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'Corrupt' Tagwireyi Eroded Local Currency Value, Caused Food Price Hikes: UK


BY MANAGING EDITOR

The United Kingdom (UK) has blamed President Emmerson Mnangagwa's ally and 

petroleum mogul, Kudakwashe Tagwireyi, for eroding the Southern African 

economy's currency by engaging in arbitrage deals, which also spawned food 

price hikes.

UK has also warned its citizens to be wary of doing business in Zimbabwe as 

it ranks among high risk countries to set up enterprise due to prohibitive 

and volatile foreign exchange controls, high inflation, fragile property 

rights, and pervasive corruption.

Through an advisory statement, the UK government said, "Under the UK’s 

Global Anti-Corruption sanctions regime, Zimbabwean Kudakwashe Regimond 

Tagwirei was sanctioned, including asset freeze and travel ban this year, 

for profitting from misappropriation of property when his company, Sakunda 

Holdings, redeemed Government of Zimbabwe Treasury Bills at up to ten times 

their official value. 

"His actions accelerated the devaluation of Zimbabwe’s currency, increasing 

the price of essentials, such as food."

It further reads, "As well as targeted sanctions on the five individuals 

referenced on the UK sanctions list, the UK implements an arms embargo and 

transit restriction on military and dual-use goods trade with Zimbabwe as 

part of Export Control Order 2008.

"It should be noted that these are targeted sanctions, and not intended to 

deter trade and investment with Zimbabwe. Indeed, the UK continues to work 

with Zimbabwe to increase bilateral trade, with the UK-ESA Economic 

Partnership Agreements."

It further warned of the adverse investment climate, saying, "Doing 

business in Zimbabwe can be challenging, with a number of obstacles and 

pitfalls. Repatriating profits and paying overseas suppliers is cited as 

the main challenge, and exporters to Zimbabwe should engage with their 

customer and/or bank to ensure that this risk is mitigated.

"The high and volatile inflation also makes the business environment more 

uncertain: many businesses price in US dollars but as discussed above the 

supply of foreign currency is erratic."

Zimbabwe sits at 140 out of 190 economies assessed in the 2020 World Bank's 

'Ease of Doing Business' report, an increase from 155 in 2019.

The country has a poor human rights record and continued abuses have 

resulted in the placement of targeted sanctions, including travel bans and 

asset freezes, on four security chiefs on 1 February this year to reflect 

their role in the most egregious human rights violations involving six 

deaths protestors in August 2018 and 17 protestors in January 2019, it was 

also noted.

"Necessary currency reforms have been slow, and whilst businesses are 

currently able to pay overseas suppliers and repatriate profits through the 

foreign currency auction, this process is slow and unreliable. Exchange 

rate management by the Reserve Bank continues to leave a large gap between 

the official and parallel market rates, increasing the risk of arbitrage."

It further states, "A legacy of the Fast Track Land Reform programme of the 

2000s is the inability to use agricultural land as collateral, stymying 

investment in the agricultural sector. The current administration’s 

relaxation of indigenisation requirements, and fledgling attempts to 

compensate dispossessed farmers, is a promising step, but occasional and 

localised instances of land invasions continue to damage the credibility of 

property rights in Zimbabwe. 

"As a result, Zimbabwe’s global competitiveness has been declining since 

2015 and is below the sub-Saharan African average. Zimbabwe ranks 124th out 

of 137 in the Global Competitiveness Index (GCI)."

Electricity shortages are common, although this situation has improved 

since the frequent outages of 2019. Increased rainfall has helped the 

country’s primary hydroelectric station return close to fully capacity, 

whilst structural reforms to the state utility have reduced its debt burden.



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