Zimbabwe: Zim Loses Billions to Illicit Financial Flows

Government should complement monetary policy changes with an anti-corruption strategy to curb illicit financial flows (IFFs) as the country is losing billions annually, businessdigest has learnt.

IFFs are seen to spiralling this year owing to current payment modalities for small-scale miners.

IFFs are illegal movements of money or capital from one country to another with Global Financial Integrity (GFI) classifying it as a movement when funds are illegally earned, transferred, or utilised across an international border.

Transparency International Zimbabwe (TIZ) blamed the flows on the absence of a solid plan that synchronises reforms, saying Zimbabwe needed a national anti-corruption strategy to co-ordinate various governance reforms aimed at curbing corruption and illicit financial flows.

A list of people and companies that moved funds offshore illegally published last year indicated that Zimbabwe had lost close to US$1 billion while the Reserve Bank of Zimbabwe (RBZ) 2016 monetary policy statement estimated that a US$684 million was remitted outside Zimbabwe by individuals under the auspices of free funds.

TIZ executive director Muchaneta Mundopa told businessdigest that it is not enough to introduce a series of reforms and not have a framework to coordinate implementing institutions as well as a framework to monitor the implementation of such reforms.

"The problem of IFFs is a big problem in Zimbabwe. According to the Global Financial Integrity, Zimbabwe could have lost a cumulative US$2,8 billion (representing an annual average loss of US$276 million) during the period ranging from 2004 to 2013.

"Another study by Afrodad on IFFs in the sectors of Mining, Wildlife and Fisheries estimated that between the period 2009-2013, Zimbabwe lost US$2,83 billion, through illicit flows, translating to an annual average of US$570,75 million. IFFs is, therefore, a big problem in Zimbabwe," she said.

Mundopa said the strategy should enlists key national anti-corruption priorities supported with a robust action plan, a monitoring framework and more importantly a framework to communicate progress and challenges to citizens. She added that the changes in the monetary policy that continue to affect payment modalities to artisinal and small-scale miners producing gold is likely to spiral IFFs in Zimbabwe.

"Gold output continues to decline in a move that may indicate that gold producers are selling their gold on the black market. As of April 2019, gold deliveries to Fidelity Printers is said to have plunged by 17% and this is blamed on the changing payment modalities to small scale gold producers," she said.

Analysts argue that the RBZ's Financial Intelligence Unit must be in full force to ensure compliance by DNFBPs, (banks and designated non-financial businesses and professions), through invocation of administrative penalties prescribed under the Money Laundering and Proceeds of Crime Act.

Lost revenue through IFFs has far-reaching consequences on the fulfilment of social and economic rights as it hinders government's ability to fund critical economic areas. -- Staff Writer.

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