Categories: Stories

Mobile phone bosses arrested for externalisation.

At least eight business persons affiliated with mobile phone operators Econet and Telecel were arrested in one week in November allegedly for externalising foreign currency.

Observers said the move was aimed at frightening people and firms from dealing on the parallel market.

According to a cable released one senior banker commented that cracking down on businessmen and corruption was part of the government’s demagogic pandering to the masses to gain popularity in advance of the March 2005 elections.

“The consensus of Zimbabwean businessmen from various sectors is that this tactic is resonating with large numbers of Zimbabweans,” the cable said. “At the same time, the GOZ’s selective crackdown against ‘externalizers’, which includes almost all businessmen, keeps the moneyed elite off balance and beholden to Mugabe and his favoured inner circle.”

 

Full cable:


Viewing cable 04HARARE1862, GOZ Steps Up Arrests of Forex Externalizers

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs

Reference ID

Created

Released

Classification

Origin

04HARARE1862

2004-11-12 08:35

2011-08-30 01:44

UNCLASSIFIED//FOR OFFICIAL USE ONLY

Embassy Harare

This record is a partial extract of the original cable. The full text of the original cable is not available.

 

120835Z Nov 04

UNCLAS HARARE 001862

 

SIPDIS

 

STATE FOR AF/S

USDOC FOR ROBERT TELCHIN

TREASURY FOR OREN WYCHE-SHAW

PASS USTR FLORIZELLE LISER

STATE PASS USAID FOR MARJORIE COPSON

 

SENSITIVE

 

E. O. 12958: N/A

TAGS: ECON ETRD EINV PGOV ZI

SUBJECT: GOZ Steps Up Arrests of Forex Externalizers

 

 

Sensitive but unclassified. Not for Internet posting.

 

1. (SBU) Summary: The GOZ has again been arresting

prominent Zimbabwean businesspersons for sending foreign

exchange offshore. The GOZ appears to believe that these

high profile arrests will deter others from exchanging

forex on the ever-resilient parallel market. End

summary.

 

2. (SBU) Over the past week, the GOZ has arrested at

least eight leading businesspersons affiliated with

mobile phone operators Econet and Telecel. Among those

detained:

 

– James Makamba, who has already spent most of the year

behind bars on similar charges. The opposition press has

asserted that Makamba’s alleged extramarital liaison with

First Lady Grace Mugabe is the underlying reason for his

arrest.

 

– Econet CEO Douglas Mboweni, an Embassy contact.

 

– PG Industries COO Nyasha Zhou, who serves on the Econet

Board of Director but does not oversee the firm’s day-to-

day operations. Zhou participated in a U.S. Embassy-

sponsored seminar about hyperinflationary coping tactics

for businesses last year, and serves as Chairman of the

Board of Zambuko Trust, a micro-finance institution and

longstanding USAID partner.

 

– Jane Mutasa, one of Zimbabwe’s top businesswomen and a

member of Telecel’s board of directors.

 

These new inmates join Finance Minister Chris Kuruneri in

detention. The GOZ has held Kuruneri since March and

alleges that he externalized funds to build a beachfront

Cape Town mansion. This week, a local judge denied

Kuruneri bail for the third time.

 

3. (SBU) Reserve Bank Deputy Governor Charity Dhliwayo,

who oversees exchange control, told us on Monday that the

GOZ still considers the parallel market trading a threat

to the economy and will pursue anyone who trades or sends

abroad forex through these informal channels. In his

October 28 policy statement, Reserve Bank Governor Gideon

Gono said he seeks to “ensure that regulatory provisions

around parallel market dealing are tightened further.”

 

Comment

——-

4. (SBU) The GOZ’s approach to monetary policy and

disinflation is largely limited to exchange rate

management. To frighten people and firms from dealing on

the parallel market, the Government has sporadically

arrested high-profile businesspersons. One senior banker

commented that cracking down on businessmen and

corruption is part of the GOZ’s demagogic pandering to

the masses to gain popularity in advance of the March

elections. The consensus of Zimbabwean businessmen from

various sectors is that this tactic is resonating with

large numbers of Zimbabweans. At the same time, the

GOZ’s selective crackdown against “externalizers,” which

includes almost all businessmen, keeps the moneyed elite

off balance and beholden to Mugabe and his favored inner

circle. In terms of economic impact, the GOZ’s zealous

enforcement has dampened but not eliminated parallel

trading. Local contacts tell us this week’s buy/sell

midpoint for U.S. dollars has been Z$8,700, a forty

percent premium to the official Z$6,200 exchange rate.

 

Weisenfeld

(585 VIEWS)

Charles Rukuni

The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

Recent Posts

Will Mnangagwa go against the trend in the region?

Plans by the ruling Zimbabwe African National Union-Patriotic Front to push President Emmerson Mnangagwa to…

October 22, 2024

The Zimbabwe government and not saboteurs sabotaging ZiG

The Zimbabwe government’s insatiable demand for money to satisfy its own needs, which has exceeded…

October 20, 2024

The Zimbabwe Gold will regain its value if the government does this…

Economist Eddie Cross says the Zimbabwe Gold (ZiG) will regain its value if the government…

October 16, 2024

Is Harare the least democratic province in Zimbabwe?

Zimbabwe’s capital, Harare, which is a metropolitan province, is the least democratic province in the…

October 11, 2024

Zimbabweans against extension of presidential term in office

Nearly 80% of Zimbabweans are against the extension of the president’s term in office, according…

October 11, 2024

Zimbabwe government biggest loser when there is a discrepancy in the exchange rate

The government is the biggest loser when there is a discrepancy between the official exchange…

October 10, 2024