By Thomas Chidamba
The Reserve Bank of Zimbabwe (RBZ) has been accused of deliberately creating an information asymmetry by not announcing the foreign currency auction bidders who have been paid, raising suspicion that some banks were spinning bidders’ allocations without their approval, ZiMining can exclusively reveal.
This came to light after some bidders told ZiMining that the RBZ was not informing bidders about their bids despite announcing the auction’s results and that week’s exchange rate.
Bidders usually deposit their local RTGS currency into their respective banks as bids for material they want to purchase and import into the country for their businesses.
RBZ then relays information about successful bids to their respective banks, which then pay for goods on behalf of their clients.
Last year, a group of miners who wanted to venture into quarry business submitted bids for stone crusher machines they wanted to import into the country. They deposited local currency into their banks and were told that their bids were successful.
However, almost a year later, they are yet to have their goods paid for.
Speaking on condition of anonymity, a representative of the miners said they are afraid that their money might have been “spinned” without their knowledge.
“We wanted to venture into quarry mining, having adhered to all regulatory requirements. We wanted to purchase machinery and we approached our bank to forward our bid accompanied by quotations.
“Our bid was successful and the foreign currency that was supposed to be paid to our supplier was calculated. We are still waiting for information from our bank that the foreign currency has been paid and we arrange for importing of the machinery.
“But it’s now over nine months of constant checking with the bank with no favourable response. The bank always tells us that RBZ is yet to fund the purchase in foreign currency despite accepting our bid”, he said.
“We suspect that the auction system has been hijacked by saboteurs who are in the banks and are taking advantage of the information asymmetry created by RBZ, because when the central bank pays, it does not tell which auction number has been paid.
“Banks have superior information than clients, and we suspect that they use this superior information to conduct unauthorized borrowing and even spin the client’s money for their profit without his/her knowledge.
“We understand that RBZ does not deal with individuals but should equalise information, not that banks know what I don’t know with regard to my bid”.
RBZ governor, John Mangudya, could not be reached for comment by the time of writing.
A banker who spoke on condition of anonymity, fearing that his comments might be deemed negative by the regulator, said the delay in availing foreign currency by the central bank was a crippling constraint on working capital management of the auction bidders.
“The RBZ discloses the total value of bids allotted on its website. The RBZ also discloses the detailed breakdown of the successful auction allotments to the banks through which the specific customers would have submitted their bids.
“The issue that has been observed in the market is the delay by the RBZ to provide foreign currency for the successful auction allotments, whereas the bidder’s local currency (ZWL) for the purchase of the foreign currency would have already been transferred to the RBZ as soon as the RBZ notified banks of the successful bid allotments.
“The prolonged holding of the bidders’ ZWL funds before availing of the foreign currency by the RBZ has, therefore, been a crippling constraint on working capital management of the auction bidders”, he said.
The banker said although there was risk of clients being prejudiced as banks are prohibited to spin customers’ money without their consent.
“Due to undefined actual time between auction allotments and availing of the foreign currency by the RBZ, there is an inherent risk of customers being prejudiced by their banks using the customers’ foreign currency availed by the RBZ before finally paying the customers.
“However, considering customers’ insistent follow ups on their banks on the outstanding foreign currency, it is less likely that banks would further prejudice customers by using their foreign currency availed by the RBZ before they avail the foreign currency for customers’ international payments.
“The funds allotted on the auction system are mainly for international payments. The banks that receive the foreign currency on behalf of their customers have an obligation to make sure that the funds are used to process payments that are aligned to the supporting documentation at the bidding stage.
“The RBZ’s Exchange Control Department has systems that track the payment of such amounts and acquittals submitted to confirm that the goods or services that have been paid for have actually been received. Through the RBZ’s Exchange Control systems processing of customers’ payments for auction, allotments can, therefore, be confirmed”, he said.
Dialogue, the banker said, was needed to solve the impasse and for the success of the forex auction system.
“There should be stakeholders’ engagement by the RBZ to bring awareness and get feedback on the adequacy and concerns on the information being disclosed by the RBZ on its website.
Feedback received may be used to refine the disclosed information to optimise the balance between the level of information details disclosed and usefulness of the disclosed information for stakeholders’ decision making”, he said.
