Money changers are back in town and they are doing serious business! You may have seen them at Road Port, East Gate or Copacabana-it is serious business for those connected and having access to cash. Money Changers are involved in selling the Bond Cash to those with electronic funds wishing to convert to cash or those with Bond Cash looking for hard cash. It is all good business for these unscrupulous characters who are exacerbating the cash problem in the country. Charges are ranging from 15% up to 35% and this information is public, money is being sold publicly unlike in the past.
Their argument is simple and perhaps understandable-they are simply providing a service which is on high demand! The country is facing hard cash challenges so should one blame them? ZBIN did an informal small survey yesterday and established that it is all good for the men and women with wads of cash. Profits range from $10 up to $300 for the small scale money changers that you find on the streets. Profits should be higher for some in big offices who supply them with cash or ask them to look for cash. The largest profit officially recorded was that of a commission of up to 15% for $30 million raised from unofficial channels by the corporate sector a few months ago. With the queue of hard funds requests above $600 million at the apex bank, most corporates have resorted to the informal sector in order to fund critical import needs.
More research is needed to find what is exactly happening on the streets where some have an abundance of cash whilst the majority of people are failing to access it from the formal banking systems.
Impact on the Corporate Sector
We are hoping that researchers are going to come with detailed reports of the impact of the current cash situation on the operating environment in the country where prices have started rising fueling an inflation spike. For instance how has this cash situation impacted on the cost of doing business for the established companies and the small to medium scale business sector?
Impact on the rural dweller
About 70% of the population of Zimbabwe resides in rural areas according to the last official census. How has this community been affected by the shortage of cash? Is the situation changing for the better? We did witness people failing to have their maize shelled at a grinding mill because they did not have hard cash. How are rural shops conducting business, how has this affected the rural population?
With most companies resorting to the informal sector to raise funds, what is the impact on internal controls and risk management? We are watching closely to see published financial results of many organisations from this year and critically look at audit reports and the audit opinion. Will organisations or companies accessing cash from the streets have clean audit reports? Here is a minefield for most audit partners-this time the nation will be watching and they should expect possible lawsuits resulting from audit opinions expressed in audit reports for clients.
So many questions and few answers but the point is e Money Changing is back and is not disappearing any time soon- and for some the argument is they are doing the nation a favour by oiling the flow of money in the economy. To the person struggling to get cash from the formal banking system, surely there is no favour from their actions. We await to see more researches and analysis that will inform the next course of action to be taken by responsible authorities. In the meantime, its all good for the money changers where some are earning more than those who are formally employed.
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