Proposed currency a futile exercise

guest column Zanda Shumba

IMAGINE unskilled contractors constructing a building for a client. The building fails to take shape and keeps collapsing.

Will it improve the building process if they change from using centimetres to inches? Will that improve the skill of the workmen and consequently the quality and strength of the structure? They may keep changing the units even to furlongs, cubits, but unless they improve the skill of the workmen, the materials used and adherence to the plans, standards, principles and drawings, in vain will the craftsmen fashion the structure.

Let’s say the contractor wants to fool the owner of the building, and probably himself too; he will first propose using centimetres for the purpose of measuring . On noticing that he is failing to put up the structure, the contractor suggests to switch to inches instead.

Failing again, will it turn out better to change to furlongs or cubits? It’s only the useless contractor that needs to be changed if he/she cannot abide by using orthodox practices of construction. If the contractor chooses to be adamant and keeps changing units year in and year out, the client will never have the finished building.

Money is just a measure of income, not the income itself. People don’t consume money, they consume commodities bought using money as a measuring device. One can have tonnes of money, but with no commodities to buy and consume, that money is useless.

Economists agree, money can both measure and also can be used to increase income if properly invested. They also agree that there is nothing more to money than trust. Money is just as good as the people administering it.

If the people administering the money are bad, the money is bad too. In my allegory, the inches are inches to a bad builder as well as to a good builder. So you cannot blame the inches if the building turns out poor.

It’s the workmen to blame. So money also can just be as good as the government.

So many will find it awkward, to say the least, the proposal by the current government to once again change the currency. Zimbabweans have used different currencies more than any other citizens of the world in a very short space of time.

We have used the Zim dollar, bearer cheque, South African rand and US dollar, bond note, RTGS dollar and now the leadership wants to change it to something new, having failed the bond note. For pharmaceutical drugs it may work changing from one drug to another, one drug may be more effective than the other. But money is something else.

MDC leader Nelson Chamisa said it very correctly, and that’s probably why over two million people voted for him, and not the clueless that rather imposed themselves.

“The problem that Zimbabwe faces is not currency, it’s politics. Until we fix our politics, deal with the legitimacy issues and address the fundamentals of the economy, introducing a new currency will not work, it’s about the fundamentals,” Chamisa said.

“Even if they were to allow trade directly in gold as currency, with the current government which is illegitimate and does not inspire national and international confidence, the gold will still lose value,” he said.

He went on further to say, “They should not lie about sanctions. When we were in the inclusive government, the same measures were in place, but we delivered. Business needs to have confidence in the government and policy direction. Capital will not come when you have corrupt elements holding influential positions,” he said.

So everyone should applaud Chamisa. The current government leaders talk about the past, the liberation struggle. But the young man talks about the future. Old age lives on remembrance, whilst youth thrives on hope and the struggling to achieve that hope.

The current government has tried in vain to convince citizens that sanctions are the source of our economic woes. Corruption by top government officials has remained unchecked with the President (Emmerson Mnangagwa) himself being regarded complicit in some corrupt schemes like Command Agriculture which has links to Sakunda.

With the level of information suppression in Zimbabwe, nothing could be further from the truth. Many Zimbabweans think therefore that it is impossible for the highly corrupt government to manage our fiscal and monetary systems. Corruption is being used by the current government as a thank you for compliance to top government officials.

The government has not been shrewd in its economic revival policies. What is needed is increased production of goods through investment and not continual printing of money.

The country needs to revert to its pre-land reform production levels. If agriculture does not rapidly and significantly take off, the economy will not recover. It has to be agriculture first.

Even NRZ collapsed as a result of agriculture collapse as it had few less goods to ferry. Unemployed people also have no money to increase demand and thereby stimulate investment, leading to economic growth. In any case no one wants to invest in a corrupt country, with a runaway inflation.

Zimbabwe has for long been an agro-based economy. The success of the economy lies in the powerful linkages between agriculture, industry and financial sector.

Government benefitted from taxing the three entities and was able to adequately remunerate civil servants, finance its fiscal activities and offer subsidies to health and education sectors. It was a delicate balance.

The poorly executed land reform that was politically motivated resulted in a shock disruption of this balance. All the three sectors suffered immensely and the economy suffered a huge setback.

The current government has tried to resuscitate agriculture through giving out huge but loosely binding loans. Most of the loans given out to top government officials were squandered rather than used for agricultural production. Inputs were sold on the black market by the same top government officials.

To remain in power, the current government resorted to same methods of patronage, giving out more loans to same top government officials with zero production on the land.

The loans are not binding and were neither monitored nor recovered. Most of the loans were actually given out through the central bank to circumvent collateral issues. The top officials then made sure that their cash cow remained in power by helping with election rigging and or frustration of opposition efforts.

With the level of systematic rigging and inconsistencies that took place in the last election, many were later shocked when the Supreme Court upheld the inconsistent result of the polls. The issue of legitimacy then surfaced and this will not go away.

An illegitimate government has to commit more crimes to remain in power and in the process become more illegitimate and sink deeper into isolation.

So with a government that does not comprehend the problems of too much printing of money with no structures of recovering the loans, inflation resulted and peaked 500 million percent in 2008. The same ‘new old dispensation’ is playing more politics than fixing the economy.

Its primary work is to make sure the opposition is decapitated and focusing only on how to remain in power, spends 90% of its time and effort on that. It remains with less time to figure out how to facilitate production on farms, industry or rescuing the financial sector.

With government clueless and insincere, inflation is wreaking havoc in the economy. Unemployment is high, and with no subsidies the health and education sectors have long since collapsed. The government has lost control of everything, except its firm grip on power.

Mnangagwa’s government should resign and give chance to those who have better ideas of how to turn around the economy and who understand the difference between money and income.

The government has removed a lot of zeros before on the currency, but the zeros kept bouncing back. Now with the bond note fast loosing value, rather than remove zeros to reset the currency like it did before, the cunning government is doing the same, but this time tries to fool the populace by changing the currency altogether.

It is the same thing, inflation remains it doesn’t change when one changes the currency.

The new old dispensation government is deceiving the whole nation. Who is fooling who?

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  1. Farai J Nhire

    Zimbabweans must never be woowinked by the prophets of doom whose mission is nothing but subotage, discourage and destroy. Zimbabwe’s financial position is consolidating even faster than expected and this has also been testified to even by the IMF. That is axactly the reason why it’s soon going to be possible for our country to have it’s own currency. Do not also forget that there are a lot of foreign companies that are already on the ground setting up shop but it takes a bit of time before full operations begin and we will see a lot of zimbabweans being employed. Have our Shumba heard of a chrome value addition plant which was recently commissioned in midlands? Such projects and others like it are the basis of zimbabwe’s new currency not street protests and vandalism by Mdc. You always want to give silly ultimatums to the government with regard to the economic situation but what positive contribution are you making towards the economy except waffling and discouraging investors and disturbing the government?

  2. Farai J Nhire

    I am also very surprised that the writer is not aware that the Us uses the dollar system to bully and dictate policy to other sovereign nations and this has unfortunately resulted in a significant number of countries starting to divesify their foreign currency reserves to include the chinese yuan which belongs to the second largest economy of this world and is still growing at more than 5% anualy. This is how your centimeter and inch analogy falls short of the situation on the ground. Our government should also diversify our whatever amount of forex reserves into the rand and the yuan and the so called high rate between the rtgs and the us dollar will tumble with a thud louder than the devil did from heaven. After all our largest trading partners are China and South Africa.

  3. Mr Shumba your rantings and raving about a ‘rigged’ elections of 2018 is just a load of bull shit. The problem is you are one of the many stupid followers of Little N.Chamisa and his MDC A who believe in his lies and falsehoods. The claims that he won the election and ‘rigged’ is just some folklore tale given or told to some uninitiated and immature toddler who believe in the old stories of the ‘hare and the baboon’ theatrics. Only a fool will buy this hogwash…….
    Curiously enough, our rtgs$ is stronger than all our regional currencies! Your misguided belief that our money is bad, is a mere perception with no basis, but largely influenced by self hate……. Take this Us$ = 109 Japanese Yen? Then the Japanese pegs their every goods in shops against the us$ and blame their government!
    Deleterious, satanic, ruinous, spiteful, and diabolic economic sanctions prayed for, instigated, invited and begged on our Motherland by the quisling MDC A led by Little N.Chamisa are the curse on our economy. These economic sanctions are an anathema to democratic ethos in a progressive global village. Only cowards impose sanctions on innocent citizens. And local advocates of sanctions on our Motherland are equally cowards who thrive on people’s misery.
    Who can trust a grouping of charlatans to lead our Motherland when they believe in economically punishing those they do not agree with politically? Hamulume chinhu chinonzi Zimbabwe….

  4. Correct Shumba, that proposal is an exercise in futility indeed not only is the announcement careless and miscalculated but a sign of panic and lack of tact. It is diabolical to conclude that an entire government with its bloated advisors, the ruling party a professor finance minister does not understand that the attendant economic tailspin cannot be addressed by currency reform – a symptom signalling more deep-seated economic fundamentals that have gone off-rail. There is a term for doing the same thing over and over again but expecting a different result.

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