The Sunday Mail
ELECTIONS the world over are associated with certain levels of instability — political, economic and social — as parties and candidates seek to outsmart, outdo and out compete each other to endear themselves to the electorate.
Editor’s Brief
Victoria Ruzvidzo
In some cases, external forces do their bit to sway voters towards preferred candidates.
While this is not ideal for any country, it tends to obtain. There is already a lot of jostling and mudslinging in the election campaign in the United States, ahead of the presidential elections slated for next year. Unfortunately, such circumstances do not just play out in the political ring, but cascade to the rest of the economy affecting currencies, investment markets and even threatening peace.
Here in Zimbabwe, we are experiencing a severe bout of currency instability, rising inflation and other attendant problems resulting from a potpourri of factors. It is not mere coincidence that the rate at which the Zimbabwe dollar is falling has gained more speed as the country hurtles towards the August 23 elections.
May has seen the sharpest decline yet, with figures showing that as at April 30, the interbank rate was at $1 021 to the USD, while the parallel market rate was at $2 000 to the dollar. The latter figure had doubled by end of May. As of yesterday, the interbank rate was at $6 713 to the dollar, while the black market rate was at $8 500.
The fall has not been supported by any major shift in economic fundamentals except mere speculation and the possibility of sabotage. The past month has seen a sharp slide on a daily basis or even more than once a day, causing havoc in the market that has threatened to undo some of the gains registered by the Second Republic. Prices of goods and services have sky rocketed and are being benchmarked with the parallel market rate.
Many prices no longer make sense, especially in Zimbabwe dollars. It is now common to hear sighs and groans as shoppers express shock and disdain over the new prices that are changing haphazardly.
Some shops no longer display prices, with consumers getting the shock of their lives at till points. Extra hands are now required to take back mounds of groceries left at the tills, as they go beyond the reach of many.
The consumer basket for a family of six has gone up to $1 million for May, up from $611 275 in April. The June figure could be even more frightening going by current trends.
Discussions everywhere are now more about the price hikes. One till operator remarked last week that she was receiving a lot of flak from customers complaining about the situation and yet she is also facing similar challenges.
“They end up telling me all their problems, so to whom do I tell mine?”
President Mnangagwa has not minced his words and has in the last few weeks sent strong warning signals that any acts of sabotage will not be tolerated.
“The wanton increase of prices and manipulation of the foreign exchange rates must stop. This morning (Friday last week), when I met the Governor (of the Reserve Bank of Zimbabwe Dr John Mangudya), and Minister Mthuli Ncube (Finance and Economic Development), I gave them instructions that we shall not tolerate this nonsense.
“Those that are going to be found wanting and commit crimes against measures we have put in place. We shall have their trading licences withdrawn because these people doing these heinous acts to cause suffering on our people, I now warn them, warn them three times,” said the President.
He has not relented.
Only last week, the RBZ’s Financial Intelligence Unit froze indefinitely bank accounts of 12 major suppliers and four supermarkets for allegedly refusing to transact in local currency while employing forward pricing tactics, through which they price goods and services using future exchange rates. Others have been selling in US dollars exclusively. These malpractices have brought great discomfort to consumers.
The blended inflation rate rose to 86,5 percent in May from April’s 75,2 percent. The rising trend is expected to slow down as new measures to stabilise the foreign currency market kick in. The central bank was targeting a blended rate of between 10 percent and 30 percent before this mayhem.
The RBZ is now selling foreign currency through banks at market-determined figures since last week to stabilise the market while taming inflation. This is expected to narrow the gap between the foreign currency parallel market and the official rates.
Developments show that some businesses have betrayed an agreement at a National Economic Consultative Forum National High-Level Dialogue, where partners sought to address challenges bedevilling the economy. Discussions were facilitated by panellists from Government, labour, business, civil society and the academia.
It was agreed that these partners would jointly work towards bringing relief to consumers and workers affected by unfair trade practices by some businesses. But, before the ink on the agreement had dried, business went into overdrive in the opposite direction.
This is an untenable situation. Business needs to meet its end of the bargain and work hand in glove with the Government and other stakeholders to rebuild the economy, instead of destroying it. It will always come back to haunt the very perpetrators, and everyone will needlessly suffer collateral damage.
There is need to go back to the drawing board, where all parties should pledge sincerity, otherwise any such gathering will be a waste of resources, least of them being the teas and lunches. The Government has extended a hand to business and acknowledges the important role by business but there has not been any reciprocity in some instances,
Research shows that the election season can indeed unleash sabotage from the opposition and other external forces.
In a paper titled “Dynamic Policy Sabotage”, Germ’an Gieczewski and Christopher Li noted: “A common feature of democratic politics is that the opposition may sabotage the implementation of policies put forth by the incumbent party.”
“Policy reforms commonly arouse opposition during their passage through the legislature as well as during their implementation. Sometimes, the opportunity or the political will to put up a challenge at the legislative stage is limited. This would be the case when the incumbent has a legislative majority, or when the identity of the winners and losers from the policy is unclear ex ante. This leaves sabotage as the only resort for the policy’s opponents, be they the opposition party or other powerful vested interests . . .”, it reads in part.
Zimbabwe has been on a growth trajectory and has broken records in many respects under the Second Republic. It demands a more progressive approach by all stakeholders to reach the land of milk and honey.
In many instances, the damage that occurs in the run-up to elections is a major drawback that takes long to redress. So, is it necessary in the first place? Current dictates are that we take a more global approach in business, as opposed to a micro, blinkered and myopic narrative.
In God I Trust!
Twitter handle: @VictoriaRuzvid2; Email: [email protected]; [email protected]; WhatsApp number: 0772 129 972.
