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Africa 2012: Meeting of minds thought leadership on dollarisation and externalisation


On Saturday, February 11 2012, former President Nelson Mandela was honoured by putting his image on South Africas currency while on the same day, Nathaniel Manheru in an article in The Sunday Mail entitled Empowerment: Learning from Rhodesia sought to argue that Zanu PF should solely claim the credit for the introduction of the currencies of foreign states as legal tender in Zimbabwe.

Manheru continues to play a thought- provocative and stimulating role in the battle of ideas. What is tragic is that often he ends up talking to himself because many are intimidated by the style and form in which his arguments are presented and articulated.

In a few weeks, President Mugabe will celebrate his 88th birthday and as a founding father of Zimbabwe, I have no doubt he will also use the opportunity to reflect on his legacy and why under his watch it became necessary to abandon the national currency.

It is opportunistic and hypocritical to claim credit for dollarisation when in truth and fact it represents the de-institutionalisation of locally produced bank notes in the memory our generation and the absence of the local currency in the millions of transactions that take place between market actors in Zimbabwe poses a significant risk in building a confident and trusting nation.

I have no doubt that if there was a rational alternative to dollarisation, such an option would have been top on the list.

Regrettably, dollarisation was a consequence of bad policies and at some stage Zimbabweans have to accept this reality.

A dynamic and prosperous economy is only possible where voluntary transactions are possible from willing market participants, so the amount of sloganeering and propaganda can make market participants accept a currency not backed by real value as a unit of exchange.

In honouring Mandela, South Africans are only acknowledging their accomplishments in delivering on the promise by ensuring that at the transaction point the holders of goods and providers of service can convert on a willing basis the fruits of their labour to another form ie paper that represents value.

The attempt by Manheru to provide meaning to the current cash crisis in Zimbabwe exposes the fault lines in the thinking that was partly responsible for undermining the promise.

In response to the cash crisis, the central bank has put a cap to withdrawals. It is evident that the thinking that informed this decision is no different from the thinking that Dr Gideon Gono borrowed from when he was appointed in 2003.

If one starts from the premise that the State exists as a controller and value creating enterprise, the consequences are predictable. When one unpacks the decision to limit withdrawals in the context of property rights, it becomes evident why the face of President Mugabe will not be added to the national currency anytime soon.

The money in question is the property of the depositor. By restricting access to the funds, the Central bank is effectively interfering with the rights of the depositor.

It is common cause that the funds held in banks belong to other parties who surely must have a say in how their property is dealt with.

The Constitution of Zimbabwe explicitly prohibits the State from interfering with the rights of citizens and yet Manheru sought to argue that the alleged convergence of the minds of Biti and Gono represents the triumph of the ideas of Zanu PF.

By asserting that Biti is slowly restoring the place and role of the central bank as a lender of last resort, itself a reverse paddle given that he has been unremitting in his attack of the central bank, Manheru is of the view that banks must be targeted for externalisation and economic sabotage.

Are banks to blame? I have no doubt that in the minds of the few wise men and women, the State actors possess the intellectual and moral authority to compel human beings to act against their self-interest.

The money that is allegedly held by banks irrespective of who is the holder of shares in such institutions belongs to the depositors whose silence when people like Manheru attack banks whose role is principally to warehouse depositors funds is ultimately the most potent weapon used to promote strange and counterproductive policies.

I bumped into Manheru recently at the AU Summit in Addis Ababa. He was sitting alone working on his iPad at the lobby of the Sheraton Hotel. The iPad that he was holding is his to the extent that he voluntarily exchanged acceptable currency for the product.

The currency used to procure the iPad was not printed in Zimbabwe; rather it must have been obtained from the foregone consumption on the trips that Manheru takes or other undefined sources because the salary of Zimbabwean civil servants would not support the purchase of iPads.

It may not be obvious to Manheru that the conversion of US dollars into an iPad is externalisation.

However, when the transactions are done by people in power they are normally perceived to be harmless.
How would Manheru feel if the funds that he has accumulated by whatever means were to be subjected to arbitrary and unilateral controls by the central bank?

Manheru sought to advance an argument that banks should be compelled to bring the money into Zimbabwe so that presumably the central bank can have unfettered access to the property belonging not to the bank but to private unsuspecting residents.

It should be self-evident that whether the funds are in the right or left pocket, they belong to the owner and the central bank should have no interest in the property of another if the provisions of the Constitution are respected.

Surely, any measure that seeks to compel market participants in a particular way will not produce the intended results.

The last 32 years has produced their own experiences that we can draw lessons from rather than imagining the Rhodesian experience when the majority of Zimbabweans could not participate in a meaningful way in the mainstream economy.

If it is true that the only conceivable interest of the government in the funds held by banks is to protect the rights, interest and title of the property owners, why would a well-thinking intellectual like Manheru want the government to expropriate the rights of citizens in a manner that takes Zimbabwe back to the casino days?

The harm already inflicted on property owners by the kind of thinking that invaded the central bank in 2003 will take generations and intellectual minds to be fully exposed.

Imagine waking up one day with a bank statement showing a credit balance of say $2 000 only to find from your bank that the funds have been borrowed by the central bank without your consent. If this is not theft then what is theft?

Intellectual honesty is important in any discourse that seeks to lift the ground higher. However, the people in the wagon that the President has been pulling for the last 32 years have developed a unique tendency of justifying even the absurd.

The author of the term externalisation remains faceless and nameless and yet it must be accepted that one fine day a person thought about the objective conditions that manifested themselves on that day and came to the conclusion that it was just and equitable that this term be introduced into the vocabulary to describe behaviour that was deemed unacceptable.

If externalisation existed, what, if any, would be the interest of the government? This is the question that must be answered with a sober mind.

One would have to construct a new reality that all export proceeds belong to the State without suffering the burden of explaining how the State could conceivably have an interest in the property belonging to an exporter. It is the exporter who is entitled to the fruits of his labour.

The process of converting physical goods into paper is contractual between two willing parties and the State plays no part in the marriage. The minds that have produced toxic policies have remained unchallenged for far too long to the extent that they believe that they hold the key to progress.

To point a finger at the exporter as a criminal for allegedly delaying the receipt of property that belongs to him is to suggest that the exporter is an agent of the state.

What the past 32 years have taught us is that new thought leaders are required to properly locate the role of the State and its actors in the enterprise of nation building.

Mutumwa Mawere is a businessman based in South Africa. He writes in his personal capacity.

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