Billions flow unaccounted through capital flight in Zimbabwe – Report


Billions flow unaccounted through capital flight in Zimbabwe – Report

HARARE – Hostile policies, macroeconomic and political instability have largely contributed to capital flight and left the minerals sector vulnerable to smuggling and illicit flows out of Zimbabwe, a new research says.

The report, Capital Flight and Trade Misinvoicing in Zimbabwe, conducted by Zimbabwe Economic Policy Analysis Research Unit (Zeparu), called for strict measures to monitor both local and foreign-owned mining companies to curb capital flight.

“In light of the fact that most of the mining companies operating in Zimbabwe are foreign owned, the government introduced the indigenisation law to address the problem. Thus, to some extent, the ownership of mining companies left the minerals sector vulnerable to smuggling and illicit flows, as Zimbabwe becomes hostile to foreign investors”, says the report.

The results of the research also show that during the period of macroeconomic and political stability, the contribution of the mining sector to economic growth increased and capital flight was lower. “This suggests that political and macroeconomic stability is needed to prevent capital flight”, says the report.

“Foreign companies are driving trade misinvoicing, as shown by high export underinvoicing from countries that have large numbers of multinational companies operating in Zimbabwe”.

The report says that six countries: Canada, China, Germany, Greece, Italy and the United States; recorded positive trade misinvoicing, suggesting that these countries were used as gateways of capital flight out of Zimbabwe.

Zimbabwe lost $120.5 million to Italy through export underinvoicing between 2008 and 2013; while $99.6 million was lost to the United States and $208.6 million to Germany during the same period.

According to the report, Australia, Belgium, United Kingdom, Zambia and South Africa are origins of unrecorded capital inflows into Zimbabwe, with inflows from South Africa topping at $2.8 billion.

The report says that trade misinvoicing increased during the crisis period, which indicates that foreign companies largely took their capital out of Zimbabwe during the crisis period. “The implications are that macroeconomic stability and enacting clear policies on how multinational companies operate are key to curbing capital flight”

Leave a Reply

Your email address will not be published. Required fields are marked *

one × 4 =