Crackdown on forex smuggling

With an iron grip on a medium-sized travelling bag, Zodwa strolls leisurely along Fifth Avenue, one of the busiest streets in the southern Zimbabwean town of Bulawayo, keeping an eye out for cars bearing foreign plates, and the police. Zodwa is a foreign currency dealer, one of the hundreds working on the parallel market in Zimbabwe's second city. Her business is made possible by an official exchange rate that bears no relation to the street value of the local currency, which has been steadily eroded by the country's economic crisis. The government, however, blames people like Zodwa for the shortages of foreign currency in the formal economy. It is determined to hit back, especially with Christmas approaching, when people working abroad return with plenty of hard currency. In a statement last week, the police said 24-hour roadblocks, manned jointly by the police and the Zimbabwe Revenue Authority (ZIMRA), would be set up along the main highways from the South African and Botswana borders in a crackdown on currency smuggling. The response revives the stop-and-search operations carried out by the police and ZIMRA in early November, which were halted after a public outcry over their intrusiveness. "The police will intensify their crackdown to monitor the movement of foreign currency into the country during the festive season. We expect many Zimbabweans who work in South Africa, Botswana and Namibia to enter the country. These are the people who smuggle in the foreign currency that feeds the black market in Bulawayo and Harare," said a police spokesman. The crackdown is the work of a nine-member cabinet taskforce led by Water Development and Rural Resources Minister Joyce Mujuru. Apart from using the police and ZIMRA to clamp down on the dealers and smugglers, the taskforce is also monitoring the conduct of banks that run foreign currency accounts. Under the new law on foreign currency transactions, the Reserve bank of Zimbabwe takes as much as 50 percent of foreign earnings in taxes, while the remaining amount must be exchanged at the official rate of US $1 to Zim $824. On the parallel market the rate varies between Zim $5,600 to Zim $8,000 to the greenback. Several hundred foreign currency dealers have been arrested in Bulawayo over the past month, with about Zim $40 million (US $49,000) seized, according to police spokesman Inspector Smile Dube. The police have also recovered over Zim $32 million through searches at Beitbridge, on the border with South Africa.