This is a short time coming. It isn’t a long ago the 2 % taxes on Mobile Money Transactions and other financial services came into effect in Zimbabwe. Still the ramifications has been dire and the consequences has hit all walks of life. Even Unions and Civil Servants are asking the government to get their salaries in US Dollars, than in the Bond Notes. That shows the lack of value in the temporary currency, which is still floated around and never was really a good idea in the first place.
That President Emmerson Mnangagwa tries to show some concern by writing to the Republic in the midst of credit crisis, a foreign exchange crisis and the sudden lack of imports of products because that is good. However, he is trying to say they ones tricking and finding a way to make is the issue. Not that the government haven’t done their job to monitor, safeguard and build a resilient economy. If they had done that, they would have known the consequences of their actions and would also have mechanisms that could ensure the balances of books and also enough reserves to fill the gaps. However, that is pipe-dream, as the ZANU-PF are making sure the hyper-inflation and lack of goods becomes a main-stay in ordinary life.
Here is notable quotes from what the President wrote on the matter:
“Sadly, events of the past two weeks have shown this is not so. Not everyone is playing to the rules. Partly because of wanton illicit currency deals happening in what is known as the black market, our economy has been disturbed. We have suffered massive market failures, manifesting in complete collapse of the pricing framework for virtually all commodities, regardless of import component. There has been a run on the bond note. In all this, there have been no winners, given that at the end of the day we are all consumers who demand and buy goods and services at any one stage for our survival” (Mnangagwa, 2018).
“Lately, our law enforcement agencies have been investigating these illicit activities. It has come to light that the money changers we see in street corners are mere “runners” who work for big currency sharks who operate from high places in air-conditioned offices. The real culprits are not these “runners” who are but a tip of a big and scandalous financial iceberg” (Mnangagwa, 2018).
“Currently we have no legislation to deal with currency manipulators. We therefore need urgent and robust measures to deal with this financial menace. Of course, I am aware of what else needs to be done by way of policy changes and key adjustments in different sectors and aspects of the economy, including in the public sector. These changes and adjustments are already being done, and will continue to be done until Government plays its own part in stabilising the economy by living strictly within its means” (Mnangagwa, 2018).
Let’s be clear about the value of the currency and the inflation, these are rates that barren on the principal that the Financial Ministry and Central Bank are controlling. Such in a manner, where the Monetary Policy and the International influence are in tandem. To an such extent that they are making sure the wages, the prices and the value of currency are leveled. In a manner, where it is livable and create a fixed growth. However, in Zimbabwe it is a free-for-all. Where a single tax and a lack of oversight with the Bond-Notes, also the oversight of currency in general. Are the reason for the short-falls and lack of cash. This is done, because the state isn’t doing their job of creating sufficient mechanisms and reserves to have a baseline even for the economy. When that is created and the vacuum has to be filled, the prices on the currency is growing, the inflation’s and the higher prices is the outcome. This isn’t something new, but an old ways of lack of resources, lack of basics and the needs of the market to push prices to cover costs. This isn’t manipulations or sharks. This is laziness of the Financial Institutions and the ones not using their oversight rule.
The already weak Bond Notes, the hated ones, that never was a good idea. Has ensured this downfall of currency. Combined with higher taxes, that takes vital funds out of the market and also empties the reserves of the companies to get more foreign exchange, but also makes it more expensive to get new stocks in the shops. This is a negative spiral self-wounded by the government, by a quick trick of transactions expensive and seeing the short-fall happening as consequence.
The previous Finance Minister called the Zimbabwe Economy an Albatross, I think he was right. Because there seems to be no one caring for having reserves, thinking of a rainy-day and also thinking of the outcome of any measure done into the economy. They should have built graphs and expected certain reactions to the levied taxes. However, they seems shocked and the President has to make excuses. Instead of saying they are incompetent and not having the man-power to stabilize the economy. They are instead making the currency traders, the Forex businesses and whoever who imports goods to blame. Because they are not seeing the Albatross, and neither the consequence of their actions.
The President and his men, should have known better, but they act all holy. When they are the ones living in sin. Peace.
Emmerson Mnangagwa – ‘Stabilising the economy: Tackling the parallel market’ 21.10.2018 link: http://www.sundaymail.co.zw/stabilising-the-economy-tackling-the-parallel-market/