It’s up to us to make Zimdollar work

echoes CONWAY TUTANI

The record needs to be set straight that Finance minister Mthuli Ncube has done nothing outrageous and/or unprecedented by banning the use of foreign currencies in domestic transactions.

According to Wikipedia, this is a measure resorted to by governments all over the world in certain circumstances. Wikipedia says:

“Foreign exchange controls are various forms of controls imposed by a government on the purchase/sale of foreign currencies by residents, on the purchase/sale of local currency by non-residents, or the transfers of any currency across national borders. These controls allow countries to better manage their economies by controlling the in-flow and out-flow of currency, which may otherwise create exchange rate volatility. Countries with weak and/or developing economies generally use foreign exchange controls to limit speculation against their currencies.”

Zimbabwe is exactly in such a position, and so needs that prescription. It’s the same medicine for the same disease. So, the idea and
principle behind Ncube’s decision is economically sound.
Turning to the United States, yes, forex trading is allowed there, but the industry is much more regulated nowadays to prevent excessive
trading and speculation that can drastically magnify risks and losses.

For forex trading, the US Commodities and Futures Trading Commission is the regulatory body. Yes, there is no laissez faire; there are
stringent regulations and restrictions. As one can see, the economic prescription is the same whether one is in Zimbabwe or in the US. So, forex controls do not make Zimbabwe any less democratic — as some elements in civil society allege — or the US any more despotic.

Ncube described the latest abolishment of the multi-currency as an attempt by government to resolve the problem where prices are indicated
in US dollars yet the majority of people earn local currency (Real Time Gross Settlement dollars), which has since been renamed Zimbabwe
dollars.

“That is profiteering (indexing prices to US dollar parallel market rates). These people are traders, actually they are not even hedging, they are traders and the moment they get the US dollars, they get them out.

“So, they are traders, they are not even hedging because when you hedge, you hedge for real. They are traders who are trading on the
parallel market and we are going to raise interest rates (to discourage speculative borrowing),” the minister said.

These restrictions are necessary so that the tiny minority who have regular access to forex do not distort the market to the massive
disadvantage of the overwhelming majority who don’t have access to forex. A balance has to be struck to attain equilibrium in favour of the majority.

Fortunately, some people are beginning to see that in its clarity and separating the economics of the matter from partisan politics. I
heard one such “born-again person”, so to speak, begging to differ with others, saying ordinary people should welcome the re-monetisation of the local currency, and not be swayed by those employed by non-governmental organisations (NGOs), who naturally want the
current situation to continue because they earn US dollars.

This could signal the change of the narrative from airy-fairy, impractical and foolishly idealistic notions to pragmatic issues. It’s a
sign of political maturity when people begin to realise that they are not on the same page, not in the same boat with those US dollar
cash-rich NGO staffers who are egging them on to cut their nose to spite the face; and that they are not in the same difficult circumstances with underpaying employers and overpricing firms.

Observed a fellow Zimbabwean this week: “Most of the people commenting against the return of Zim dollar are on social media and enjoying
foreign beers and whiskies in bars and hotels they don’t own nor have shares in — they are called consumers and US dollar is best
currency, hence the bitterness.”
One of the critics contrived to twist the directive from the minister, saying: “Your nostros/foreign currency account balances will be
liquidated if you want to use the money in Zimbabwe. No more cash withdrawals!”

Fortunately, fellow Zimbabwean Shingai Ndoro exposed this falsehood with his sober take: “Your FCA nostro account is usable when you
travel outside of the country. You can also do your online payments for foreign goods and services while you are here. You will no longer
require forex locally since all goods and services will be paid for in local currency. Pane chaipa here? (What’s wrong with that?)”

Just like NGOs, many private companies — who are among the staunchest critics of Ncube’s latest move because they have been reaping and ripping off from it — have been engaged in speculative and profiteering tendencies where even the prices of products that are produced
locally using locally produced raw materials were being indexed to the prevailing parallel market exchange rates of the foreign
currencies. These employers trade in forex, but they don’t want to pay salaries in US dollars — why? They sell goods and services in US
dollars, but don’t want to pay taxes in US dollars — why?

Ncube said: “What are we doing (in most instances) is that all the domestic market raw materials are here and you are paying your workers in RTGS. You know what? These companies that are profiteering with earnings growth of 70%-80%, are they increasing wages for their
workers? They are not.”

Ncube questioned why the private sector, despite reporting huge profits, were not adjusting the salaries of their employees. He said
government was working on improving earnings for its workers and, likewise, the private sector should also have a duty to look after its
workers. Indeed, these employers trade in forex but they don’t want to pay salaries in US — why? Need it be said again that it’s not coincidental that speculators hiding behind the people whose suffering they are causing don’t want the ban on the US dollar in everyday
transactions?

“They have a responsibility to their employees. Why are they not looking at their employees and paying them properly? Why are the
employees not marching in the streets to say pay us properly?” he said.

Indeed, it’s high time private sector employees marched against the real culprits — their exploitative employers — while Ncube carries
out his end of the bargain using the tried and tested the global template of forex controls.
All in all, a fair-minded Zimbabwean observed: “We, here in the Diaspora, we are sending money and that money has been going into the
streets. We need to take our financial system from the streets and operate from banking vaults.”

That’s exactly what Ncube is trying to achieve by making the Zimbabwe dollar the only legal tender for domestic transactions. Zimbabwe
needs its own official currency, period. This obsession with the US dollar is unsustainable from an economic point of view. The US
dollar should be traded in banks only. We need our own currency going forward. The price madness should be stopped by market forces as usage of the Zim dollar increases. It’s a process, not an event as some sections of the media are making it out to be with headlines
screaming failure.

It’s up to us to make the Zimbabwe dollar work — it’s all in our hands.

11 Comments

  1. Indeed Conway, there is nothing unprecedented by Mhtuli or is it government move, BECAUSE we have been through this route before during Gideon Gono’s era and the result is not going to be different. Always be reminded that parallel market rates are not pushed by those who earn foreign currency but by the few (CHEFS) who have unlimited access to huge RTGS$ then buy forex. The latest move is designed to make sure those few CHEFS will now have all the forex while the rest will have RTGS$….by July-end 100 RTGS$ will not purchase a loaf of bread – if it will be available. Its a public secret that civil servants have been pestering government to be paid in US$, its believed uniformed forces had joined the chorus hence the swift move by Mhtuli against all odds with no consultations whatsoever…again another own-goal to efforts at building the much needed trust between government business and consumers. The circus has reached fever-level.

    1. That is your predictable prediction, SINYO, as long as you accept that others have predictions that are not as dim as yours. And you make the glaring omission that in Gono’s era, his quasi-fiscal measures were not within the IMF Staff-Monitored Programme and other international financial lenders and players. This makes the basic premise of your postulations false and hollow.

      1. Well observed. This Sinyo has a conceptual problem, he is conceptually challenged.

      2. There are a lot of ‘constants’ from Gono’s era to the current situation; government still controls the economy eg RBZ controls allocation procurement of fuel and foreign currency, production is zero-corruption is abundant, political and human rights crisis awash to mention a few…aah one more zanupf is still in power. And its for these and many more reasons why the IMF cautioned that the SMP will not yield opening-up of lending avenues Faced with that adversity government will be forced to print more Bonds…resulting in hyper inflation. God forbid, i would love to be completely wrong on this one.

        1. Yes, ZANU P.F is still in power, doesn’t you know that? It was firstly ordained by our living Lord God and blessed by Ambuya Nehanda, Sekuru Kaguvi and the Great Sekuru Chaminuka to rule this country forevermore. And, the majority endorsed the rule by Zanu P.F. through the ballot box as a formality.
          If, you believe in your self you must simply accept your currency.
          Any government may print its currency when it deems it necessary.
          Corruption is not necessarily a Zanu P.F bane; but, is alive across the political divide. Getting lucre money (N.Chamisa and T.Biti) from the USA, UK, and EU countries in exchange of satanic,deleterious, ruinous,spiteful and racist economic sanctions imposed on our Motherland is worse than a police officer taking a z$5 bribe at a police manned road block! Though the crimes are equally bad……And, corruption is not confined in Zimbabwe alone, but, a world-wide scourge which need vigorous a fight, and has been in existence since the holy bible! Biti’s corrupt trail is yet to be unveiled; he is no saint!
          No country is debt-free, even your admired western countries borrow for their sustenance, even from perceived state rivals, e.g. THE UK was advance 60 Billion pounds in 2015 by the Chinese, and the USA owes both China and the Japanese trillions of dollars.

    2. I like how you have opened this debate, no harsh words only your mind, your fears and your predictions. Comparing now and 2008 is trick in the sense that Gono was running a quasi-fiscal government where everything was coming from printing the money. This time its slightly different because these guys are reporting a surplus and have a staff monitored scheme by IMF. The success of this currency is everyone’s responsibility. My view

      1. RBZ still controls fuel and foreign currency procurement thats the Gono way. The government cannot wait to start printing money, as matter of fact they have. You will recall when they introduced the BOND note it was said to be only for EXPORTERS and guaranteed by a controversial AFREXIM US$200 million loan facility hence why they hedged it at 1;1 with US$ against all advice. But we now have more than 1billion bond in circulation yet it was supposed to be only 200 million??. (I have dealt with the IMF SMP already on this platform) The surplus there are harping on about is not a result of increased production but from increased taxation – bad for investment. It only exists in theory perhaps from the confusion in accounting. The success of the new zimdollar indeed needs everyone’s buy-in with the powers-that-be coming clean and sincere – just like respect, trust is earned not demanded. Something is fundamentally wrong when you find a nation ambuishing its own citizens with currency reform.

        1. This Sinyo lacks a sense of proportion and balance. The United States national debt currently stands at US$22 trillion. That’s garguantan fiscal indiscipline. The overwhelming majority of Zimbabweans were not ambushed because they don’t have US dollars. Yes, speculators and profiteers were ambushed because they deserved to be ambushed. Police won’t notify criminals of impending raids and arrests because that would be the dumbest thing to do.

  2. I concur with Sinyo as I submit that what’s going to sustain the zim dollar when we are not producing and how are we going to restock again when we are not producing. The last time I checked all currencies are sustained by production – a macroeconomic fundamental.

  3. Farai J Nhire

    Also, african economies can do well with mining only and a good example is Botswana which does not have as many kinds of minerals as ourselves though. The main problem with those opposing the move to manitise the local currency is that they rely too much on the opposition backed media which speaks against anything and everthing as long as it is not from Mdc Alliance. These are the kind of people who do not believe anything until they have been “ambushed”. The government has been hinting again and again of the iminent return of the local currency but the doubting thomases wanted to be “ambushed” first in order to believe in the promise. They believe curuption is only coruption when practiced by zanu pf but i do not know what they call what drove the late opposition leader to fire 17 Chitungwiza counselors during the inclusive government. I would also want Sinyo to explain what makes Ed’s minning businesses, if any, more corupt than Nelson Chamisa’s business partnership with former president Rg Mugabe?

    1. Now we are talking. No wonder someone above has said Sinyo is conceptually challenged.

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