At the just ended 73rd United Nations General Assembly (UNGA), held in New York, United States of America, President Emmerson Mnangagwa and his Finance and Economic Development Minister, Professor Mthuli Ncube, touched on a number of issues regarding the resuscitation of the Zimbabwean economy and measures to be implemented meant to pull the country from the economic doldrums that it currently finds itself in.
The President stressed on the uphill climb process to economic revival stating that the process would not be a walk in the park, but rather, that stern and hard decisions would have to be taken to turn around the economy of the nation. Difficult at first but with sweet results in the not so distant future. The Monetary Policy Statement (MPS) made a definite articulation of the steps of a thousand miles to be taken for the country to get to its endpoint of a middle income economy by 2030.
Professor Mthuli Ncube, Finance and Economic Development Permanent Secretary, Mr George Guvamatanga and the Reserve Bank of Zimbabwe, (RBZ) Governor John Mangudya, yesterday unpacked an approach to be adopted to effectively tackle the economy that had seemingly spiralled out of control. Artificial cash shortages and price hikes of goods and services had become the order of the day, flooding social media networks deliberately setting the agenda that the situation is bad in the country. This solidified the decision by the Head of State and his Finance Minister that the country needed firm and immediate intervention from Government.
To the layman on the street the MPS is rather complicated to breakdown, calling for a much simpler clarification that resonates with their day to day lives. An attempt has been made to translate some of the issues that touch the average man on the street, so that understanding is brought home for everyone to participate and assist the Government in its effort to bring sanity to the economic politics at play.
The Monetary Policy Statement is work-in-progress to put the country back to its original setting where banking made sense and where people had confidence with the banking sector. Contrary to alarmists who are bent on seizing and manipulating every opportunity for expedience and political relevance such as Tendai Biti who is singing for his supper with the hope that his dictator boss Nelson Chamisa would reserve a seat with his name on it, at the dictator’s round table.
Confederation of Zimbabwe Industries (CZI) President, Sifelani Jabangwe has attested to the fact that this MPS is a positive move toward the country’s economic revival; a Professor at the University of Zimbabwe, Ashok Chakravarti has also supported the MPS stating that it’s a step in the right direction. These are real Economists who understand the dynamics of the economy at a global scale, unlike Biti who is desperately trying to apply his limited knowledge of finance acquired when he was ceremonial Finance Minister during the Government of National Unity (GNU). Someone needs to tell Biti to stay within his lawyer’s lane, and let real Economists comment on the Economic dynamics of this country.
Back to the Monetary Policy Statement, people need to understand that due to a relaxed banking system in the previous administration, the country lost almost US$1billion in foreign currency through externalisation. It has thus become a necessity for the country to curb foreign currency abuse and externalisation through the implementation of measures that might seem harsh and unforgiving today, but yield positive results in the future. The Government now demands that for every import into the country, invoices whose banking details match with the payee’s name and bank account details be submitted, also foreigners buying goods such as fuel and other basic commodities to pay in foreign currency. This will slowly, but surely eradicate the system of illegal foreign currency exchange that has created artificial exchange rates. If this system is religiously enforced it will require that only manufacturing companies can be entitled to import raw materials which are not immediately available in Zimbabwe for purposes of producing local products, which in turn will be sold to the consumer by retailers. This production pyramid spells affordable prices for basic commodities; Statutory Instrument 64 of 2016 would have to play a critical role.
All this does not in any way entail that people will not be able to access foreign currency, the system demands that we bank our foreign currency and be in a position to access it as and when we want. However, if we do not deposit say Euros and United States Dollars, how do we expect to withdraw them from our accounts? The MPS has asked the banks to, with immediate effect; create Foreign Currency Accounts and Real Time Gross Settlement (RTGS) Accounts for their clients, and to exercise the “know your client” exercise. If one deposits the foreign currency into their bank it is automatically put in their foreign currency account, enabling them to access it when they travel outside the country or within which ever may be the case. RTGS will continue to be used and in effect at the rate of 1:1 with the US dollar.
The long and short of it is that Zimbabwe can only be built by Zimbabweans by coming together to work towards a progressive economy. Let the citizenry work in harmony with Government by policing each other and by abiding by the laid down financial regulations and building trust over the banking system. Transparency was not only necessary and exercised during elections, but should spill over to mining, agricultural and manufacturing sector. All the sectors of the economy should conform with transparency to the financial regulations. If everyone shuns corruption and underhand dealings, the ripple effects will be positive.