Zimbabwe's in trouble again.
Publication:
FCRO Subsection:
Thursday, 24 December, 2020 - 00:35
The news (Al Jazeera) that Zimbabwe's sortie into restoring its own currency is in crisis is extremely unwelcome.
Just as we saw in Russia in and about 1997 there is rampant inflation (now reaching 800%) and the local currency being eschewed in favour of US dollar bank notes.
Strict controls are now being imposed on so-called peer-to-peer payment systems.
Why does this matter?
First, it means that the government loses control of the economy: the US Dollar, in cash, is invisible until used for purchases.
Secondly, the US Dollar is highly convertible - and exportable: this increases the likelihood of unlawful transfers of wealth and therefore of, amongst other things, money laundering.
Third, the use of the dollar *might* give some relief for the poor by way of mitigation against the inflation in the cost of staples.
The current President, who replaced Mugabe three years ago, saw the restoration of the nation's currency as a vital stage in rebuilding the country. Now he blames a wide range of others for the unfolding calamity.
Funds and other asset transfers from Zimbabwe must be considered as of increased risk especially where there is no demonstrable commercial purpose.
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