Externalisation is a myth created by Zanu-PF to explain cash shortages

Former Minister of Finance Tendai Biti has accused the ruling Zanu-PF party of creating the myth of externalisation to hide their illicit cash flows which caused the country’s cash shortages. In an interview with Violet Gonda, Tendai Biti said:

So, what has caused the shortage is not that people are taking out money. Remember, when you are taking out money, you are taking your money; you are not taking another person’s money, which is a myth that ZANU PF has.

Separate the issue of illicit financial flows. Illicit financial flows never get into the system and the private sector is the number one perpetrator of illicit financial flows. So, if you take platinum, for instance, when tonnes and tonnes of platinum metal is shipped out of Zimbabwe, there are about 10 derivatives, including palladium, for instance, that is not fully accounted for to Zimbabwe.

So, there is what is called transfer pricing, there is what is called thin capitalisation and these are the things that are hurting Zimbabwe. This is what is known as illicit financial flows. On the African continent, almost yearly, more than a trillion dollars is leaving the African continent, and, in fact, ironically, more money is leaving the African continent through illicit financial flows, than money that is coming to Africa in the form of Aid. So, this is a different debate to the narrow question of liberalising or not the capital account.

More: Read the full interview here