Reserve Bank names companies abusing foreign exchange auction system

THE Reserve Bank of Zimbabwe has named 18 companies that have been abusing the foreign exchange auction system. 

The RBZ released a statement and said the companies that were found out by the Financial Intelligence unit will be fined.

The companies include National Foods (Pvt) Ltd, Georgia Petroleum (Pvt) Ltd, Tettola Investments (Pvt) Ltd, Africa Steel (Pvt) Ltd, Westville Investments (Pvt) Ltd (T/A Omni Africa), Flicknik Enterprises (Pvt) Ltd, Duo Valley Commodity Brokers, Faircclot Investments, GlenuLas Trading, Natural Stone Export Company, Nuvert Trading, Phirebrook Investments, Classic Energy, Clorex Energy, Explochem, Mutare Mart & Exchange, Souzcre Fuels and Kimya Investments.

According to SI 127 of 2021, businesses that access foreign currency on the RBZ Foreign Exchange Auction System (introduced last year) and then proceed to peg prices using parallel market rates may face a maximum fine of ZW$50,000. Any business that puts a premium on goods and services in local currency to induce consumers to pay using foreign currency will face a penalty of ZW$50,000.

The RBZ said that these companies shall be dealt with under SI 127.

“The Bank has a duty of care to ensure that the significant progress that the economy made since the introduction of the foreign exchange auction system in June 2020 continues on an unabated positive trajectory whilst at the same time protecting consumers and fostering compliance to engender fair play in the economy. It is against these noble objectives that SI 127 was put in place to provide for penalties against errant entities that were at the forefront of abusing the foreign exchange auction system to the detriment of the stability of the economy.

Accordingly, after investigations by the Financial Intelligence Unit and the Bank’s Exchange Control Division, the entities listed hereunder which were abusing the foreign exchange auction system shall be dealt with in accordance with SI 127,” read the statement by RBZ Governor Dr John Mangudya.https://googleads.g.doubleclick.net/pagead/ads?client=ca-pub-7429385817508822&output=html&h=170&slotname=7815614683&adk=3563050067&adf=2576995947&pi=t.ma~as.7815614683&w=680&fwrn=4&lmt=1623756592&rafmt=11&psa=1&format=680×170&url=https%3A%2F%2Fwww.chronicle.co.zw%2Freserve-bank-names-companies-abusing-foreign-exchange-auction-system%2F&flash=0&wgl=1&uach=WyJXaW5kb3dzIiwiMTAuMCIsIng4NiIsIiIsIjkxLjAuNDQ3Mi43NyIsW11d&dt=1623756591206&bpp=3&bdt=2213&idt=1008&shv=r20210607&cbv=%2Fr20190131&ptt=9&saldr=aa&abxe=1&cookie=ID%3D6454fcbfeafd2053-221b7970f1c80016%3AT%3D1623754396%3ART%3D1623754396%3AS%3DALNI_MbR2kytdjXtaFAz-iQS96VVNQchew&prev_fmts=680×170&correlator=7619874430666&frm=20&pv=1&ga_vid=2116564331.1600057562&ga_sid=1623756592&ga_hid=3559082&ga_fc=0&rplot=4&u_tz=120&u_his=1&u_java=0&u_h=768&u_w=1366&u_ah=728&u_aw=1366&u_cd=24&u_nplug=3&u_nmime=4&adx=145&ady=2178&biw=1349&bih=638&scr_x=0&scr_y=0&eid=31060956%2C31061406%2C31060839&oid=3&pvsid=4500761328993168&pem=310&eae=0&fc=896&brdim=0%2C0%2C0%2C0%2C1366%2C0%2C1366%2C728%2C1366%2C638&vis=1&rsz=%7C%7CoeEbr%7C&abl=CS&pfx=0&fu=128&bc=31&ifi=2&uci=a!2&btvi=2&fsb=1&xpc=g9dIAeL6Dx&p=https%3A//www.chronicle.co.zw&dtd=1038

He said the Bank will come heavily on those who abuse the foreign exchange auction system.

“In line with the recommendations from the business community on the need to continue to enhance stability in the economy, the Bank’s efforts to foster compliance in terms of SI 127 shall be limited to outliers that wantonly abuse the foreign exchange auction system, exchange rate manipulation and non-compliance with anti-money laundering rules and regulations. The Bank’s focus on these key areas, coupled with business’s reality check, self-discipline, self-monitoring and peer-review, sill sustain inflation and exchange rate stability that are necessary for the economy to continue to rebound,” said Dr Mangudya.

He said the RBZ appreciates that the business community in understanding the tenants of SI 127.

“The Reserve Bank of Zimbabwe has engaged a number of business associations and entities to discuss the modalities for compliance with Statutory Instrument 127 of 2021 (SI 127). The Bank would like to express its appreciation to the business community for the valuable feedback during the engagements which have culminated in business’s clearer understanding of the essence of SI 127,” said Dr Mangudya.

Under Statutory Instrument 127 of 2021, gazetted under Presidential Powers (Temporary Measures) (Financial Laws Amendment) Regulations, penalties are now imposed for issuing of local currency receipt for a foreign currency purchase, pricing goods and services above the ruling exchange rate (between 1USD = ZW$85 and 1USD = ZW$86), pricing of goods and services only in foreign currency and using the money obtained from the auctions for other purposes than what the supporting invoices on the bid stated.

Banks are now expected to do their job since they are liable for failure to verify information submitted by their clients.