THE ZIMBABWE ECONOMIC SITUATION – CROSS BORDER BUSINESS OPERATIONS

A Brief Analysis Of The Current Economic Situation In Zimbabwe vis a vis The Issue Of Currency Externalization and Cross Border Smuggling.

By Namakando Nalikando Sinyama, B.Sc Forestry,BAHRM

Chapter 1


JOINT OPERATIONS WITH ZIMBABWE AUTHORITIES TO COMBAT THE SMUGGLING SCOURGE

The possibility of Joint operations between ZIMRA and ZRA is one area where the two tax administrative bodies in the two countries can get involved so as to foster bilateral cooperation. The effects of smuggling on any growing economy are all too familiar hence the need to find lasting solutions or ways of reducing and managing the problem through collaborative efforts. This will call for political will from both countries in providing the needed resources to ZIMRA and ZRA to support them in their drive to crack down on the vice of smuggling. The modus operandi of effecting this partnership has to be devised in order to iron out any possible huddles from the outset.

There have been times when day-trippers and other cross border traders have been released or cleared when the borders on the other side has been closed. This has been identified as a possible primer for smuggling. The authorities should endeavor to monitor the levels of human and vehicular traffic pile-up in the area stretching from the last exit gate on the Zambian side including the area designated as No Man’s Land up to the ZIMRA offices, Zimbabwe. These people are more often than not the ones that end up using the bush paths and other routes to bring in their goods. This happens because by the time they are cleared, the border on the Zambian side would have been closed at 22:00 Hours and vice versa. The jagged frontier between Zambia and Zimbabwe does seem to confer a natural inhibiting geographical
feature that offers some degree of hindrance against smuggling. The smugglers on the other hand have exhibited tenacity and determination by risking both life and limb to scale these dangerous cliff faces in order to eke out a living. As a result, border control mechanisms should be bolstered by more deliberate and calculated measures by the two governments to bring into effect policy that should see them working together as a united front against a common problem.

The problem of smuggling is accentuated when high value commercial consignments are involved. These can be addressed by further strengthening the VID department in Zimbabwe and the ZRA Customs Services at the border entrusted with conducting physical inspections of these goods. These sections are the first line of defense and therefore should be empowered with the necessary financial resources and equipment to carry out their work more effectively.

The hotline connecting the two authorities is a useful tool that should be used and relied upon more. Currently due to outstanding bills the Hotline has since been disconnected which unhealthy situation has further hampered the smooth joint operations of the two authorities. It would greatly help if the unpaid bills can be reconciled and the bill and reconnection charges if any can be shared.

A key area needing enhanced cooperation is that of information sharing. This is cardinal if the efforts of working together are to bear any fruit. Where there are any interceptions during any preventive patrols, information relating to;

I. Owner of the goods
II. Description of the goods
III. Quantity of goods
IV. Value for duty purposes
V. Tariff item number
VI. Transporter
VII. Agent
VIII. Time/date

Should be made available to the other counterparts where possible.
All this is crucial and invaluable intelligence information that would in turn feed into the Risk Management And Profiling schemes of the respective border Stations.

An area of great concern over the years has been the trend where a number of Zambian nationals have been arrested on the Zimbabwean side for allegedly flouting that country’s tax regulations. The interpretation of which becomes smuggling and are consequently committed to the Zimbabwean judicial system. These people have sometimes been held for weeks before Zambian authorities learn of their fate and their relatives probably assume it’s a case of a protracted business trip! Inasmuch as we would never meddle or interfere with a sovereign state’s legal requirements in their tax administration regime, however in the spirit of good neighborliness, it would be appreciated if the Ministry Of Home Affairs or the embassies of the sister country are promptly informed of such happenings so that these people’s relatives can be communicated to as well. This type of international cooperation would be very welcome when properly managed and it is indeed well within the realms of feasibility.

Chapter 2

THE EXTERNALISATION OF ZIMBABWEAN CURRENCY

The monetary controls introduced to address the problem of currency externalization should be instituted with a view to advantaging both countries in terms of trade facilitation. They should in no way prove injurious to the economic well being of any party concerned. Section 41A of CAP 322 of the laws of Zambia requires that any foreign currency imported or exported through its borders be declared with any excess undeclared currencies being liable for seizure by the customs services border control officers. In order to effectively enforce these requirements, the search techniques of having to thoroughly search the entire luggage or rub down all the individuals crossing the borders may, for all intent and purposes, be impractical due to low staffing levels and the cumbersome nature of the technique. It has been observed that in the same way that merchandise finds its way on the streets of the two countries through smuggling, currency can also be taken out in the same way.

This is more the reason we should work out a mechanism of jointly policing our common border in combined patrols when needed resources are made available .The other wings of government stationed at the borders like Immigration departments would also be called upon to assist in monitoring the currency dealings across borders as they go about enforcing immigration requirements. Information flow in this exercise is very crucial. Therefore, ZIMRA should communicate their policy statements on monetary control matters and how they would want ZRA to help enforce their requirements on the other side of the border.

The problem of currency externalization on the other hand should be understood in context. We should for instance establish what scale of Zimbabwe currency out-fluxes is considered externalization. If what is being addressed as externalization is the existence of black market currency dealers, then the situation may be very difficult to address for a number of reasons. All relatively strong economies world over have managed to exist with a certain degree of black market currency dealing activity without endangering the overall national economies of those countries. However, when this occurs in weaker economies at an uncontrollable levels it has the potential of crippling the economic fabric of those nations. The bureau de change offices in these countries do have a big role to play in this matter, as they are more in touch with individual currency traders. The commercial banks on the other hand can come in and perform their role, all this should occur with the central bank arduously performing its regulatory role of these activities.

The situation where the citizens find themselves in possession of excess local currency with which they cannot buy their essential commodity needs is a sure recipe for disaster. It is ultimately this excess currency that is off loaded on the black market in the country and across the borders where it is perceived they would be able to get the required goods with slightly less currency of those countries. The individual revenue administration bodies of these countries should more vigorously confront this problem on their own soil as it may be much easier to limit how much of their local currency can leave the country.

The truth of the matter however is that the current levels of black market currency dealings by the money changers at the border points and at times in the central business district is not what can constitute worrisome currency externalization unless it went on unabated. When however individuals acquire huge sums of money through doubtful means and then start opening accounts across the border and buying properties there, then this becomes a very difficult problem of money laundering for which there government bodies in individual countries are entrusted with fighting this particular vice. As dictated by The Palermo Convention, a comprehensive domestic regulatory and supervisory regime for bank and non-bank financial institutions and where appropriate, other bodies particularly susceptible to money laundering can within its competence, in order to deter and detect all forms of money laundering.

We are also faced with a situation where there is a high level of interaction across the borders in the form of cross border trade by day-trippers who need currency of the country they are entering. The peculiar situation where both countries do not have registered bureau de change establishments at their borders to try and stump out any illegal currency dealing is well known. This situation does to some extent create an enabling environment for unauthorized money transactions, as people find it convenient to change their money at the border.

There could be instances where Zimbabweans living abroad would be provided with external accounts into which to make deposits in hard currency. The Zimbabweans would also provide accounts in Zimbabwe into which the local equivalent should be paid at the parallel rate. This elaborate scheme can be a source of FOREX externalization that the authorities can work hard to address. This does represent a potential method of currency conveyance through borders. The regulatory requirements of currency declarations are scarcely adequate in
addressing this issue therefore it will continue to contribute a sizeable number of problem areas.

Namakando Nalikando Sinyama
Barotse Patriot
Barotseland, Central Africa
“I tell you a truth, liberty is the best of all things, my son, never live under a slavish bond.” – Sir William Wallace’s Uncle