RBZ making all the noise, but . . .

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THE Reserve Bank of Zimbabwe (RBZ) remains too interventionist and constrained by vested political interests to cause a fundamental economic paradigm shift which is required for us to revive the economy.

VINCE MUSEWE

RBZ governor John Mangudya
RBZ governor John Mangudya

Throughout the years, I have learnt that the best way to understand a problem is to simplify it.

At most times, the problem is not the actual problem, the problem is our attitude towards the problem.

This clearly applies to Zanu PF’s attitude and that of related State institutions such as the RBZ towards accepting the fundamental problem that unless we deal with the issue of political reforms, we are most unlikely to see any meaningful economic turnaround.

I have read the 99-page monetary policy statement which was recently presented by the RBZ governor John Mangudya.

In my opinion, it is quite a coherent analysis of the issues at hand.

It certainly articulates the problem situation well, but fails to come up with the necessary drastic actions which can cause a fundamental paradigm shift in how we can reinvent the financial services sector and align it with our long term developmental objectives.

We are all aware that the RBZ has effectively lost direct control over money supply, interest rates and the exchange rate.

The role of the RBZ is, therefore, merely limited to banking supervision and trying to ensure the smooth operation of the national payment system to ensure financial stability.

In my view, the RBZ unfortunately remains too politically constrained and continues to face a conflict between satisfying its core mandate objectively and acceding to Zanu PF’s narrow political interests, which have always been at the expense of national interests.

Its independence and objectivity in applying the correct bitter medicine, therefore, remains highly questionable.

This, of course, is the legacy of former RBZ boss Gideon Gono’s experiments and monumental historical disaster which continues to burden us to this day.

Zimbabwe is going through systemic failure. This systemic failure is really as a result of lack of the ethics and confidence in a Zanu PF government which has failed to implement common sense economic policies.

Instead, it has nurtured institutions which are not only inefficient and incompetent to implement policy, but are soiled with patronage, corruption and lack of accountability.
A systemic failure requires a systemic solution and not merely to deal with the symptoms such as cash leakages, for example.

We are clearly in a crisis of leadership and a self-manufactured crisis of social and economic decline that has arisen, not because we are cursed as a nation as some might want to believe, but because of the political and economic choices we have made.

The good news is that our crisis is man-made and everything that is man-made can be reversed.

The simple problem is that we are not generating adequate capital inflows into the country.

In addition, we are wasting the little resources which we have and we are, therefore, unable to meet our operational costs or invest in the productive capacity of the country.
The result of this will be economic decline and not growth as anticipated by Finance minister Patrick Chinamasa.

The solutions are straight forward. Whatever we may do, we need to urgently address perceived country risk.

Firstly, we cannot expect any economic growth without an increase in capital inflows which must be invested in our productive sector. We, therefore, need to do all we can to attract long term capital inflows.

This requires that laws such as the Indigenisation one are expunged, the rule of law is respected, especially when it comes to corruption within the Zanu PF cabal.

In addition, the respect of private property ownership must sacrosanct all we do and farm evasions must stop.

We cannot expect to build confidence in our country’s future until we address this.

Secondly, we need to manage our debt legacy so that we can access new capital.

However, that access comes with conditions which we must meet, whether we like it or not.

I doubt very much whether we have the political will to address political reforms as a condition to access new funds.

There simply is no visible interest within Zanu PF and the government to address political reforms as a precondition for economic recovery.

Unfortunately, they think and hope these are mutually exclusive. They are not.

Besides all the good sounding ideas proffered by RBZ, the brutal truth is that we cannot expect any fundamental economic turnaround at all without some sort of political settlement.

Unfortunately, this truth seems unpalatable to Zanu PF.

Vince Musewe is an economist and author. He is also the secretary for finance and economic affairs for the People’s Democratic Party. The views expressed herein are his personal views.

2 COMMENTS

  1. This is a catch 22 situation; you will never get Zanu PF to “expunge” the indigenisation laws and you will never remove them from power without political reforms – the reforms you keep shying away from! Unless you address the political reforms you are just wasting everyone’s time with your theories!

  2. how dumb are you Wilbert. Vince is 100% correct and actually says that we need political reforms in his analysis. seems you cant read.

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