In the statement, Simbisa Brands informs the public it is engaging with the RBZ in respect of Innbucks’ ADLA license. Simbisa expresses a desire to achieve a “speedy and amicable resolution”.

Simbisa Brands also assures its clients that their accounts with Innbucks are secure and all product purchases and withdrawals will be honoured as per regulations.

Innbucks initially came on the scene as a reward system for customers and on Facebook, Innbucks says it is “Zimbabwe’s Ultimate Loyalty And Rewards programme”. At the onset, customers would buy at Simbisa outlets like Chicken Inn, Creamy Inn, Pizza Inn and so forth and people could receive loyalty points and they had an option to receive their outstanding change on the app that they would be able to use later.

Innbucks then transitioned to money transfers at a very low cost compared to its competitors. Naturally, people flooded where there were lower charges giving Innbucks a huge advantage over its competitors. Could the low charges be because they hadn’t yet been regulated by the RBZ? Many people on social media that use the service have expressed their hope that the issue will be resolved as they feel Innbucks is more convenient than other money transfer services.

Full Simbisa Brands statement below

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Innbucks

The RBZ has ceased Innbucks from operating as a money transfer service provider with immediate effect citing their inability to regulate the service as directed by the bank last year in November (2021). According to the statement, Simbisa Brands was supposed to “obtain necessary approvals in order to continue offering the service”.

RBZ notified the public that they can no longer make deposits with Innbucks or send money to third parties but a grace period of 30 days has been given for people to withdraw their balances in the form of cash or goods and services.

Metbank Limited

Metbank has been suspended from operating as an authorized dealer with immediate effect pending investigations. RBZ says Metbank has breached Exchange Control regulations relating to trading in foreign currency.

Metbank will not be permitted to deal in foreign currency and this includes buying and selling in foreign currency and processing international and domestic foreign currency transactions.

Rolink Finance

Rolink Finance has been suspended from operating as a Bureau De Change. A bureau de change is a business that, in competition with other similar businesses, makes its profit by buying foreign currency and then selling the same currency at a higher exchange rate. It may also charge a commission or fee on the purchase or sale.

The suspension is a result of the Exchange Control (Authorized Dealers with Limited Authority) Order. The RBZ has levied a fine of US$120,000 (or ZWL equivalent) against Rolink Finance for breaking said exchange control violations.

This is not the first time RBZ has cracked down on multiple companies for breaking regulations. Recently RBZ froze the accounts of Halsted, Enbee, Transerve and Electrosales for money laundering.

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The Reserve Bank Of Zimbabwe (RBZ) is set to release a 100 dollar bond note. A document is in circulation about the features that it will have. This development comes after RBZ announced new regulations by the Monetary Policy Committee to curb inflation.

The features include a watermark of the Zimbabwean bird and it will be brown in colour.

The release of the new note is a reflection of just how bad the inflation in Zimbabwe is. The note will not be able to buy you USD1. Some people have expressed in their comments on social media that they fear this path will end in bigger notes being printed with time and landing back in the terrible situation we were in back in 2008.

History is repeating itself. Yesterday RBZ effectively introduced the Bank forex rate, and now higher currency denomination. With the parallel rate projected at RTGS500 to US$1 and annual inflation at over 100 by year end, even higher denominations are bound to be introduced.

— John Gadzikwa (@jgadzikwa) April 6, 2022

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“Resolutions of the Monetary Policy Committee (MPC) Meeting held on 1st April 2022”

In the statement, RBZ expressed being concerned about annual inflation that has risen from 66.11% to 72.70%. The Monetary Policy Committee (MPC) also noted that global inflation is on the increase because of the Russia-Ukraine war.

Due to the inflation caused by unstable prices of oil, gas, fertilizers and other related products (according to the MPC), the statement also outlines new measures taken by the RBZ focused on inflation reduction.

The most interesting measure is the fifth one which states that the RBZ is liberalising the foreign exchange market by allowing transactions up to US$1 000 under an arrangement agreed upon between banks and the Bank. Individuals with free funds an entities/corporates holding foreign exchange in their foreign currency accounts will be free to sell foreign currency to banks on a willing-buyer-willing-seller basis.

This measure depending on the rate offered by the banks will lessen the power held by the black market over the US dollar. Read the full statement issued on RBZ’s Twitter page below

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Gift Mugano is a leading economist and executive director at Africa Economic Development Strategies. He spoke as Reserve Bank of Zimbabwe governor John Mangudya told the Confederation of Zimbabwe Industries that Zimbabwe would be using its currency as the main medium of exchange by 2027.

The economist strongly believes that the Zim dollar will collapse because of the ever-changing black market rates. The official exchange rate this week was US$1: ZWL$120 and the black market rate was US$1: ZWL$235.

Prices of basic commodities are increasing every day and this has increased the demand for salaries in US dollars. Addressing participants during an Employers Confederation of Zimbabwe symposium in Harare yesterday, Mugano projected that inflation would shoot to 100% by June this year. He also said the official and parallel market rates would shoot further.

Mugano also spoke about how the increased rates would be driven by huge payments in Zim dollars which people would use to buy foreign currency on the black market. He spoke about how Chinese construction companies –though paid in Zim dollars- would not send Zim dollars back to China. But they would go to Roadport (black-market) and buy US dollars. He also spoke about Tobacco farmers that will also join the queues on the black market with intention of buying US dollars with the Zim dollars government would have paid them.

Mugano expressed his concern over how the government spends the US dollars available to them. He made mention of the money received from the International Monetary Fund through Special Drawing Rights in August 2021. The money has been allocated to projects he felt were not urgent as the US$144 million allocated to the Masvingo Road Interchange Development Project, also known as the Mbudzi roundabout.

Mugano is right that the Zim dollar is very unstable. And it is causing a lot of panic, especially amongst those that are being paid in local currencies. We see this in how the teachers are on strike because they need more money to stay afloat. More and more people are demanding USD for their goods and services because they have no faith in the Zim dollar. You could go to bed with a thousand US equivalent in local currency and wake up tomorrow with just a dollar.

Although using the US dollar as the official currency in Zimbabwe may seem like a good idea, the after-effects of that decision may not be pleasant. The government does not have the capacity to pay all civil servants in USD as seen by their response to the teacher’s requests. Paying civil servants in USD would mean that the government would need to collect more taxes and this will further affect the prices of basic commodities in US dollars.

Perhaps a better approach can be found in Mugano’s expressed concerns. If the government held on to the available US dollars and used them to boost the economy instead of spending projects that do not need immediate attention it could prevent the further erosion of the Zim dollar.

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An image was circulating on social media yesterday. Two individuals were caught hugging by the RBZ “high-definition CCTV” cameras. This was so disturbing to the extent that it lead to the following official press release statement by the RBZ:

View the controversial images below:

People have commented disapprovingly on this press statement. Others suggested that the RBZ should be handling more pressing issues, for example, dealing with the 18 foul companies they recently exposed.

What are your thoughts on this?

Let us know in the comment section below.

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By Eddie Cross

Because these deliberations were always on a strictly private basis and none of us talked about these encounters or their outcome, I will not talk about this process here, except to give tribute to two incidents which highlight my topic today – that of the role the private sector can play in Zimbabwe, if it is allowed to do so.

A year ago we were plagued by shortages and queues for basic necessities – fuel, cooking oil, maize meal and other items. In addition, our money markets were chaotic, the ‘market rates’ set by our shadowy world of informal sector traders, were going through the roof, 135 to 1 and rising. Business was talking about 200 to 1 by Christmas and all the consequences. Inflation peaked at over 800 per cent, driven mainly by the collapse of the local currency.

Our informal group was invited to attend a Cabinet Committee led by the then Minister of Foreign Affairs, General S B Moyo (now late) and comprising of a number of senior Ministers and Civil Servants. We arrived at the venue at 14.30 hrs, not knowing what to expect and were told to wait until we were called. When we finally went into the meeting we were told where to sit and then the Chairman asked us for our ideas on how to resolve the market problems we were experiencing.

We then simply stated that in our view, the problems with supplies could only be solved by handing over responsibility to the private sector. He was most surprised and asked us if we had the capacity in terms of both financial and physical capacity? We responded in the affirmative and to bolster our position we had representatives of very large corporates in our team. S B Moyo was a very effective Minister and with his military background, used to decision making. He stated that he supported our point of view and thanked us for our contribution. We left the meeting.

I am not sure of what transpired afterwards, but in a series of decisions and actions, the supply of five critical basic commodities was transferred to the private sector and liberalised using market principles. Fuel, maize, soyabeans, wheat and crude vegetable oil were involved. The market problems vanished.

Some months later, one of our group in a meeting with Mr. Moyo reminded him of that crucial meeting and the decisions made and said ‘Minister, I hope you understand just how much you helped the country by those decisions.’ We are going to miss him very much going forward.

The chaos in the money market remained. We did a mathematical analysis of the problem and concluded that the main driver of inflation was the depreciation in the exchange rate. We were not satisfied it was justified. We knew that the bubble created by artificial exchange rates in 2014/17 had to be burst and the local currency devalued, but we also felt that the extent of the depreciation we were experiencing, was no longer justified by the fundamentals. We had stopped printing money, in fact there was a shortage of the local currency, we had a fiscal surplus and a cash budget process and a balance of payments surplus. We had authorised a return to the multi-currency system used when we dollarised in 2009 while retaining our own currency as the main means of exchange.

In early June 2020, the President called us in for a light supper at State House with the Minister of Finance who had suggested the meeting. The President went around the room asking each of us what we thought should be done to bring a halt to the chaos in money markets. We gave our views and were thanked and went home. He sat on this issue for two weeks and then gave an instruction that the Reserve Bank should initiate a formal auction for foreign exchange at the Bank. The Governor advised on the technicalities and the auction was launched on the 23rd of June.

The rest, as they say in the classics, is history. In the first few auctions we were able to put US$15 million a week on the auction and with several hundred companies participating, the rate quickly settled down at about 82/83 to 1. Over the next 6 months we were able to increase the weekly volume of hard currency to over US$35 million a week and with the currency stabilised, the inflation rate began to fall, declining from a high of over 800 per cent to 350 per cent by the year end and just over 4 per cent per month. The rate of exchange had devalued slightly to just under 84 to 1. The month on month inflation rate today is 2,19 per cent.

The private sector was taken by surprise, ‘was this sustainable’ they asked, we responded that in our view it was. It was being funded by our own cash flow from exports and other sources. It was exciting to see, week after week, hundreds of companies, small and large, buying hard currency on the market at rates they set themselves and funding the real heart of this economy with raw materials, machinery, spares and equipment. This process established a new sense of stability in all markets although the informal sector continued to report transactions at 100 or 110 to 1.

I am not concerned about this wide gap between the formal market rates and the informal rate for two main reasons:

Firstly, the majority of funds being used by the private sector to support imports of all kinds, are now taking place at the auction, or formal sector rate. Right now at the level of about US$5,4 billion a year or 96 per cent of all formal sector imports;

Secondly, those individuals and companies who are using the informal sector to secure hard currency and doing so either to protect value in the mistaken belief that the authorities are going to allow another bout of money driven inflation or they need money to fund smuggling in one way or another.

As far as I am concerned the much higher rates paid for currency being traded outside the formal system is essentially a tax on these activities. It gives a much higher return on remittances from abroad and this in turn is fed into the economy to buy food, pay for education and health services and to build homes. All positive and contributing massively to the welfare of our people and to the economy at large. The good thing about the stability created by the auction is that it has also stabilised the informal market rates which have changed very little in the past 8 months – in fact they have strengthened when compared to the rates that were running when the auction was started.

Listening to the voice of the private sector. Taking key decisions to unlock its potential for growth and market driven stability. That is what it is all about. What concerns me is that so few business leaders have the national interest in mind when they seek the ear of our political leadership. So often it is their own narrow interests that prevail when they get an opportunity to talk to power. If we can get around that, this will be a very different place in a very short space of time.

Eddie Cross
Harare, 27th March 2021

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The then established bank withdrawal limiting was placed at $2000. This limit was therefore unsatisfactory to a number of citizens who wanted the weekly limit to be reviewed. Unfortunately this was declined.

In senate on Thursday, Mthuli Ncube, Finance Minster, shared the following sentiments:

“The issue about regulating access to cash was triggered by the abuse that we had seen taking place from the use of the mobile banking platform in terms of electronic money.

We realize that it is necessary to restrict the cash withdrawals, the amounts that can be used at any point in time and be transferred at any point in time.

This is necessary for us to keep those restrictions in place as a general policy. If we loosen up on that, it will cause a lot of difficulties and basically, we will go back to where we were before, where individuals will access larger amounts of cash and then want to trade in the parallel market and just make our currency more unstable”

This decision is said to have been made as a way for government to keep the country’s currency stable.

Mthuli Ncube pointed out that the currency is currently trading at about $84 to 1US$. Some compare this to the $1 to US$1 rate that once was, not mentioning the drastic fluctuations in between, and point out that the currency was never stable to begin with. This point appears to highlight that the governments efforts to stabilize the currency seem futile.

Nonetheless, RBZ Governor, John Mangudya, shared his sentiments on the issue of not increasing bank withdrawal limits. He said that the country’s efforts in stabilizing financial system require team effort by all Zimbabweans and a willingness to comply with given mandates.

What about authorized dealers?

He said the following:

“The Bank’s Exchange Control Inspectorate and the Financial Intelligence Unit (FIU) have enhanced their monitoring and surveillance on the utilisation of foreign exchange in the market to foster market discipline.

Banks and mobile banking institutions are obliged to ensure that the Know Your Customer (KYC) and Customer Due Diligence (CDD) principles are complied with at all times.

In essence, FIU will continue to ensure that authorized dealers or banks and foreign exchange auction system participants comply with auction rules and regulations to stop the abuse of such financial systems.

What are your thoughts on this matter?

Let us know in the comment section below

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