Finance and Economic Development Minister, Mthuli Ncube has castigated the country’s legal and institutional framework relating to illegal trading of foreign currency as ineffective in fighting rampant parallel market activities.
Since the reintroduction of the Zimbabwean dollar, monetary authorities have been grappling to contain the exchange rate movements which are being fueled by illicit activities on the parallel market.
In his address to the press yesterday, the Minister however indicated that a review of some of the laws governing the foreign exchange activities and financial fraud is imminent.
“Our laws and enforcement regime are not as effective as they should be when it comes to crimes relating to foreign exchange and financial fraud. The current legal and institutional framework relating to curbing of trading on the parallel market is quite inadequate,”
“Government will be reviewing all the laws and institutional framework in order to bring them in line with international best practices and more importantly, monitor the effectiveness of institutions charged with implementing the laws. The sanctions framework for illegal foreign exchange trading, will be enhanced to provide for a range of effective proportionate and dissuasive sanctions, including more stringent criminal, civil and administrative penalties,” he said.
This comes amid mounting pressure for authorities to act on curbing the bourgeoning parallel market for foreign currency trading.
Recently, a legal think-tank, Veritas also pointed out the legal shortcomings of the Statutory Instrument 142/ 19 which do not criminalizing exchange of foreign currency outside the formal banking channels.
“There is no provision in SI 142 of 2019 stating that the use of a foreign currency rather than Zimbabwe dollars is a criminal offence,”
“There could not be any such provision because sections 44A and 64 of the Reserve Bank of Zimbabwe, under which the SI was made, do not allow the Finance minister to create criminal offences — or, to put it more precisely, the sections do not provide expressly for criminal offences and, in the absence of such a provision, the minister cannot create them,” Veritas said.
Zimbabwe is going through the worst financial crisis since 2008 with the local currency in rapid free-fall since its reintroduction in 2019.
The Zimbabwean dollar crumbled nearly 20 percent this week alone.