Zimbabwe stems illicit outflows – cbank chief

Zimbabwe stems illicit outflows – cbank chief

HARARE, May 5 (The Source) – Zimbabwe has lost $50 million through illicit outflows in the last three months, the central bank governor John Mangudya said on Thursday, but said tighter controls have stemmed the tide that saw the country losing $1.8 billion in 2015.

The central bank introduced a series of measures at the beginning of the year, managing to reduce illicit outflows from an average $150 million per month in 2015 to about $17 million in the first quarter of 2016.

The southern African nation $1,8 billion funneled out of the country in 2015 was mostly in the form of export sale proceeds and inflated management fees as well as payments for technical and professional services, according to the bank.

The outflows have been cited as one of the key reasons for the cash shortages that have gripped the country since the turn of the year.

Mangudya, however, told The Source that the central bank’s February interventions — which limited daily withdrawals and tightened foreign payment mechanisms — aimed at plucking the leakages have been positive.

“Because of measures we put in place in February, the amount that has been lost has gone down compared to last year, and we are very happy,” he said.

Mangudya said while the illicit outflows were going down, there were still pockets of resistance as people try to shift money out of the country using unofficial means.

According to the RBZ’s February monetary policy statement, at least $684 million was externalized by individuals in 2015 for various purposes that include donations, investments and account transfers, while firms externalized $1, 2 billion.

As part of the RBZ’s new measures, service fees, management fees, technical fees are no longer exceeding an aggregate of three of revenue and shall require central bank approval. Both individual and corporate offshore investments exceeding $10,000 are also now required to be declared to authorities for approval.
On Wednesday, the RBZ announced further measures meant to ease persistent cash shortages, including the imposition of a $1,000 limit on all cash withdrawals and exports as well as plans to introduce local’ bond notes’ to circulate alongside foreign currencies adopted in 2009 to replace the inflation-ravaged Zimbabwean dollar.

According to estimates, Africa is losing $50 billion annually through illicit outflows.