The Sunday News
Mhlupheki Dube
THERE have been some critical actions and pronouncements being made regarding money issues over the past few weeks.
First, was the freezing of some mobile money accounts of companies and individuals suspected to be involved in illegal money laundering schemes.
The freeze has affected some big players in the livestock industries whom I may not name for fear of litigation. There are one or two abattoirs who were affected and my suspicion is that they got caught up not necessarily because they are involved in illegal deals but perhaps because they have accounts that move a lot of money through mobile network platforms because they pay farmers for their livestock using these platforms. This article, however, is not aimed at exonerating them, neither is it aimed at convicting them but to lament the effect of the action on the farmers.
Another second major pronouncement is that of the court ruling relating to debts incurred in US dollars where it was declared that the money should be paid in that currency contrary to the previous provisions where these were directed to be cleared in local currency.
I am no lawyer nor am I an economist hence I am well out of my depth in this territory. However, my interest again is what this means to livestock farmers. How this ruling will impact livestock farmers. Regarding the issue of frozen mobile money accounts for some big livestock buyers my appeal to the powers that be is to resolve this matter as quickly as they can as farmers are already being affected.
I get a lot of calls from farmers screaming to high heavens about this as the action has left them vulnerable for exploitation by the middlemen. Also, since this has affected big time players in the livestock value chain, one can posit that the livestock producer price will take a knock as demand gets depressed because of the inability to take part in the market.
Ordinarily this is the season during which we should see the curve of producer prices beginning to rise as prices starts to firm as we get into the dry season. It is important to realise the inter-connectedness of the value chain such that when one section fails to function optimally, it affects other components of the value chain. A simple example will be, if the buyer is unable to pay because his payment platform has been frozen, it means farmers have nowhere to send their cattle and consequently transporters are grounded because there are no customers who want to ferry their animals.
Even other players like stock feed and drug suppliers will feel the heat because when farmers are not able to sell, they are not able to buy such products. While I appreciate that not all livestock buyers or abattoirs were affected by this freeze, in some areas these players by their sheer size, have become a de facto monopoly such that if they catch a cold the whole value chain in that area sneezes.
It is my prayer that this matter gets resolved and things normalise. Now with regards to the court ruling, my questions are what that means to the livestock farmer. If for example I was owed US$5 000 by the abattoir for my animals which I supplied, then after the pronouncement that my US$5 000 could be cleared using 5 000RTGS, they did just that. Now after the nullification of this directive can I go back to the abattoir and say, you know what, you owe me big time, pay. In other words, can this be applied in retrospect for those debts that had already been cleared using the local currency or it only affects those that had not been paid?
Someone with a legal brain needs to unpack this for our farmers and agro-dealers who may have been affected by the now overruled directive. Having said this I reiterate my call to abattoir operators and big-time buyers that they need to consider paying farmers in a firmer currency since the US$ was brought in as legal tender. Will it be asking for too much if they could say pay a certain fraction in US$ and the remainder in the other ways that they have been using?
Right now, farmers want to destock but selling in local currency is not a favourable option as the money gets wiped out by inflation. So if the money cannot be alive until the next season when farmers want to restock, then selling fails to be an option.
Uyabonga umntakaMaKhumalo.
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