Doing business in the Southern Africa country of Zimbabwe just got tougher for importers in the country. In its latest policy change, Zimbabwean importers will now be forced to declare sources of their foreign currency, and those who fail to prove they obtained the money from banks will made to forfeit their goods to the state.
“In the event that you are not able to declare the official source of foreign currency, you forfeit whatever you have to the state. So, this will deal with black market operations,” Deputy finance minister Clemence Chiduwa said.
Here Is All You Need To Know
- Shortages of foreign currency, fuel and electricity are characterising Zimbabwe’s worst economic crisis in a decade, and have dashed hopes the economy might recover under president Emmerson Mnangagwa, who took over from Robert Mugabe in 2017.
- According to Chiduwa, demand for foreign exchange was still high, even after the government ended a decade of dollarisation in June in a major step towards fully restoring its domestic currency.
- This practice by Zimbabwean importers of indexing prices to the US dollar, said Chiduwa, was driving up inflation, which economists say reached 440% in October.
- Foreign currency shortages have also been worsened by Zimbabwe’s failure to attract foreign investment and loans.
Under The Burden Of Loan
- Zimbabwe currently owes foreign lenders more than US$9 billion, most of it arrears, and does not qualify for new funding.
- Western nations channel financial help through local charities, but China has emerged as a major direct donor and investor by funding infrastructure like airports, power and water.
- Just recently, however, China accused Zimbabwe of understating its financial help, after budget figures released last week showed that Beijing ranked poorly on the list of Harare’s foreign donors.
- Finance minister Mthuli Ncube said China provided US$3.6 million between January and September this year, but the Chinese embassy in Harare said it had provided US$136.8 million.
- Reuters reports that in a country where authorities have a history of quietly racking up foreign debt without the approval of parliament, the funding discrepancy immediately raised questions from government critics as to whether it was hiding figures, or it had just made an accounting error.
- Last Friday, Chinese ambassador to Zimbabwe Guo Shaochun said it was an accounting issue by Zimbabwe, adding that Harare accepted that the figures released by China were correct.
- Ncube said the issue has been resolved.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world