The Reserve Bank made the order available on Monday, saying it will be enforcing new currency controls to stop money leaving the shattered economy. The Bank said that property sellers will receive only the first $50,000 of their selling price, while the rest will be held in a Reserve Bank account for a year. It is understood that sellers will receive the balance of the total price in four payments over the year, with 10% interest.
The Bank has said that the order, described as an ‘involuntary loan’ order, “enhances liquidity in the market,” arguing that money sent out of the country as a result of property sales since 2009 has ‘weakened’ Zimbabwe’s economy. The Bank has also said that the order will not affect foreign property investors and sellers, as long as they can prove that the properties were bought with hard currency brought into the country originally.
In 2009, the newly formed unity government canceled previous strict currency controls imposed by the Reserve Bank, which led to an economic meltdown and record inflation in the local currency. The local currency was then dropped that year in favour of the US dollar. The central bank meanwhile has also lost the trust of a nation after years of mismanagement and looting, with few people willing to have their money dealt with through the Bank.
Economic analyst Masimba Kuchera told SW Radio Africa on Tuesday that this order has “clearly not been thought out.” He explained that people have not forgotten that the Reserve Bank was responsible for large scale looting of bank accounts, adding that “an involuntary loan from property sellers is really not the best way to harness resources to improve liquidity.”
Kuchera also added that the timing of the order is a worry, in light of threats by the ZANU PF controlled Empowerment Ministry to take over foreign owned firms under the Indigenisation Act. He explained that it “doesn’t bode well for the future.”
“The RBZ should shelve these ideas for now, sort through the Indigenisation issues and find other ways to liquidate itself so that it can be the lender of last resort,” Kuchera said, adding: “If this order is implemented people will simply hold onto their properties, which will defeat the Bank’s purpose.”
Zimbabwean real estate firms meanwhile have expressed concern that the new controls, which they say were designed without consultation with the property sector, will drive property sales further down. According to an article by South Africa’s Mail & Guardian newspaper, real estate firms have said that sellers think the new controls are unfair and “daylight robbery.”
Post published in: News