The Sunday Mail
Dr Gift Mugano
Zimbabwe’s economic challenges — which are characterised by a shortage of foreign exchange, price instability and erosion of real income among others — require a united team to tackle the problems head-on.
In recent weeks we had serious turbulences which emanated from fiscal and monetary measures pronounced by the Minister of Finance and Economic Development and the Governor of Reserve Bank of Zimbabwe respectively.
We didn’t agree on the approach which saw the pronouncement of the two percent tax on transfers without adequate consultations and explanations on how Government will rein in its expenditure.
We would have wanted to be thoroughly updated on how Government is cutting down its expenditures and show us the gap which need to be filled by the two percent tax. Ideally, the two percent tax would have been presented during the national budget presentation. This would have given our Honourable Minister time to adequately consult on the two percent whilst at the same time explain to us on measures he is putting in place to rein expenditures.
Equally, we were somehow disturbed by the separation of the real time gross settlement from nostro account.
Despite the fact that the RBZ argued that they want to preserve value of the foreign exchange earned by exporters, for example, it was clear to us that RTGS balances were not equal to 1:1 with the real United States Dollars.
So, we panicked and went on a rampage to exchange our RTGS balances with real dollars leading to the soaring exchange rates and high price volatility. This is the context. This context has brought us to a point where companies cannot continue to raise prices because no one has the capacity to buy since household incomes are fixed.
In order to store value, companies are going back to the re-dollarisation mode — charging prices in hard USD. This is illegal as it violates the Bank Use Promotion Act which prohibits the three — tier pricing system.
However, whether it’s illegal or not that is the direction this economy is heading towards. At some point we have to be fully dollarised; that is, a situation where the bank balances will be backed by hard notes and coins generated by Zimbabweans. In my view, we can achieve this in three years if we work extremely hard. And to achieve full dollarisation and economic stability which ensues, we need to be united as Zimbabweans. We can’t afford to go back to past events of politicking and blame game on past policy pronouncements. There are certain things we must accept and move forward.
These are inter alia accepting the fact that President Emmerson Mnangagwa is the President of Zimbabwe whether we like him or not.
The President and his Government have a constitutional mandate to lead this country. So, any voices and actions which are taken to undermine his authority or derail his Government will not help us at all but bring us misery.
The current price hikes which has seen our incomes being eroded thereby entrenching us into absolute poverty are not sparing anyone. The job losses we are seeing today are affecting both MDC and Zanu-PF supporters. We must collectively reverse this trend.
In the same vein, we expect our ministers to undertake extensive consultations before the policies are announced. This is key as it brings in national cohesion and consensus thereby lighten the burden and cost of policy implementation. In this month of budget consultations, let us work together as team Zimbabwe to inform the national budget with practical solutions which can take us to Canaan.
In the same vein, let us unite in operationalising the Transitional Stabilisation Programme. The TSP is a sound medium term blue print which has solutions to our current challenges.
What we must do is implement it as one team. Together we make Zimbabwe great.
Asante Sana.
Dr Mugano is an author and expert in trade and international finance. He has supervised four doctorate candidates in the field of Trade and International Finance, and published over 25 articles and book chapters in peer reviewed journals. He is a Research Associate at Nelson Mandela University, Registrar at Zimbabwe Ezekiel Guti University and Director at Africa Economic Development Strategies. Feedback: +263772541209 and [email protected]
