Chinamasa to investigate service stations that demand payment in US dollars

Q & A

MEASURES TO CURB THE PROLIFERATION OF THE BLACK MARKET

HON. MAHIYA asked the Minister of Finance and Economic Development to explain the measures in place to curb the proliferation of the black market which is likely to emerge as a result of the introduction of the Bond notes.

THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA:  My response Madam Speaker is that the black market for foreign exchange the world over is caused by the scarcity of foreign exchange, that is when the demand for foreign exchange is higher than supply.  Black market for foreign exchange in Zimbabwe, if it exists, is therefore not caused by bond notes.  Black market for foreign exchange is prevented by increasing the supply of foreign exchange which means increasing exports and any other receipt of forex such as diaspora remittances.

Madam Speaker, bond notes are trading at parity with the US$ as is evidenced by the parity prices in all major retail outlets. If the black market exists, then it means that those who are participating on the black market are doing so for nefarious purposes that include externalisation.

It is also imperative to note that the Reserve Bank’s strategy to use small denominations of $2 and $5 bond notes is designed to mitigate against black market practices.  I thank you.

HON. MUTSEYAMI:  Thank you Madam Speaker.  I am very grateful for the pronounced response from the Hon. Minister.

However, my supplementary question purely on the aspect of the black market rates happening with regards to the bond money; there is a situation which is happening as we speak now which is going towards the issue of black market.  If you manage to have time Minister, may you move out of the office and move around town on foot and not in your Mercedes Benz.  We have informal shops around town, especially the electrical shops and hardware, they have price tags for products in the shop in US$, bond money, Eco-cash transfer and swipe.  These are varied prices for the same product.  This is happening here in Harare in most informal shops.

HON. CHINAMASA:  I have taken note of that and it will be investigated and it is reflecting that someone owning that informal shop wants to externalise US$.  The problem that we encountered last year through the drying up of the foreign exchange market was caused by especially foreign businesses coming to mop up our US$ which is why we introduced the bond notes in order to stem and stop capital flight of the US$.

I want to say that in the long term, the measures that have been taken by the Reserve Bank will certainly dry up availability of that foreign exchange to those who want to practice black market activities.  I say so because and I pointed out this in this august House before – since May last year, we are moving away from an over-liberalised foreign exchange market to one which is managed.  What this means is that we know which players or companies export out of the country.

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