Last Sunday, President Emmerson Mnangagwa took to a weekly publication where he has a column to fume at local business for triggering current price hikes that just defy sense.
For him, business has betrayed the trust government has invested in private commerce by causing the fall in the value of the local currency; steeply raising prices across the board.
This, according to him, is against the fact that the government has facilitated easy access to foreign currency on the auction floor, allowing business to retain 80% of their earnings in and letting them do business using a multi-currency regime.
The president accused commerce — mainly comprising manufacturers, wholesalers, retailers and service providers — of abusing the forex auction system, disabling point-of-sale machines so as to trade only in forex and diverting goods onto the black market to avoid paying tax.
Was he correct to say this? The answer is yes and no.
There is a good sense in which business must partly take the blame for causing mayhem on the money market.
This wouldn’t be the first time we have seen commerce, out of pure greed and a penchant for profiteering, has done this.
Do you remember the Queen Bee syndicate a couple of years ago, just as one example?
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That one which took mega-millions from the official system, offloaded it on the black market and caused rates to spin.
The government even intervened by freezing the accounts of those involved.
Pity we don’t know what came out of the investigations that were done, if any were ever done.
What Mnangagwa forgot to say, most probably hypocritically, was that some of these businesses are intricately linked to the ruling Zanu PF and have even funded the party for its political preservation.
That some of these goons are, actually, close friends of those in high office and are, possibly, proxies of the powerful elite.
But if you are still going to believe we have high-end commerce that’s independent of Zanu PF and the ruling elite, there is still evidence that business has played a part in the pricing craze we have been suffering of late.
The president was apparently hyperbolic to accuse business of tampering with point-of-sale machines.
Yes, it’s possible that some naughty ones are doing this, but these belong to the minority.
The majority of them is still using a dual system that involves both the local currency and forex, particularly the US dollar.
But what’s happening is that the businesses, particularly major retail chains, are manipulating the system. Most of the tills within their shops are selling in both local and foreign currencies.
Then you have the odd till that is exclusively using foreign currency.
Here is the thing.
If you go to the hybrid till, the prices are really crazy.
If you want to buy a bottle of wine in local currency, the price asked for is unimaginable, especially when you convert to the US dollar on the official rate.
A bottle of wine that was costing US$25 a month or so ago is fetching something like US$70 or US$80 when converted using the official rate.
Which means that if you are using forex, you will literally pay a tongue and throat for the bottle, in real terms.
What’s then confusing is that, if you go to the till exclusively trading in US dollars, the price has dropped.
By US$5 or so.
How on earth — under one roof and in real time — does the same product have different prices?
If prices were going to rise in the local currency alone, considering that forex-denominated rates are playing havoc on the black market where most things are happening, it would be understandable.
But then, how is business justifying the steep rises in foreign currency prices?
A bush economist like yours truly has one answer. Profiteering.
Even the rise in local currency prices is suspect. They are too high to be justified by anything outside mere speculation.
Yes, it’s possible that some businesses are diverting goods to the black market.
A culture of profiteering would explain this.
Where the president is being naïve or dishonest or both is when he says it’s being done to avoid paying tax. Saying this is simply dissing the taxman, which is an arm of government, because Zimra must easily detect this.
You just track what goods were bought, how many are in stock and how many have been sold.
Then you kindly ask the retailer, as in this case, to explain the variance.
If I know this, Zimra must surely know it far better. The president too. Now, let’s look for the other culprits. It’s easy for Mnangagwa and other suspects in government to be using the blame bug to wiggle out of the pricing mess.
Successive Zanu PF governments have done that since time immemorial. Whenever they face a problem, the problem is coming not from them, but elsewhere.
That’s a lazy and dishonest way of doing things, of course.
We got loads of that spin during the Mugabe era, and the tendency is refusing to go away.
You get tempted to ask, in support of Mnangagwa and his spin masters: Why are prices going so mad just ahead of the elections?
An offshoot question: Is it not that there are some people out there trying to make voters angry so that they will vote “properly”?
Number one, most of the businesses in Zimbabwe have no business doing down the current establishment.
They don’t care who is in power for as long as the space is good for profits. Number two, it’s not as if money crises during election time are the preserve of business.
If the truth were to be told, it’s actually the sitting government and its direct and indirect agencies that’s mainly to blame for causing the chaos ahead of the general elections.
That’s because election time requires lots of spending on the part of the ruling party and its government to preserve their incumbency.
So, the RBZ is printing money 24/7 to fund election campaigns and logistics.
This money is being taken to the black market to mop up the forex, hence the whirlwind rises in rates.
The electoral commission needs super millions to carry out its basic mandate of managing the elections and most possibly to referee in favour of Zanu PF too, as we have seen for years.
The best thing to then do is to get the money printing machine whimpering. All propaganda tools must be funded.
That’s the reason why, all of a sudden, we are hearing that they are using millions and millions to buy cars and what not for the propaganda media.
Not that public media must not be supported. The problem comes when they are just remembered towards elections.
These days, there is so much talk—which Zanu PF and the government have not disputed — of a shadowy entity, the Forever Associates Zimbabwe Trust (Faz) that is being used to aid the party’s campaigns.
This trust is working throughout the country and steered the Zanu PF primaries. Have you asked yourself where it’s getting money from and how much?
The printing press, stupid!
Then we have the traditional perks for the chiefs.
The roads rehabilitation programme must continue. Zanu PF must get some money from somewhere and there should be a plethora of other projects to seduce the electorate.
That money is coming from somewhere, and that somewhere is the black market, via Fidelity Printers.
Someone last week was saying money supply from the RBZ has gone up by at least 100% in the past two or so months.
Even a bush economist knows that when money supply spikes, the money market goes really dizzy.
We shan’t be talking for too long about policy.
Successive Zanu PF government have adopted weird policies over the decades that are also to blame even for the current financial problems.
It’s not clear why it’s not getting into these guys’ heads that what they did by adopting the bond and RTGS currencies about seven years ago is one of the reasons why money rates and inflation can’t be controlled.
- Tawanda Majoni writes in his personal capacity and can be contacted on [email protected]