The introduction of the Zimbabwe dollar (ZW$) through Statutory Instrument (SI) 142 has generated a great deal of debate, with some arguing on the legality of the SI itself, which I have little knowledge of, but I can at least comment on its economic and political substance.
The chief argument being used now to attack the new currency is that there is lack of confidence.
This is understandable, because of the 2008 crisis where the government resorted to printing money when there was no production, resulting in hyperinflation like never seen before.
The question then is: How do we restore confidence? The simple answer is by avoiding the mistakes of the past, which although the government still has a lot to do, is now evident as seen by the budget surpluses since the start of the year.
It has been painful, especially with the 2% intermediated money transfer tax. Economists blame inflation of money supply, but this time, the cause of inflation was cost push, driven by a speculative exchange rate and almost everything was now being priced by an exchange rate factor.
As the government has now done fiscal consolidation, let us keep checks on government spending so that 2008 era is not repeated.
In particular, Parliament should play its oversight role through the Parliamentary Portfolio Committee on Public Finance with the treasury itself respecting the constitutional debt limit.
In dealing with the issue of public confidence, is the emotive issue of corruption.
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And the government, as the authorities, has to lead the process and by example. We read every day of corruption cases in parastatals and everywhere.
We have also seen the Auditor General’s audit reports exposing shocking cases and non–adherence to corporate governance tenets in the local authorities as well as government ministries.
That should be stopped and the culprits made accountable.
The big question is – what use are we making of the audit reports if the culprits are not being made accountable? We should begin to see arrests, prosecutions and convictions if the government is to be taken seriously by the people.
But there is also corruption in the private sector, which has to be dealt with by upholding good tenets of corporate governance.
Responsible behaviour is also needed. A good example is the impact of fuel cost on the pricing of goods and services, so when fuel price increases by 100% it does not mean that prices of everything goes up by the same factor, because fuel is not the only cost.
By performing a costing model, one can discover that unit cost of a unit produced only goes up by say 30%, so there is no reason at all to justify huge prices increases in line with the fuel price increase.
Some businesses are fair in their pricing model, yet some are bent on profiteering.
We should all be responsible during this time, because the consumer will not forget when normalcy returns, and those businesses won’t survive.
We should be guided by the notion that the consumer is king; it may be a sellers’ market now, but in the long run, the consumer will rule.
The latest pronouncement by the government banning the multi-currency currency can encourage exports.
Dollarisation had put us in a mentality that the US dollar could be obtained locally. Yet obtaining the US$ locally just meant a company would have solved its own problems, but what about national problems?
So production has to be supported, starting with agriculture and then the whole value chain. It is sad that even when we had good rains, our agricultural output was low.
We have to return to exporting horticulture to the Netherlands and our good beef to the European market. We need creativity and innovation so that we don’t spend the little available foreign currency on importing things like toothpicks.
When there is production, money printing becomes a function of the underlying economic activities.
Zimbabwe is at the moment mostly a nation of speculation — just buying and selling — which does not achieve economic growth or development.
If A buys shares today on the stockmarket and makes a gain in three days, that is just A’s gain at the expense of someone else, but there is no contribution to the country’s gross domestic product.
In these times of trouble, we should see real business leaders constantly innovating to produce for the export market.
We should also strive for efficient allocation of the foreign currency (forex).
Finance minister Mthuli Ncube correctly noted that Zimbabwe has no forex shortage, but it was being wired outside the formal system, changing hands on the parallel market.
So when banks have to allocate forex, we should see that done according to priorities.
A company importing raw materials for local production or medicines should be given priority over things like school fees, holidays, and other non-essentials, unless the applicant is generating forex.
We cannot continue to take credit lines and consume forex we have not yet earned. We will get into a debt trap and put a burden on the future generation.
Zimbabwe is not poor, but rich; we have so much which if used economically the nation would double its growth and improve quality of lives.
Crucially, let’s not continue to dwell in the past of the 2008 era, but work for the future. And let the mistakes of 2008 not be repeated.
We can all play a role in making Zimbabwe better. Former United States President John F Kennedy put it nicely and I quote: “We are not here to curse the darkness, but to light the candle that guides us through darkness to a safe and sane future.”
So let us not criticise for the sake of criticising, but let us all be active citizens who contribute positively. And we want the government to be a listening one, walking the talk.
Kudakwashe Bhaera is a qualified chartered accountant. He writes in his personal capacity.