The Zimbabwean government has blacklisted 19 companies for engaging in foreign exchange parallel market activities that fuel inflation.
Finance Minister Mthuli Ncube said in a statement Thursday that the Reserve Bank of Zimbabwe’s Financial Intelligence Unit (FIU) had carried out investigations and found out that certain pricing behaviors and trends in the supply chain to government agencies and ministries pointed to weaknesses in the procurement framework, and that these loopholes contributed to distorted pricing practices by the market and effectively fueled inflation in the economy.
“It has been observed that some contractors after passing through the value for money process and having received their payment from the government still tend to siphon their proceeds into the parallel market thereby causing domestic inflationary pressures,” Ncube said.
He said the FIU noted that upon receiving payment, the companies would engage in spontaneous illegal foreign currency transactions through buying foreign currency from individuals and entities, while some engaged in transactions unrelated to their line of business.
Some, he said, would purchase fast-moving consumer goods from various manufacturers and the goods would then be sold exclusively in foreign currency.
“In view of the above and in order to maintain sanity in the foreign currency market and to curb inflation, the government is left with no other option than to blacklist the mentioned companies,” Ncube said.
The Zimbabwean government has this year implemented various measures to instill discipline and curb speculative behavior, which has been blamed for currency depreciation and rising inflation.
One of the measures is the introduction of gold coins into the market in July this year by the Reserve Bank of Zimbabwe, to mop up excess liquidity and act as an alternative stable investment product for value preservation. Enditem