Resolutions made by political parties at their conferences are important because ultimately, they determine economic policy or at least the macroeconomic environment in which economic policy plays out. Opinion by Omen Muza
Consequently, the output of such conferences is as important as the input and generally, the quality of one reflects that of the other.
This is why, in April 2012, the Banking Association of South Africa met the ANC ahead of the party’s policy conference in Mangaung, to raise concerns about the party’s economic policies to be discussed at the conference.
Closer to home, Zanu PF recently held its annual conference and made a number of resolutions.
As a follow up to some of these resolutions, we may see Bills being put before the next session of Parliament, so I thought this week I would consider the import on the financial sector of selected resolutions extracted from Section 2 of the conference resolutions document.
(e) To urge the party to spearhead the adoption of currencies of the BRICS countries and other emerging economies as legal tender in Zimbabwe alongside the US dollar.
While this may be politically expedient, it does nothing to enhance our fiscal sovereignty and panders to short-term considerations. For the long haul, it would be helpful to prioritise enactment of policies that create conditions for the return of our own strong currency, propped up by solid fundamentals not sentiment.
(g) That government should prohibit the externalisation of the people’s bank deposits.
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I am not sure what was intended by this resolution, but I could not help noticing the populist ring to it. Whatever its basis, it puts pressure on the banking sector because when it comes to issues of “the people” in an election year, banks can always be assured that they will come off second best.
(i) That the party takes a leading role in the establishment of an Agricultural Commodity Exchange that should provide a vibrant market to drive the agriculture sector.
There is no doubt that a functional Agricultural Commodity Exchange will improve availability of agricultural financing from the banking sector due to the transparency it creates, so the party is absolutely right that this market infrastructure can drive agriculture. Following its launch in January 2011, spearheaded by the Ministry of Industry and Commerce, we thought the matter had already progressed beyond partisan politics.
The leading role that the party resolves to take should, therefore, have the effect of speeding up rather than slowing down the processes that are already in motion, given encouraging comments recently made by the Industry and Commerce deputy Minister Mike Bimha about the significant progress already made on the Commodity Exchange in Zimbabwe (Comez).
(j) To urge the party to push for legislation for banks to lend to key sectors of the economy at affordable rates and to offer substantive real rates of return on deposits so as to mobilise and encourage savings.
This resolution appears to affirm processes already in motion since the Ministry of Finance is reportedly seized with the matter and has been working with the Reserve Bank of Zimbabwe and the banking sector. This is expected to culminate in the amendment of the Banking Act (which is assured of sailing through Parliament unopposed) in order to give effect to some of the issues highlighted by the party.
(k) To call upon Government to set a Zimbabwe’s Minerals Exchange as a vehicle to ensure that there is no external listing of Zimbabwe’s mineral assets.
I couldn’t agree more with this resolution. The listing of mining companies operating in Zimbabwe, both on the Zimbabwe Stock Exchange or on a separate specialised bourse can enhance transparency and accountability in the resources sector and consequently improve availability and access to mining finance, while deepening local capital markets.
(l) To instruct the government to work out modalities for the re-introduction of domestic currency alongside the multi-currency system in order to address the current liquidity crisis and to enable our people to carry out their transactions I don’t think it is just about conjuring modalities for re-introduction of the local currency. Rather, I think it is about enacting policies that create a conducive macroeconomic environment in which the return of the Zimbabwe dollar becomes a natural progression rather than a contrived intervention meant solely to facilitate “transactions.”
(m) That all export receipts should be banked in Zimbabwe with national local financial institutions This appears to have largely been implemented by the Reserve Bank through directives issued earlier in the year to the banking sector to repatriate nostro balances and to the mining sector to bank their proceeds locally. We should, however, be mindful that for sustainable access to external credit, some level of “externalisation” of export receipts in escrow accounts to facilitate debt repayment is necessary. The phrase “national local financial institutions” in this resolution appears to signify an intention to favour local banks ahead of foreign ones.
Feedback: [email protected]. Omen N Muza writes in his personal capacity. He is a banker and managing director of TFC Capital (Zimbabwe) (Pvt) Ltd, a Harare-based financial advisory, research and training company with interests in banking, technology and agriculture as well as the convergence area among them.
