Police & RBZ teams using new monetary policy to raid businesses and individuals

By Tererai Karimakwenda

2 August 2006

The new monetary policy put in place by the Reserve Bank this week has continued to bring chaos and confusion around the country as the police, aided by RBZ teams, clamped down on businesses and individuals. RBZ Governor Gideon Gono had announced the new policy saying it was meant to ease money transactions by canceling 3 zeros on the currency, but the campaign is proving to be much more than an effort to help Zimbabweans deal with numbers.

What they are dealing with are roadblocks at which the police have been instructed to question and arrest all people carrying too much cash. There were random raids on wholesalers, at some supermarkets in Harare and at border posts. And long queues continued at the banks where Zimbabweans are rushing to change their money to the new notes before the 3-week deadline arrives. Cash machines have been shut down. Reports say three people were arrested at Beitbridge Border Post on Tuesday while trying to repatriate billions of dollars they were keeping in South Africa.

Mike Mutasa in Chinhoyi told us many people were keeping their cash in potato sacks, suitcases, safes and filing cabinets. With such inflation anyone who had any money, had a lot of it. But now Zimbabweans may lose billions in cash if they cannot account for it. Critics say this is ironic because the government itself does not account for anything. The new policy requires individuals converting sums in excess of Z$100 million to present receipts or other transactional documentation (US$400 at the new official exchange rate of $250,000 per U.S. dollar). Companies must account for amounts over Z$5 billion (US$20,000).

According to the state controlled Herald newspaper the Reserve Bank has barred all retail outlets from selling goods worth more than Z$100 million in cash to customers using old and new bearer cheques. These transactions must now be done through bank transfers and cheques. The Herald also reported that the police and a crack RBZ team had unearthed irregular transactions and billions of dollars in cash stashed at companies. Some observers say they fear this campaign is being used to target certain businesses and individuals. They stress that the government itself is the biggest entity doing deals on the black market in its desperate quest for foreign currency.

One such targeted business was Mohamed Mussa Wholesalers in Harare where The Herald said billions were discovered on Monday afternoon. The paper said the funds were locked away in safes which, not surprisingly, Mr Mussa initially resisted opening but eventually did so after negotiations. It is of course not illegal to keep money in safes in Zimbabwe but none the less authorities confiscated the cash discovered at the wholesaler. An RBZ team is now stationed there.

Muchadeyi Masunda an attorney with the Commercial Arbitration Centre who also directs a number of companies in Zimbabwe said his immediate observation is that the aftermath of Gono’s announcement has been chaotic. Masunda explained that many people are battling to come to terms with the reality on the ground and the general consensus is that they are being taken for one gigantic ride by the government.

Masunda said on the surface Gono’s aim is to control the flow of money supply which is out of hand. But he would not rule out the possibility that the RBZ could be planning on introducing a whole new currency before the end of 2006. Masunda believes this plan cannot come to fruition until Zimbabwe gets a serious infusion of foreign currency. This is how countries like Mozambique which also dropped zeros from their currency recently managed to pull it off.

More importantly, Masunda said the real problem in Zimbabwe has more to do with the breakdown of the rule of law. He said: “There needs to be a restoration of the respect for human rights and respect for property rights.” Masunda believes all the reports of road blocks, border searches, raids and people with large sums of money have come to be as the result of skewered policies. He said the government needs to stop these knee-jerk reactions and short term measures to what is essentially a political problem.