currency.
“If it is true that banks are trading larger denominations on the black market, then that’s quite unfortunate and a punishable offence because we can’t abuse hard earned foreign exchange like that,” Mangudya said in response to businessdigest’s inquiry late last week.
The central bank chief urged members of the public to give names of the perpetrators of such illegal activities and proof where possible so that they can investigate and punish offenders.
This also comes amid claims Zimra and the National Social Security Authority (Nssa) have been on the offensive, garnishing corporate accounts to collect their due payments. This, some bankers say, has seen some companies devising ways to avoid banking their proceeds in cash.
However, other bankers said big corporates have no way around banking as most of their transactions are electronic.
“Whether it is hard cash or not, Zimra and Nssa can garnish funds as soon as they get into your account,” the banker said.
Mangudya said the central bank was not aware of an increase in the number of accounts being garnished by Nssa and Zimra.
“We are not privy to the issues concerning Zimra and Nssa,” he said.