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ZIMBABWE: Police crackdown on "money hoarders"
IRIN News
August 04, 2006

http://www.irinnews.org/report.asp?ReportID=54998&SelectRegion=Southern_Africa

HARARE - Zimbabwe's police are being accused of heavy-handedness after setting up roadblocks to seize money from people thought to be trading on the black market.

Zimbabweans were thrown into panic on Monday after reserve bank governor Gideon Gono devalued the currency by 1,000 percent, with a three-week deadline for the old currency to be exchanged for new denominations.

Gono also ruled in his mid-term monetary policy review that individuals could only deposit Z$100 million (US$1,000 at the old official rate) at a time. The deadline means there are only 16 working days to make deposits, and a maximum of Z$1.6 billion (US$16,000) can be exchanged.

Inflation has officially reached 1,183 percent - the world's highest rate - forcing people to carry shopping bags and suitcases full of money to purchase basic goods.

Gono's ruling was an unexpected shock for parallel market foreign currency traders, and for the many who have little confidence in the banking system and choose to keep their money at home or in the office.

According to the new rules, all individuals holding more than Z$100 million (US$1,000) and companies with more than Z$500 million (US$5,000) of the old currency would have the money seized unless they could prove it was acquired legally.

A senior Zimbabwe Revenue Authority (Zimra) official, speaking on condition of anonymity, said the roadblocks were being manned by the police, Zimra, state intelligence operatives and graduates of the ruling ZANU-PF party's youth training camps.

"Roadblocks are being mounted countrywide but searches are mainly concentrated at border posts, where most of the youths who have been recruited have been deployed especially to forfeit large amounts of money that black market foreign currency dealers are returning into the country ahead of the 21 August deadline," the official said.

On major routes into the capital, Harare, there were long traffic queues as officials searched cars and people carrying large bags. Other vehicles, including at least one commuter bus, made U-turns to avoid being searched. At a roadblock about 8km southeast of the capital, two men were arrested after Z$2 billion (US$20,000) was found in their car.

The State-owned Herald newspaper reported that so far 125 "cash hoarders" had been arrested, and more than Z$62 billion (US$62,000) recovered in countrywide searches.

Steven Matenda, a small businessman, had Z$150 million (US$1,500) seized at a roadblock when he failed to provide receipts showing how he had acquired the cash. "The law could now be saying that cash in excess of Z$100m (US$1,000) should be taken away from individuals who cannot prove where they obtained it from, but that does not make any sense," he said.

"For many years, I have been rearing chickens on my plot on a small-scale basis, and that kind of business does not require that I produce receipts. Even though I banked some of the money, I kept most of it at home to buy feed for the chickens, but now it is being taken away."

Renson Gasela, a former spokesperson for the Movement for Democratic Change (MDC), the main opposition party, said the roadblocks were unnecessary and heavy-handed.

"This is a purely civic and monetary issue that requires decent methods that don't inconvenience people. They [government] could just have flighted advertisements urging people to surrender their money rather than criminalise (people)."

He said roadblocks were counter-productive, as those holding large sums of cash would find illegal ways to dispose of it.

In the rural areas people tended to store money at home because of expensive transport costs and did not necessarily use receipts in their day-to-day business dealings. "Information doesn't reach rural people so fast and, after all, [Z]$100m [US1,000] is not that much money, given the high inflation, and one tends to wonder how Gono arrived at that figure," he pointed out.

Zimbabwe's new exchange rate is US$1 to Z$250, after Gono announced that three zeroes would be struck off the country's temporary currency of bearer cheques. Last week the official rate was Z$250,000 to the US dollar, and Z$555,000 on the parallel market.

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