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By Tinashe Eric Muzamhindo
The mono-currency regime has dismally failed and we have gone back to the United States dollars by default. This has been necessitated by the transacting public’s lack of confidence in the country’s monetary policies. Inflation is ballooning and the prices of basic commodities are skyrocketing with each passing day. The black market rate is unimaginably running amok. The generality of the public is suffering. Men and women in the streets are suffering. Children back home are the hardest hit. The price of bread is a clear indication things are not looking good for the ordinary person in Zimbabwe. Many people, arguably the majority of Zimbabweans are failing to afford a loaf of bread at least twice a week. This shows the gravity of the situation on the ground and the magnitude of poverty that is eating into the sinews of our society.
Despite all this, the government’s forecast is that the economy will register positive growth due to sable inflation. Really? The World Bank also estimates a modest growth of 3,9%, while the International Monetary Fund (IMF) has slightly reduced the country’s forecast from 6% to 5,1% for 2021.
The mono-currency crusade has witnessed interesting episodes in this country. Many statutory instruments were instituted however to no avail, with businesses being prohibited from selling goods and services at an exchange rate above the auction market rate. A number of ‘saboteurs’ has been arrested for fueling the black market exchange rate and money laundering. All these efforts seem to have hit a brick wall.
Nevertheless, I liked how the Central Bank Chief Dr. John Mangudya has kept his chin up during these all trying times. I was of the view that Mangudya should resign as the Governor of the Reserve Bank of Zimbabwe taking from his own words that if the bond note fails, he would resign. We all saw how the bond noes performed. Interestingly, we are no longer in the bond note era.
Despite his shortcomings, I have seen his desire to bring stability to the economy. This economy was destroyed for many decades and it will not be mended overnight. We need to appreciate some of the steps the Reserve Bank of Zimbabwe (RBZ) and the Finance Ministry are taking to address fundamental issues.
In Mangudya’s own words, Zimbabwe’s economy is growing faster than all its peers in the region driven by strong agricultural output in 2021, attractive global mineral prices, and massive construction across the country. I would like to believe him based on the International Monetary Fund (IMF) report that there is indeed progress in the country and the measures that are taken to address the issues are internationally accepted.
I would also like to believe his words when he refers to massive construction across the country. There is indeed infrastructural development which includes road construction, dams, and so on. This is a positive development that many Zimbabweans are seeing. This is something that an ordinary man can attest to. Moreover, his attribution to strong agricultural output in 2021 is as clear as day. Everybody is aware of Pfumvudza. I wrote many articles about Pfumvudza and even predicted strong agricultural output. So these are some of the things that can be seen by a normal eye. It doesn’t need binoculars.
The fact that the RBZ played a role in making sure the previous farming season success is something that we need to applaud the Central Bank Chief for. Agriculture is the backbone of this economy and investing in agriculture will definitely grow this economy.
It is imperative to strengthen the value chain in agriculture. It is also important to maximize value in the mining and tourism sectors since the country has been deriving the optimal returns from natural resources to change livelihoods.
I commend him for prioritizing critical sectors of the economy. Furthermore, the auction system that was introduced by the RBZ has so far benefited almost every facet of the economy if their statistics are anything to go by. In a difficult economy like ours, this development, to some extent is welcome. However, there are challenges associated with this auction system. The environment that has been created by the auction system is not conducive and some sectors are crying foul. I will touch on this sufficiently in my next article.
The Reserve Bank of Zimbabwe Governor has also made it clear that the fiscal authorities were determined to maintain financial sector stability and there should be strict monitoring of mobile banking activities.
In his presentation at the Parliamentary Pre-budget Consultation Seminar, the Central Bank Chief put forward interesting measures to support the 2022 national budget which include among others taking appropriate measures to ensure that foreign currency allotments are settled timeously, pursuing a strict monetary targeting framework to ensure that money supply does not destabilize the exchange rate, ensuring truant behavior in the economy is minimized and support domestic savings in local currency through instruments that compensate local currency depositors for potential exchange rate depreciation. These measures, if implemented, will help stabilize the economy.
It is also critical to allocate more resources towards civic education to accommodate citizens’ perspectives in the whole matrix. Given the nature of our challenges, it is key to address the real fundamentals relating to production and trade to boost confidence levels which have since telescoped due to dingy years of economic malady
His emphasis on measures that promote re-industrialization to deal with growth challenges, unemployment, and the budget deficit is commended. However, the bulk of these issues can be dealt with by bringing together captains of industry to deliberate on key fiscal policy measures needed to revitalize industries in the country as well as brainstorming on ideas to address other economic conundrums. This will further help come up with not only a fiscal policy statement that will speak to the needs and aspirations of the generality of the country’s population but address the pressing issues affecting the performance of industry nationwide.
Tinashe Eric Muzamhindo is the Head of Zimbabwe Institute of Strategic Thinking – ZIST, a local Think Tank which is responsible for solution-oriented and focused thinking in Zimbabwe, and he can be contacted at countrydirector@zist.co.zw