The first thing I did when I read about the US$2.5 million robbery on the ZRP’s Twitter handle was to rush to Google “biggest Zimbabwean robbery”. The second thing I did was look up Gwebi on Google maps. It’s one of those places that you have heard of before but you have no idea in which province it’s located.
It seems this was Zimbabwe’s biggest cash heist. As far as I and several publications can tell there has never been a bigger robbery cash haul. This is bigger than the 2018 Harare robbery when robbers got away with roughly $1.8 million in cash after blasting their way into a Chinese company’s strong room.
During Wednesday’s robbery the people driving the cash-in-transit truck stopped to give a ride to hitch-hikers while on their way to Chinhoyi. When they got to Gwebi river it is said one of the passengers they had picked up produced a pistol and the robbers loaded the bags of cash into their get away car and made good their escape.
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Blame Mthuli Ncube’s 2% tax
Contrary to popular belief Finance Minister Mthuli Ncube did not introduce the IMT tax that is currently at 2%. He mere adjusted it. These were his words in 2018 when he made the adjustment:
I hereby review the Intermediated Money Transfer Tax from 5 cents per transaction to 2 cents per dollar transacted, effective 1 October 2018.Mthuli Ncube presenting his budget in 2018
Prior to this, we were paying a tax of 5 US cents every time we conducted a bank transaction. The country was already suffering from crippling cash shortages but people were making do with electronic transactions which were on the rise. Mobile money was also exempt from this tax as well. You wouldn’t think twice about paying using Ecocash or swipe.
Electronic transactions were soaring and ZIMRA was not strapped for cash as Mthuli Ncube claimed. During that time it only took ZIMRA 11 months to collect $4.7 billion against a target of $4.3 billion which the government had set for that year. So the Finance Minister’s assertion that he wanted to expand his tax base was just baseless. The government didn’t want to rein in the wayward spending, they instead wanted to tax the populace to reduce the deficit they had accrued over the years instead. It was nothing more than a case of fiscal greed as my colleague rightly pointed out.
Think about it. These days fewer people are using Ecocash or swipe to pay compared to 2018. Personally, I don’t swipe unless I have to. Whatever RTGS I get I choose to spend in one single transaction rather than risk making little transactions that come with punitive bank charges and the 2% tax I have never grown to love. It’s usually cash for me. The same thing goes whenever someone wants to pay me. I make sure I factor in all those potential taxes I might pay. That tends to dissuade whoever wants to pay me using Ecocash or ZIPIT. The tax has indeed taken the banking system back into the dark ages.
Do you know what was not soaring at the time? Robberies and cash heists. With more and more people being forced to use electronic payment methods there were just not that many lucrative targets to rob anymore is my opinion. Robbing people of their RTGS dollars is just not such as easy as taking cash from someone. There are probably other reasons but this is one of them. From news reports, it just seems there is a rise in big haul cash robberies.
Enter the tax and the forced conversions
Two things happened that year that completely destroyed the faith people had in electronic currencies. First there was the forced separation of accounts into USD RTGS and USD Nostro that was all but an admission that the government’s “gedye-gedye” claim was nothing but stuff from the rear-end of a cow.
The second devastating move was the introduction of the 2% tax. Both moves undermined people’s belief in the banking system and from then on the number of high value cash heists seems to have gone up again. The 2018 heist happened because a Chinese firm chose to keep millions of dollars in their strong room rather than risk taking it into a bank and lose it.
For a time businesses even offered cash discounts making it clear they prefer cash. That practice has since stopped ever since the rate stabilised but the fact still remains, little cash-only shops charge lower prices compared to shops that take both swipe and cash. And despite multiple warnings, most companies I know have a big safe hidden somewhere where they keep their rainy day USD ( I am an accountant by training and fellow accountants talk you know).
While it looks low the multiplier nature of the 2% tax means that it’s not just 2% you end up paying as a business. Every time you move money you are punished for doing so. Technically businesses are exempt but the whole thing is such a mess to the extent that small businesses never bother to go and ask for an exemption. They just charge an electronic premium that forces customers into preferring to pay using cash which never sees the bank because once you take it to a bank it’s bye bye cash.
Or worse if the Finance Minister or his Monetary Colleague the RBZ governor can just wake up and freeze your account or convert the money to god knows what. There is also the dreaded FIU unit which used to dish out account freezes and froze people’s agent lines for months while inflation wreaked havoc to their money while it was held up in administrative purgatory. The bank then retroactively applied the 2% tax to this money because it felt like it.
That’s why companies would rather put their money into a safe, recipients of money send via Money Transfer Agents prefer to get their cash in hand than into their account too and individuals swear by the mattress bank. If you need to buy something it’s a matter of pulling out a note instead of risking COVID and visiting a bank where you might or might not get cash.
Without confidence in the banking system targets grow
Robbers are now spoiled for choice thanks to the rise in cash usage. With the bond notes losing value people sought refuge in the USD which means more people are using USD. A fact acknowledged by the government’s blended inflation figures.
I mean look at the latest robbery incidents. Yesterday we had cash in transit to Chinhoyi. It’s not yet clear where it was destined to in Chinhoyi. It could be a bank and/or Money Transfer Agent. We also had a case where a cash transit crew helped themselves to cash belonging to Mukuru. We have already mentioned the Chinese firm in 2018.
It could be that the cash was meant to be used to pay workers. Some lucky workers get paid in cash as it means they actually get to pocket something closer to their supposed pay. Talking of pay none of this would have happened had the cash transit crew not been looking to make an extra buck. Security companies are notorious when it comes to underpaying with the average guard earning less than US$100.
Long road back to normal
It would take a miracle for people to trust banks again. Sadly it’s not something the banking and Finance authorities seem to be working towards. On multiple occasions both the Monetary and Fiscal authorities have publicly revealed how they love to keep stakeholders off-balance.
With the banking public burnt so many times expect targets to be replete. I wouldn’t be surprised if the biggest cash haul record is broken in the near future. That’s another gift from the 2% tax to us.