The Sunday News
Khumbulani Vodloza Sibanda
THE introduction of the new notes and coins by the Reserve Bank of Zimbabwe (RBZ) as part of measures to ease cash shortages and bring back the local currency exposed the inconsistency between the Zimbabwe portrayed by some media outlets and what is exactly taking place on the ground.
One such local newspaper had it that most Zimbabweans felt the new money would not change anything as long as Government has not implemented economic and political reforms to generate market confidence. Two days down the line the same paper reported that hundreds of people were queuing at banks across the country eagerly waiting to access that same money they had no confidence in — what a contradiction!
Allow me to sidetrack a little, are these papers saying the introduction of new notes and coins (currency reforms), the repealing of laws such as Access to Information and Protection of Privacy Act (Aippa) and Public Order and Security Act (Posa) and the Political Actors’ Dialogue (Polad) are not reforms? — Food for thought.
Those who follow the United States (US)-China trade war understand that US President, Donald Trump, has long accused China of unfair trading practices and intellectual property theft. According to the US Council on Foreign Relations the Trump administration declared China a currency manipulator. This occurs when a country that runs a large overall trade surplus buys foreign currency, often US dollars, to keep its currency from rising in value, because that weaker currency gives its exporters an edge.
Whether these allegations are true or not, the lesson Zimbabweans can take from this is that China is succeeding partly because it has a local currency, which by virtue of being weaker to the US dollar, at 1:7016 as of 13 November 2019, is giving its exports a competitive advantage — something Zimbabwe can also enjoy owing to the return of the local currency.
Turning to the local scene, it was reported that a day after the introduction of the new money and premiums charged by illegal dealers selling cash for mobile transfers started falling landing at 25 percent for coins and 30 percent for notes down from as high as 60 percent as cash supply rose and market demand fell.
If this is not change, then nothing qualifies as such. Should this trend continue, one would expect that a significant percentage of the transacting public’s disposable income would be restored before Christmas owing to the disappearance of premiums on cash or multi-tier pricing system.
Another argument raised in support of the position that the new money would not change anything was that new notes would likely increase inflation like it used to happen during the hyper-inflationary era under former RBZ Governor, Gideon Gono. However, economists that attended the 2020 National Budget consultation conference for National Assembly Members recently held in Victoria Falls dismissed fears that the cash injection would trigger inflation, arguing that price hikes were a result of many internal and external factors within an economy and that at 10 percent of deposits, the amount of cash in circulation would still be low by international standards.
RBZ Governor, Dr John Mangudya, weighed in saying the regional average of the total cash to deposit ratio was 12 percent, but countries such as Tanzania have up to 15 percent of their deposits in the form of cash. In layman’s terms, the money to be drip-fed into the economy by the RBZ, though enough for genuine cash demands, will be too little to cause inflation.
Taking the above discussion into consideration, it can be safely concluded that Zimbabwe stands to accrue more benefits than disadvantages owing to the introduction of the new money. Enough of cynicism and more of working together as one people with one goal, one vision and one country.
It’s high time Zimbabweans desist from trying to find loopholes in the system with a view to enrich themselves and this has been our Achilles heel. If truth be told, a few unscrupulous individuals have been making huge sums of money at the expense of the majority of Zimbabweans who are suffering and these are the proponents of the status quo.
Recently, the Minister of Finance and Economic Development, Professor Mthuli Ncube announced that the painful austerity measures period had elapsed and the country is looking forward to positive growth and productivity to ensure economic recovery.
This should be a signal to all Zimbabweans of the work each one of us has ahead, of ensuring the country achieve the middle-income economy by 2030. This is no time for scepticism bordering on a misguided view that the perpetuation of the hardship will bring in a new political order or huge profits for a few egotistical individuals.
Zimbabweans need to find each other and the Second Republic has created a forum to that end, Polad. Those among us who continue to think this forum is not for them and would want to continue with their “kudira jecha” campaign then Zimbabwe does not need them.
Zimbabwe challenges are best addressed by Zimbabweans themselves and this is the message we have been receiving from those who have the country’s interest at heart. As for the citizens, there is a need to sing from the same hymn book — this is our country, no amount of soiling it will change that fact.
