Govt must heed advice on the economy

President Emmerson Mnangagwa

BUSINESS’ criticism of government’s latest measures to strengthen the deteriorating Zimbabwe dollar has exposed again the failure by President Emmerson Mnangagwa’s government to address the economic crisis.

The crisis is deepening and concrete measures are urgently required.

Some of the measures announced by Mnangagwa include the imposition of stiff taxes on foreign currency transfers and on the sale of Zimbabwe Stock Exchange shares.

The measures are aimed at calming the markets, but in many ways they pose challenges for companies to sustain operations.

This is why even after the announcement, the Zimbabwe dollar continued to fall on the black market.

This has resulted in skyrocketing prices of basic commodities, as salaries lag behind the galloping black market exchange rate.

The Zimbabwe National Chamber of Commerce (ZNCC) has not pulled any punches in raising alarm over political interference in monetary policy issues, and it is right.

Political interference in the running of the economy has proved futile in Zimbabwe over the years.

But it seems leaders are unwilling to learn.

“The downside is having the head of State announcing such measures sending a clear signal that politicians are directly involved in economic policymaking, notably monetary policy measures (where a greater degree of central bank independence is required), and in the process rendering the Reserve Bank of Zimbabwe as an arm of political decision-making,” the ZNCC said.

Robust sustainable measures must be implemented to turn around the economy.

But government has chosen to ignore sound advice.

Therein lies the tragedy of the latest measures.

Government has continued to stick its head in the sand, implementing measures that worsen the economic crisis and are against the letter and spirit of its ‘open for business’ mantra.

No serious investor will come to a country run by a government prone to knee-jerk reactions such as suspending bank lending, the lifeblood of the country’s financial services sector.

Measures put in place by Mnangagwa’s government in the past to protect the local currency include banning the multi-currency regime and making the Zimbabwe dollar the sole legal tender in 2019 and the infamous Statutory Instrument 127 which penalises issuance of local currency receipts for foreign currency purchases and pricing goods above the official auction rate. These measures have a common denominator in that they have failed dismally to stop the alarming free-fall of the Zimbabwe dollar.

Similarly, these punitive measures will fail to stem the rapid depreciation of the local currency and things will not change until government consults and implements advice proffered by business and other stakeholders.