Who is behind forex dealers?

By Nathan Gurira

NO matter how well-meaning and determined, the Reserve Bank of Zimbabwe (RBZ) could be towards uprooting rampant delinquency in the economy, the effort may count for nothing if other institutions are inflaming the situation through their inaction.

Hardly a month passes without the central bank naming and shaming some of the culprits. That hall of shame could just be a tip of the iceberg. In the event that the captain of the ship behaves like Edward Smith of the Titanic, the whole economy could go down.

When Vice-President Constantino Chiwenga, at the just-ended Zimbabwe International Trade Fair and more recently at the Harare Agricultural Show, threatened to deal with those who are brewing chaos in the markets he could have been firing warning shots before pulling the trigger because the State knows who the real culprits are.

The offenders, who are driving parallel market rates, are largely big companies, including local and foreign contractors, who are working on infrastructural projects around the country, petroleum firms, fast-moving consumer goods firms, and retailers, among others. It has also been said and not denied that big businesses are double-dipping by using their surrogates to buy foreign currency on the auction but still charge their products at parallel market prices that would make the devil himself pity Zimbabwe’s poor who buy from the shops at extortionate prices.

The involvement of big business explains the government’s hesitancy to close in fast on them for fear of frightening capital markets. However, after that warning from Chiwenga, it may not be long before the authorities take their gloves off because allowing the chaos to continue would be career limiting, especially for the political elite who have a lot to lose.

While the public expects the central bank to single-handedly clean up the mess, the inconvenient truth is that the monetary authorities can only do so much. From a legal standpoint, the RBZ operates in terms of the Reserve Bank Act (Chapter 22:15), whose scope confines the institution to the maintenance of price stability, formulation and execution of monetary policy and fostering a stable financial system using financial instruments at its disposal.

Apart from the Reserve Bank Act, the apex bank also administers the Banking Act (Chapter 24:20) and a slew of statutory instruments.

These statutes do not give the bank sweeping powers to extend itself beyond certain boundaries nor the carte blanche to turn itself into a big brother with authority to interfere with other State institutions.

We all know that the bank’s autonomy was surrendered to the Treasury during the unity government (2009–13) when the then Finance minister Tendai Biti’s obsession with clipping ex-RBZ governor Gideon Gono’s wings, led to regrettable amendments that compromised its independence.

Be that as it may, the bank does not operate in a vacuum. It is part of an ecosystem with other economic agents…