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 Samu- kange, 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.”