“Our problems are man-made and can be solved by man.” Those are the words of John Kennedy and there cannot be a better way to capture the current cash shortages in the country.
The damage has already been done, huge sums of money have been externalised from the country, and in all honesty, there is no one to blame for that.
We all bore witness as various business people, international musicians included, came in their numbers, did business and flew out the following morning with our hard currency. That money that they went away with to their countries did not find its way back into our system because we are not exporting our products and services as much as we are importing.
With that picture of our “man-made problem” painted, the thrust should now be on how to fix it.
Only the wise are able to learn from their mistakes. Therefore, news that the Reserve Bank of Zimbabwe has put in place measures to address the cash shortages is music to the ear. There is just too much pessimism in this country.
Reserve Bank of Zimbabwe governor, Dr John Mangudya, has prescribed a weekly importation of a minimum of USD10 million, businesses’ mandatory deposits of money, extensive plastic money usage and the resuscitation of the multi-currency regime.
Results are likely to show sooner rather than later. As we report elsewhere in this publication, businesses that do not bank their money risk losing their operators’ licenses.
Starting last Friday, RBZ’s crack unit has been hard at work making sure that no business keeps money away from the banking channel.
As the good doctor rightly diagnoses, this problem we have today is caused by the non-circulation of money.
What this translates to is the fact that we still have some money within our boarders; it is just not circulating as it is supposed to. Therefore, the RBZ should really come hard on those who have been mopping up cash from the market and not injecting it back into formal channels.
While a lot has also been said about the use of plastic money, a lot still has to be rectified in that area. The RBZ is engaging financial institutions over the reduction of bank charges and Point of Sale (POS) costs and we applaud them for doing that.
However, it shouldn’t end there. The crux of the matter is that while a great percentage of the populace wouldn’t mind using plastic money to do most of their transactions, the service is simply not yet available universally.
Take for instance; most motorists are still buying fuel with cash because most service stations do not have POS. Zimbabweans would prefer walking the talk rather than just saying the right things without following them through.
But solutions abound to this problem we find ourselves in. With the United States dollar, South African rand, Botswana pula, Japanese yen and Chinese Yuan among other currencies in Zimbabwe’s multi-currency basket; why should we even be mourning over the shortage of the USD? Maybe it is high time the people of Zimbabwe familiarise themselves with the other currencies.
The prevailing situation screams out loud that our macro-economic dynamics simply cannot support the USD, we picked out the wrong currency from that bountiful basket.
The good news is that it is not too late to look the other way — south, that is. Our best choice is the currency of a country that Zimbabwe trades with the most. While most locals have lost faith in the rand following its recent fall against the USD, there is need to appreciate that much of the rand’s drop has to do with world economics rather than the performance of the South African economy. Despite all our insatiable love for the greenback, South Africa remains Zimbabweans’ biggest trading partner accounting for around 44 percent of imports and 40 percent of exports.
Embracing the rand would not only reduce our cash shortages, it would also substantially reduce the cost of importing that currency. The relative ease with which Zimbabweans move to and from South Africa coupled with the large volume of trade and the strong political ties between the two countries will facilitate a continuous supply of bank notes and coins at a relatively cheaper cost. On the other hand, the distance between the USA and Zimbabwe makes the supply of the money too expensive, thereby making the USD the least favourable currency to use in Zimbabwe.
We can’t continue wanting to use the USD when we don’t have it. Let’s be real.
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