×

AMH is an independent media house free from political ties or outside influence. We have four newspapers: The Zimbabwe Independent, a business weekly published every Friday, The Standard, a weekly published every Sunday, and Southern and NewsDay, our daily newspapers. Each has an online edition.

  • Marketing
  • Digital Marketing Manager: tmutambara@alphamedia.co.zw
  • Tel: (04) 771722/3
  • Online Advertising
  • Digital@alphamedia.co.zw
  • Web Development
  • jmanyenyere@alphamedia.co.zw

‘Rampant financial vices choking Zim’

RBZ

RAMPANT illicit financial flows (IFFs) choking Zimbabwe’s fragile economy are done through misinvoicing, tax evasion and abuse of public office, according to a research by an international think-tank.

IFFs refer to the movement of money earned and transferred illegally across jurisdictions. It also relates to the illicit movement of funds within a single jurisdiction.

With the global economy losing an estimated US$2,6 trillion annually due to IFFs related crime as indicated by the World Economic Forum (WEF), Zimbabwe’s haemorrhaging economy is prejudiced by a staggering US$1 billion every year as a result of graft.

The research by Pact, an international not-for-profit organisation headquartered in the United States, shows that five key economic sectors, namely mining, health, transport, agriculture and energy suffer massive financial leakages, thereby stagnating Zimbabwe’s efforts to resuscitate its floundering economy.

Titled Infamous by Design, the research by Pact, whose findings were published in September, reveals the “drivers that enable — or in some cases incentivise — Zimbabweans to participate in illicit finance across” the aforementioned economic sectors.

“The ubiquity of illicit finance in Zimbabwe reflects both institutional weakness and the reality that the current political order relies on the movement of dirty money to bind and stabilise relationships between power-holders,” the report reads, in part.

Focusing on the mining sector, Pact observed that the widespread practice of trade misinvoicing was largely the factor fuelling financial leakages. The same vice is also common in the transport, health and energy sectors.

Zimbabwe is mineral rich and the mining sector is an important driver of growth, generating 60% of the country’s export earnings in 2021.

“Trade misinvoicing is a notoriously difficult problem to address because it too often eludes regulators, who have limited capacity and knowledge to cut through the red tape of the accounting procedures used to obscure the transactions and who are unfamiliar with the market price of minerals,” Pact said.

A perceived compromised judiciary system, military, central bank and poorly run state enterprises as stated by Pact, are also identified as barriers in efforts to curtail graft.

“The court system is not fully independent and is deeply affected by clientelism and rent-seeking behaviour. Consequently, litigation efforts may be stymied by officials seeking to preserve the status quo,” Pact wrote in its report. “Individuals within the Reserve Bank of Zimbabwe (RBZ) have wide discretion over the monetary policy and capital controls that have distorted the economy and incentivised stakeholders to evade the rules. One Monetary Policy Committee member noted that the RBZ governor’s ‘ability to sweep what foreign currency (is) available into the accounts of the central bank and then allocate it to economic and political players (makes) him one of the most powerful figures in the country.

“The Office of the Auditor-General (OAG) produced reports that are an indispensable data source for anti-corruption champions, with parliamentarians, CSOs, and citizens referencing the information contained in these reports as critical tools in the fight against corruption. Identifying how to further capacitate the OAG to continue this work and share this information with stakeholders who can amplify it, such as investigative journalists or parliamentary portfolio committees, could spur even more action.

“Parliament, through its authority to legislate, and Parliamentary Portfolio Committees, which can convene public hearings requesting anyone (except the President) to appear before them, has the potential to catalyse significant change.”

Proposing a raft of recommendations, Pact indicated that Zimbabwe could plug financial leakages by bolstering its procurement regulations and compelling public office bearers to disclose their wealth.

Related Topics