Guest Column: Livison Bhebhe
As inflation, among other key economic indicators, keeps worsening at a pace reminiscent of the 2008 experience, public demands, often through protests, for dollarisation have become more pronounced. Proponents of dollarisation do proffer a compelling argument, albeit ignoring the yesteryear dollarisation experience that the economic dashboard failed to impress beyond price stability. And we wonder why taking too long to confront the elephant in the room, which has somehow remained elusive for so long, and get things right, once and for all?
We do not require the services of a rocket scientist to labour the fact that central to the Zimbabwean problem is the lack of political will to institute fundamental progressive political and economic reforms to birth robust, competent and independent representative institutions that promote good governance, rule of law, transparency and accountability and a vibrant civic society.
A deep-seated and a pervasive culture of impunity owing to unaccountability has promoted rampant corruption and unbridled excesses by the rich and powerful, mainly evidenced by massive scandals since the 1980s. These range from the Willowvale Scandal and the fatal bleeding of once thriving parastatals like Zupco, NRZ, Zisco, among others; to the outright disappearance of the jaw-dropping US$15 billion diamond proceeds in 2015. Add to this ineffectual leaders who, instead of being retired, are preserved and retained through reappointments and reshuffles, thwarting any prospects for renewal and hope. Thus the country remains stuck with a reactionary and oftentimes belligerent bunch, so indifferent to progressive change and dissention that it maintains a tight leash on all levers of the State and economy.
And the consequences, ranging from international isolation through sanctions to a bad macroeconomic environment, have rendered Zimbabwe a very dangerous investment destination. Inconsistencies in policymaking and implementation has left many Zimbabweans in government’s induced poverty and destitution. An average working-class Zimbabwean has today got their monetary wealth fivefold eroded by the ill-advised introduction of the bond currency, despite fervent assurances by government to the contrary. More recently government abruptly reneged on its earlier gazette to allow tobacco farmers retain 50% of the golden leaf’s export proceeds, a development which casts aspersions on government’s commitment to safeguard investments and profits.
Thus demands and protests for the government to readopt forex as legal tender are certainly born out of genuine welfare concerns for the majority of hardworking Zimbabweans whose monthly salaries now range in the US$50 to US$100 bracket. Businesses has not been spared either as inflation keeps eroding value of future cash flows. It seems we have come full cycle to the period immediately preceding dollarisation under the 2009 Government of National Unity (GNU), hence same solution to the same old problem.
But because the GNU failed to implement political reforms espoused in the Global Political Agreement (GPA) of 2009, the current economic quagmire is precisely what ensues every time economic reforms, however thoughtful and brilliant, accomplish in the absence of meaningful political reforms. Consequently, Zimbabwe failed to consolidate the gains, mainly price stability, that dollarisation brought.
With hindsight, in the grand scheme of things, it can be argued that the economy suffered the most during the US-dominated multicurrency era. According to the UN Comtrade (2019), between 2008 and 2017 Zimbabwe ran persistent trade deficits averaging $2,9 billion. Coupled with rampant corruption, externalisation and government’s fiscal profligacy, which rendered the country a net exporter of the greenback. Against the backdrop of unaccountability and impunity, real rate of return on corruption reached an all-time high; no wonder why the dollarisation period coincided with the disappearance of US$15 billion, not to mention at least a billion more lost through externalisation.
Thus the devil is not with the Real Time Gross Settlement dollar per se, but in government’s mercurial tendency which, while indicating left, turns right; or equally suicidal, not turning at all. The devil is in the absence of reforms and competent and impartial institutions to curtail government’s excesses, which repels investment and kills industry. The devil is in the crippling sanctions which curtails local businesses to access major foreign markets and attract lines of credit to stimulate industrial production and economic growth. Now, virtually everything has to be imported, including toothpicks, unnecessarily losing forex. These are pertinent issues to which everyone across the socio-political divide should direct their passions and energies on, if we are to make real strides toward sustainable economic growth and shared prosperity.
That our currency is trading at five times (or more) to the US dollar, hence that weaker than the greenback, cannot be a problem. The South African rand and the Japanese yen, for instance, trade at 14 and 109 times the US dollar, respectively, but because their home countries enjoy attractive and open investment climates anchored on competent and impartial institutions not subjected to the direct influence of politics, their economies are strong and vibrant, notwithstanding their seemingly weak currency value against the US dollar. There, foreign currency is earned through productivity, not demanded.
Zimbabwe is currently one of the world’s poorest countries and to rid of that tittle and join middle income nations by 2030 requires more than rhetoric or demanding a strong or a stable foreign currency. It calls for government’s genuine commitment to reforms and painstakingly adhering to international best practices of governance, trade and commerce. This is the arduous journey traversed by once poor and struggling, but now rich and thriving nations. They identified and acted in harmony with the proven principles which govern the results they sought. And yes, we can, too.
Livison Bhebhe a political commentator and writes in his personal capacity