Twenty percent of all new foreign currency taken by
Zimbabwean businesses from local customers must now be liquidated at the
official exchange rate, when deposited in a domestic foreign currency bank
account, as part of the measures introduced by the Reserve Bank of Zimbabwe
(RBZ) in the latest monetary policy statement.
Temporary measures taken a few weeks ago to limit abuse on
mobile money platforms are now being made permanent.
Phone agency lines are permanently abolished; businesses
can keep their merchant lines as one-way lines to receive money from customers,
but have to move that money into their bank accounts to spend it; individuals
are limited to total transactions of $5 000 a day; and phone companies are to
ensure each person has just one wallet, thus banning the multiple wallets that
have sprung up.
The bulk payment wallets will be approved for limited use,
basically now value transactions and payment of the small humanitarian
allowances to vulnerable members of society, but things like payrolls and other
larger bulk payments must now go through the banking system.
At the same time, bureaux de change can now buy foreign
currency at 5 percent above the auction rate, but now also have to sell 80
percent of their foreign currency holdings at each weekly auction, but they can
set their own reserve price.
In his mid-term monetary policy statement, RBZ Governor Dr
John Mangudya noted that the introduction of the auction system had ended the
volatility of the foreign currency system and its exchange rates and that the
auctions had provided over 87 percent of the foreign currency needs of
importers since the auction system was introduced on June 23.
The stability in exchange rates, still below the parallel
market rates of $90:US$1 to $120:US$1 seen before the auctions, had stabilised
prices and brought inflationary trends crashing south. This now had to be
sustained, hence the new measures and tweaking of the foreign currency and
banking systems.
Following the decision to allow people to use free funds in
foreign currency when buying goods and services, the voluntary dual payment
systems introduced in March at the beginning of the Covid-19 emergency, Dr
Mangudya said the RBZ was encouraged by the growth of foreign exchange balances
in the domestic foreign currency accounts (FCAs) where businesses have to bank
this money.
To ensure that some of the domestic-generated foreign
currency is used to sustain the auctions, with immediate effect and going
forward, 20 percent of the foreign currency receipts of providers of goods and
services must now be liquidated at the point of depositing in the domestic
FCAs.
But there are exceptions. “For the avoidance of doubt, all
existing balances in the domestic foreign currency accounts will not be
affected by this policy. This policy measure shall also not apply to recipients
of free funds including individuals, embassies, non-governmental organisations,
tobacco and cotton producers and domestic FCAs for fuel companies,” Dr Mangudya
said.
The RBZ is further liberalising the activities of bureaux
de change to enable them to enhance their business by increasing the exchange
rate spread from the present 3,5 percent over the auction rate to up to 5
percent above the auction rate.
The bureaux de change will be required to sell at the
auction, at their reserve price, 80 percent of their balances held every
Monday.
On the basis of a forensic audit by RBZ, and the findings
and recommendations brought up by the auditors, the bank will implement a
cocktail of measures to bring the mobile money system under monitoring and
control.
Regulations are already in place to put mobile money
platforms under the sort of rules banks have been using for years.
Transactions by individuals shall be limited to $5 000 a
day. Individuals shall be allowed to undertake person to person transfers,
person to merchant payments for goods and services, settlement of bills and
purchase of airtime.
But the rest of the 27 June temporary measures go
permanent. The new measure is that following mobile money operators allowing
illegal foreign currency dealers to use multiple individual wallets as a means
to bypass the transaction limits, “mobile money operators shall, with immediate
effect, close all multiple wallets, and allow just one wallet per individual,”
Dr Mangudya said.
As they have been doing since June, retailers and other
service providers will be permitted to continue operating one-way merchant
wallets to allow the public to pay for goods and services using their phones
and mobile accounts, but as has been the case merchants cannot make payments
from their wallets and have to move the money to their bank accounts to use it.
“Agent wallets are no longer serving any legitimate purpose
and were now being used primarily for illegal foreign exchange transactions.
Agents’ mobile money wallets are therefore abolished, with immediate effect.
“Agents currently holding value in suspended and frozen
wallets shall be allowed to liquidate the funds to their bank accounts, upon
the Financial Intelligence Unit having satisfied itself of the legitimacy of
the source of funds,” Dr Manguyda said.
Agents lines were originally created at the beginning of
the mobile money platforms, when the purpose of the cash-in cash-out system was
to transfer money.
As the mobile platforms became ubiquitous and dominated the
transaction market, people stopped transferring cash and instead just sent
money electronically, which their
recipients spent electronically.
Agent lines then came to be used by cash barons and illegal
pavement currency dealers.
Dr Mangudya said that mobile payment operators have been
turning a blind eye and have even actively encouraged the abuse of bulk payment
wallets for illegal foreign currency trading transactions, thus earning
lucrative transaction fees in the process.
Going forward, bulk payment wallets will be approved by
regulatory authorities for limited use, primarily for low value transactions
and humanitarian funds disbursements to vulnerable members of the society.
Any other bulk payment transactions, such as payment of
salaries and wages, shall be processed through normal banking channels.
Reflecting recent developments on the foreign exchange
auction, blended annual inflation is forecast to gradually fall to 249 percent
by December 2020 and further to single digit levels by December 2021. This is
because inflation measures the difference in the cost of living between two
points a year apart.
The spell of almost level prices for the past two months is
pulling inflation down as this near zero rise is lower than the same two months
last year.
As prices move very slowly, the monthly jumps for the rest
of this year and for next year will be far less than the monthly jumps in the
second half of last year and the first half of this year, so the price rise
between two equivalent months will be progressively lower as the “made-prices”
bulge moves out of the calculations.
Zimbabwean inflation, with the imposition of fiscal
discipline by the new administration almost two years ago, has been almost
entirely cost-push rather than the past demand-pull, with the exchange rate
providing the push, or more precisely the expected exchange rate on the black
market.
With far more stable official rates, and 87 percent of
imports funded through auctions, that push is now very weak. Herald
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