The Sunday News
Vusumuzi Dube, Senior Reporter
ZIMBABWE is losing thousands of rand and United States dollars to illegal money transfer agencies that collect money and ship it to neighbouring South Africa, with Reserve Bank of Zimbabwe officials noting there is a need to tighten security within the country’s borders.
The trend is known as the Hawala system and the United Nations office on crime and drugs noted that it has previously been flagged by Interpol, as one of the most used illegal means of transferring funds outside the normal banking system and is one of the growing trends of illicit financial flows.
A Sunday News investigation has revealed this system is gaining momentum as Zimbabweans wishing to send money to their friends and relatives in South Africa approach unregistered money transfer agencies with hard cash to be collected from their makeshift offices in Hilbrow, Johannesburg. The agencies charge 10 percent of whatever amount one wishes to send as administration costs.
According to Zimbabwe’s Exchange Control Regulations all money transfer agencies must be registered with the RBZ as an authorised dealer but with limited authority. Sunday News went to four agencies in Bulawayo where operators saw nothing amiss about their service.
“We just act as middlemen; our service is instant and very reliable. Ours is all about ensuring that people are able to send money to their loved ones in South Africa. I tell you that so reliable are we that in a day people can send over 100 000 rand and there is no time that we fail to deliver the money,” said a woman manning one of the agencies called koStella.
Another illegal agency operating within a salon in town has even tried to build a semblance of security with the operator serving clients from a gated enclosure. Questioned on their operations, the agent who identified himself as Mr Moyo said they saw nothing illegal as people voluntarily came to seek their service.
“We don’t force anyone to give us their money at all. What is illegal about someone giving us their money which we in turn return to their relatives and friends in South Africa? This has been happening for too long with people previously sending their money through long distance buses, what we have done is simply improve the service, to make it instant,” he said.
On means they used to ship the foreign currency raised to South Africa, he claimed they had a network of cross border transporters that they worked with.
RBZ deputy director in the financial intelligence unit, Mr Oliver Chiperesa said these illegal money transfer agencies were costing the nation thousands in potential revenue as the foreign currency they collected was not going back to the fiscus.
He said although they were yet to quantify how much was being lost through this system, this was one form of money laundering which they were working to tackle and ensure that people used the legal channels to transfer money.
“When you calculate the money that is being collected and then shipped by these agencies you will see that the country is losing thousands daily, money which is normally meant to go through the normal legal channels. We have clear legislation on how money transfer agencies are meant to operate therefore will keep on working with our law enforcement officers to see to it that these illegal agencies are brought to book,” said Mr Chiperesa.
National police spokesperson Assistant Commissioner Paul Nyathi acknowledged that these agencies had been operating under the radar but they had since gathered the necessary intelligence and would be soon descending on them as their activities were bleeding the nation.
“Our job as the police is to ensure that anyone who is breaking the country’s laws is brought to book,” said Asst Comm Nyathi.
Deputy Minister of Finance and Economic Development Clemence Chiduwa likened the agencies to illegal foreign currency changers that were freely operating in the country noting that there was a need for people to use legal channels instead of fuelling the black market which was negatively affecting the country’s economy.
Sunday News also managed to interview some cross-border transporters at the Beitbridge Border Post who revealed that transporting money into the neighbouring country was not a simple task and most cases, due to the risks involved they charged 10 percent of the figure they were transporting.
“Yes, it’s risky but we now have the mechanisms and tricks we use to transport the money, all you have to do is pay officials to avoid them searching your bus and, in most cases, it is the passengers who contribute between 10 and 20 rand each for this.
“The highest figure I personally have managed to ship through is 200 000 rand,” said a driver with a popular long-distance bus company.
Zimbabwe Cross Border Traders Association president Mr Killer Zivhu noted that there was a need to nip corruption in the bud which will henceforth restore traders and individuals’ confidence in the normal banking and trading systems.
“The idea is to restore the market’s confidence in the banking system, that is the only way that one can deal with such illegal agencies,” he said.
Mr Zivhu, however, noted that there was a danger that if Government did not consult in implementing stringent regulations, they were likely to trigger an increase in corruption where smuggling becomes fully-fledged.
This story was produced by Sunday News. It was written as part of Wealth of Nations, a media skills development programme run by the Thomson Reuters Foundation in collaboration with the Institute for the Advancement of Journalism. More information at www.wealth-of-nations.org. The content is the sole responsibility of the author and the publisher.
