The Reserve Bank of Zimbabwe revealed that the only way it can remove the black market is through controlling all the foreign currency in the economy. Appearering before Parliament’s Public Accounts Committee yesterday, RBZ deputy governor Kupukile Mlambo said ,as reported by Herald:
The existence of a parallel market is a reflection of shortages in the system or the wrong incentives in the system.
Clearly we have to fix that and deal with that (black) market and the best way to deal with that is to make sure the interbank rate is sufficiently priced and there is always sufficient foreign currency.
The only way we can control those kinds of markets where there is a parallel market is when the central bank had control of all the foreign currency in the system.
As things stand, we don’t have control of all the foreign currency in the system. A lot of it is outside our powers or purview and we have no way of knowing where it ends.
In other words, the deputy governor is saying that as long as much of economic activity is happening outside the formal system, it can’t do away with the black market. It’s not surprising to hear this considering that the RBZ didn’t or still don’t know where RTGS balances (bond notes, coins and electronic money) are coming from.
The latest study about “Shadow Economies” (nice term for black markets) noted that Zimbabwe has the second largest black market in the whole world, which accounts for 60% of the total economy. Let’s hypothesis that, it is that 60% of the economy which also holds 60% of the total forex. In that case, RBZ would need the government to formalise that significant informal economy to control the black market which I think is a tall order.