ZIMBABWE WEALTH HIDDEN IN TAX HAVENS - A CASE OF TAX EVASION

Zimbabwean savings in tax havens.

30 March 2020.

Above is a graph generated in a 2017 report by the US National Bureau of Economic Research on the amount of global wealth placed in tax havens by households across the world.

Usually such studies exclude poor countries to only encompass middle and higher income countries, however this report was comprehensive enough to include smaller economies to give us a full picture of the level of externalization across the globe.

According to the graph, Zimbabweans are the fourth biggest externalizers in the world, having externalized just over 60% of the nation’s GDP into tax havens.

This number does not include Zimbabwean savings (these include diaspora savings) in countries that do not carry the designation of tax haven, Zimbabwean funds owned by duel citizens, citizens using fake identities, those using sophisticated financial vehicles or those holding gold or diamonds.

So the reality is this number could be astronically larger than this to account for the over $24bil that has flown out of the country in the last 20yrs.

Now, with most Zimbabwean government officials blacklisted by sanctions in the western nations that control these tax havens, the question arises, who are these individuals who have externalized all this wealth without being restricted of sanctions?

They can only be high net worth individuals who have accumulated such wealth and have the sophisticated networks to externalize large amounts of money from the economy.

These are individuals who either export and transfer price or those who get forex allocations from the reserve bank to import essentials and technology, then they externalize the over invoiced excess into tax havens.

It’s for this reason we challenge companies like Delta, Inscor, Mukuru, Cassava, the Meikles group and others who have grown large investments outside Zimbabwe during a regime of exchange controls over the past 20yrs, to explain how they did it.

We don’t hate our entrepreneurs but the nation is suffering due to excessive externalization and corruption by entrepreneurs.

As a case study, in 2016, Edward Mutambanadzo passed away while whistleblowing on externalization and tax evasion that he claimed to have facilitated for a prominent company in Zimbabwe.

Now, lets imagine for a moment if Zimbabwe could attract the return of this estimated $30 billion dollars of savings in tax havens and non-tax havens and have it reinvested in R&D, manufacturing, 4IR, mining, agriculture and other productive sectors in the country, where the nation could attract skills from all across the world to work in Zimbabwe and leave IP in the hands of our companies?

Zimbabwe can be a powerhouse if the Ministry of Finance could go on roadshows, specifically targeted at Zimbabwean offshore account holders, incentivizing them to reinvest their dormant funds in gas, mining, Afro processing and innovation through the hedging of innovative financial instruments of Victoria Falls financial market.

By Rutendo Bereza Matinyarare. Marketing Strategist at Frontline Strat Marketing Consultancy and Chairman of ZASM and ZUAUWS.