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‘Zim policies adhocratic, chaotic’

The reason why businesses are increasingly abandoning the Zimbabwe dollar is because the currency has depreciated so much that it is almost valueless.

BY TATIRA ZWINOIRA HARARE East Member of Parliament and former Finance minister Tendai Biti says the new law allowing the national power utility to charge exporters in United States dollars for its services is proof of Zimbabwe’s “adhocratic and chaotic” policymaking processes.

Last week, the Reserve Bank of Zimbabwe (RBZ), with the approval of the Treasury, issued Statutory Instrument (SI) 131 of 2022 directing exporters to pay in foreign currency for power purchased from Zesa Holdings.

However, the promulgation of the law comes as government has threatened to levy foreign currency duties on exporters charging consumers in strictly foreign currency for their goods or services.

The reason why businesses are increasingly abandoning the Zimbabwe dollar is because the currency has depreciated so much that it is almost valueless.

When the Zimbabwe dollar was reintroduced on June 24, 2019, after a decade in the morgue, it had a value of $6,32 against the greenback but this has since depreciated to $396,89 currently on the official market and over $800 on the parallel market.

“The regime has enacted SI 131 of 2022 which obliges exporters or partial exporters to pay electricity charges in US dollars.

“The measure is yet further proof of the adhocratic and chaotic nature of policymaking in Zimbabwe. It is proof of how ill-thought de-dollaristion was,” Biti said on Twitter last week.

He added: “Zimbabwe faces an energy crisis arising out of the fact that in 42 years of independence, there has not been investment in power generation.

“The Hwange thermal units are archaic and obsolete whilst Kariba has its own challenges. Pushing the cost of lack of gross capital formation to exporters is heavy handed and ill-thought.

“Zimbabwe urgently requires fresh 2 000 megawatt (MW) power generation and this regime is not capable of overseeing this. The lack of infrastructure development in 42 years captures incompetency and paralysis of the #Zanu project.”

Zesa Holdings revealed at the March International Renewable Energy Conference hosted by Alpha Media Holdings publishers of NewsDay, The Standard, Zimbabwe Independent and Weekly Digest, that the utility required US$2,5 billion to recapitalise.

The money is for increasing power generation to reduce the reliance on imported electricity that Zesa has been struggling to pay for.

The country has a monthly electricity generation import requirement of US$17 million.

But, while Zesa has a huge foreign currency requirement, workers and businesses earn their revenues in mostly Zimbabwe dollars.

As a result, experts expect new forex levies to be included in the costs of goods and services, thus increasing prices and further raising the already soaring cost of living for consumers.

“Needless to say, gross capital formation and infrastructure development will be a top, top priority in a new Zimbabwe.

“Zimbabwe infrastructure is in a state of decay, frozen in a 1950s-time machine. An absolute national embarrassment,” Biti said.

“Making exporters pay for electricity is also reflective of the fact that the regime has run out of foreign currency.

“The auction system has been an expensive vehicle of arbitrage and the taps are running dry, yet, the same exporters still suffer from the pain of export surrender requirements.”

Under the export surrender requirements, exporters must surrender 40% of their foreign currency earnings that they have called a tax burden.

“The overuse of Statutory Instruments to govern reflects lack of planning and disdain of parliament.

“Having 131 SIs in six months literally means a Statutory Instrument every 16 hours.

“Governance by decree is authoritarian, archaic and undemocratic,” Biti said.

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