Externalisation: Mnangagwa caught on the wrong side

Externalisation: Mnangagwa caught on the wrong side
Published: 20 March 2018 (989 Views)
Government should handle matters of alleged foreign currency externalisers case by case, as some firms on the list are actually battling to recoup money from foreign firms that are now raising varying reasons for failing to own up, lawyers, economists and industrial representatives have said.

This comes after Government released a list of companies and individuals who reportedly externalised foreign currency over a period dating years back.

The list revealed 284 externalised money through non-repatriation of export proceeds, 1 403 through payment of goods not received in Zimbabwe, while 157 did it through foreign banks in cash or under spurious transactions.

Speaking to The Herald yesterday, prominent lawyer Mr Jonathan Samukange, said many companies filled in the CD1 forms, but failed to acquit them.

"This alone does not mean they externalised the money," he said. "There are so many reasons for that. But for those that externalised the money, there are so many legal instruments, among them the Exchange Control Act, to deal with them. The Government can also take them to court depending on the answers they give.

"Some of these companies when they filled the CD1 forms they genuinely wanted to sell their goods and bring the money back home and after 90 days they did not. This means Government should investigate what happened.

"You will notice that some of the companies will actually need Government assistance to recoup their money. There are cases of foreign companies that are refusing to pay, saying you sold us substandard goods, come and collect them. I know of some companies that have come to me saying help us."

Confederation of Zimbabwe Industries (CZI) president Sifelani Jabangwe said the industrial body was inundated by calls from companies that sought explanation after discovering their names on the list.

"What we understand is if one sends money outside and does not want to return it that is externalisation," he said. "We have discovered cases of delays in acquittal. By lumping everyone in one basket we have camouflaged the real culprits.

"Some of the firms on the list had real issues. They exported and their buyers failed to pay and the majority of them are actually seeking assistance."

Mr Jabangwe said some of the companies were affected after banks they used such as Interfin were closed before their acquittal documents were processed, adding the list needed to be scrutinised.

"We should separate outstanding issues of trade and what we call externalisation," he said.

"There is no way over 1 000 companies can externalise money. Cases of some companies with figures around $20 000 need to be relooked at."

Externalisation is capital flight where money leaves financial markets through legal or illegal channels.

Money can be externalised legally through formal trade, where an industrialist or a mining company completes CD1 acquittal forms and is supposed to bring back the money after selling the products to foreign markets.

In most cases, that money has not been returned into the country because there is under-invoicing of the export receipts.

The money can also be externalised illegally through money laundering and transfer pricing.

Economic analyst Dr Farai Mugano said the biggest externalisers in Zimbabwe are not private individuals, but private companies.

He said through transfer pricing, money was externalised in three ways.

"The first one is when buying, say, machinery, the firm gets a higher invoice of, say, $3 million instead of $1 million that it presents to the bank," said Mr Mugano. "In Africa, we trade in over 10 000 products and some banks may not have the capacity to analyse all the transactions.

"The second one is when exporting, the company may get a lower invoice not reflecting the correct value of the goods. Lastly, especially under the previous dispensation, some individual politicians would also do it corruptly. The Central Bank would be asked to clear the transactions, with no questions being asked.

"The laws to curb abuse of facilities are there, but there was no political will to enforce them, resulting in politicians using force on the RBZ officials and the Governor's hands were tied."

Dr Mugano said the central bank might have lacked capacity to deal with externalisation through transfer systems.

"There are economists at the central bank and not industrial scientists to scrutinise the materials companies want to buy," he said.

"If a company brings an invoice to buy chemicals from China, there should be some scientists who advise if there are alternative sources where the country will get the materials at a lesser price.

"The Zimbabwe Revenue Authority has the same challenge. These institutions need specialised skills."

In the process of bringing back the money, there a number of bottlenecks that can be experienced.

Some of the people will claim they spent the money to clear debts or buy some materials, making it difficult for them to bring it back.

Analysts say some of the externalisers used the money to buy immovable properties and these at times take time to liquidate and send the money home.

"There is also a crop of arrogant people who will say they will not support the current Government and will never bring back the money," said Dr Mugano.

"To solve this problem, remedial measures are needed and Government needs to be practical every time."

Dr Mugano said there were massive benefits to be derived from the externalised money, chief among them being the improvement in the liquidity situation.

"This money is as good as capital injection into the economy and $1,8 billion will improve the performance of the economy 9,43 times," he said.

"The money is hard currency. When it is wired into the individual's bank account, the money physically comes just like the movement of money through Western Union."

- the herald

 0

You May Like These Videos

Comments

There are no comments.

Latest stories

France beat Croatia to win SWC

by Sports24 | 15 July 2018 | 115 Views

Why army warning is omnious

by Siphosami Malunga | 15 July 2018 | 265 Views

2 separate funerals for MUgabe's prophet

by Staff reporter | 15 July 2018 | 263 Views

Tribal tensions intensifies in Matebeleland

by Staff reporter | 15 July 2018 | 175 Views

Chicken Inn beats Nichrut

by Staff Reporter | 15 July 2018 | 98 Views

Makokoba man drinks himself to death

by Staff Reporter | 15 July 2018 | 138 Views

ZEC dismisses Chigumba resignation report

by Stephen Jakes | 15 July 2018 | 190 Views

Mnangagwa accepts that women should not lead!

by Tendai Ruben Mbofana | 15 July 2018 | 185 Views

674 graduate at Masvingo Poly

by Staff Reporter | 15 July 2018 | 96 Views

Obert Mpofu, Mudenda get Mnangagwa praise

by Staff reporter | 15 July 2018 | 120 Views

Does Njelele hold the keys?

by Staff rpeorter | 15 July 2018 | 109 Views

ZEC commissioner receives death threats

by Staff reporter | 15 July 2018 | 126 Views

$400m for roads rehabilitation

by Staff reporter | 15 July 2018 | 96 Views

Glamour has left Dynamos

by Staff reporter | 15 July 2018 | 116 Views

'Be principled' says Khaya-Moyo

by Staff reporter | 15 July 2018 | 64 Views

Jonathan Moyo's STEM re-launched

by Staff reporter | 15 July 2018 | 116 Views

Gurira to break bank with blockbuster Hollywood roles

by Staff reporter | 15 July 2018 | 105 Views

Chamisa wants SADC, AU to run elections

by Staff reporter | 15 July 2018 | 96 Views

Chiwenga promises modern apartments with swimming pools for Mbare

by Staff reporter | 15 July 2018 | 97 Views

Postal votes scam and the forgotten postman

by Tawanda Majoni | 15 July 2018 | 103 Views

Chamisa warns Mnangagwa

by Staff reporter | 15 July 2018 | 108 Views

Zanu-PF supporters in fierce clashes

by Staff reporter | 15 July 2018 | 120 Views

Mnangagwa had never seen such a huge crowd

by Staff reporter | 15 July 2018 | 130 Views

Chigumba hits back at critics

by Staff reporter | 15 July 2018 | 108 Views

Strive Masiyiwa bailed Mugabe's govt out

by Staff reporter | 15 July 2018 | 118 Views

Trust, not arrogance, will deliver a good election

by Zifiso Masiye | 15 July 2018 | 81 Views

Fears of military interference persist as Zanu-PF denies backing

by Nkosana Dlamini | 15 July 2018 | 99 Views

Winky D 'endorses' Chamisa

by Staff reporter | 15 July 2018 | 108 Views

AfDB signs agreements with Zimbabwe firms

by Staff reporter | 15 July 2018 | 58 Views

Mohadi brother buried

by Staff reporter | 15 July 2018 | 64 Views

Postpone Zimbabwe's elections and address serious issues of concern

by Zimbabwe Election Watch | 15 July 2018 | 78 Views

Chamisa vows to rename Zimbabwe

by Staff reporter | 15 July 2018 | 55 Views

Mnangagwa has already won elections

by Staff reporter | 15 July 2018 | 52 Views

92,000 'ghost voters' still on new roll

by Staff reporter | 15 July 2018 | 41 Views

Mugabe's tactics persist in first election without him

by WashingtonPost.com | 15 July 2018 | 85 Views

Zanu-PF taken to court

by Staff reporter | 15 July 2018 | 43 Views