Case of disappearing god

Joram Nyathi Spectrum

Now that the US dollar has failed us, we are desperately in search of another god, and we are so terrified of our own that the bureaucrats have once again come up with a very revolutionary idea, adopting the South African Rand as the “final solution”. That way they avoid the burden of thinking while cockily waving their economics or finance degrees.

WE have observed in the Spectrum in the past that no amount of foreign direct investment or exports or Diaspora remittances or aid can earn this economy enough foreign exchange so long as there are no serious efforts by the authorities to staunch its random, reckless and wanton externalisation by regulating its access and use in the country.

This was crudely exemplified in a recent announcement by Reserve Bank Governor John Mangudya that tobacco farmers and ordinary Zimbabweans could withdraw as much as $10 000 and $1 000 respectively per day.

No questions asked, too.

Not even the proliferation of bank cards and point of sale machines can cover for the reckless export of US dollars to buy trinkets.

Thankfully, that never materialised, and for the first time since dollarisation in 2009, the nation is beginning to engage in a serious conversation about the damaging effects of the US dollar on the economy and the need for alternatives, although, for convenience or for political expediency, we are once again refusing to bite the bullet or, to use an ancient cliché, to take the bull by the horns.

Our reservations about sufficient foreign earnings in the past have been based on the trade deficit the country is facing, much of the money spent on non-productive imports.

But there is much more and we could never have articulated the situation more eloquently than the banks themselves, leaving us wondering whether we always tell each other the truth. (If so, surely bankers should have asked Dr Mangudya if he were serious about setting a daily individual cash withdrawal of $10 000 just because one was a tobacco farmer, when in the US the limit is said to be just $400).

At a breakfast meeting organised by the Roman Catholic Church earlier last week to discuss the vexed issue of mooted bond notes and the cash situation in the country, bankers vindicated our position regarding the wasteful use of foreign currency in Zimbabwe. Barclays Bank Zimbabwe managing director George Guvamatanga was apparently asked by fellow bankers and he agreed to bell the cat. Never mind that banks might be understating their foreign currency holdings. Guvamatanga told the breakfast meeting that banks were depleting their nostro accounts bringing into the country money that was not being used for productive purposes.

These were his own words as quoted by the media: “If we keep on using money in nostro accounts that keeps on disappearing then we need a different mode. We need a means of transacting that is not going to be abused. We cannot keep on bringing money into the economy that is disappearing.” And disappearing is the word.

What is a person authorised to withdraw up to $10 000 every day supposed to do with that amount of cash? When they have the authority to withdraw the money why should anyone pester them about how they spend it, where, when, on what? Not to mention that our borders are porous.

On Tuesday this week Bankers Association of Zimbabwe president Charity Jinya was reported as stating that Zimbabwe had lost $1,8 billion to externalisation last year. Given an average annual trade deficit of almost $3 billion, we can assume that the $1,8 billion refers only to official transactions, including illicit financial flows. That the figure doesn’t include regular reports of up 100 bales of second-hand clothes imported through Mutare or truckloads of second-hand tyres passing through Plumtree border post.

We are now accustomed to reports of $20 000 being seized from individuals at the airport. This week one David Chapfika joined the elite club of those exposed for externalising $20 000.

Earlier in the week it was some Rwandese caught trying to take out $87 000. We don’t have the nerve to imagine the amounts that leave this country through other illicit channels and, to use the bankers own words, “disappear” from the system.

Let’s acknowledge that the US dollar brought relief following the trauma of 2007/08. It did serve a purpose when it was a means of transacting, like all currencies should be. Things changed gradually when the US dollar became the dominant currency in the multi-currency basket, and soon became a commodity to be hoarded, sold and exported. Now the Bankers Association of Zimbabwe tells us the US dollar accounts for 95 percent of all transactions in a basket of nine currencies! What cash crisis?

“Why should tomatoes that have been produced in Mutoko be paid for in foreign currency?” asked Guvamatanga at the Roman Catholic Church meeting. “Why must workers be paid in foreign currency?”

Sir, the seed was bought using foreign currency. So was the fertiliser. We are foreigners to ourselves. It is good and salutary that these inconvenient questions are being asked at public forums, not secretly in foggy bars.

The US dollar is not our currency. We cannot tamper with its value for our own benefit. We cannot earn enough of it to do as we please. Our love for it has killed the multi-currency system in everything else but policy. It has become an albatross on the economy. While we must export more to earn it, it has made exports impossible for it to save our economy.

If we were a courageous people who love their country, we should say at this moment the US dollar has committed hara-kiri. We would then embalm it, give it a decent burial in the vaults of the banks, only to be accessed when the halo of its value is required to pay for essential imports. And life would still move on. Why should an individual, no matter however big by influence or stature, be allowed to withdraw $1 000 in crisp $100 bills every day of the month without having to account for it?

Zimbabwe is not plagued by a cash crisis or cash shortages. We have chosen to worship the US dollar, and that is the god which keeps disappearing. The other currencies are available in the basket. We shun them because they have limited appeal, they have a limited export potential.

Now that the US dollar has failed us, we are desperately in search of another god, and we are so terrified of our own that the bureaucrats have once again come up with a very revolutionary idea, adopting the South African Rand as the “final solution”. That way they avoid the burden of thinking while cockily waving their economics or finance degrees. What Gono’s derided as “bookish economics”.

Next time it will the Mozambican metical, next the Malawian or Zambia kwacha as we try to beat a stronger South African Rand. The Botswana pula is too strong. Through the Rand, we have managed to dodge the bullet. Don’t expect Tsvangirai and gang to say a word or stage a protest demonstration. He only gets worked up when local solutions are proposed. In the absence of the gold standard, American and South African central banks can print notes as necessary to aid their economies, but Dr Mangudya cannot be trusted with a paltry $200 million of bond notes, so I can’t envisage them flying come October.

So we shall miss the spectacle of Tsvangirai waving a placard in front of the American Embassy in Harare boldly inscribed: “We don’t want bond notes; We want our US dollars.”

Meanwhile the illusion of economic recovery based on daily, random, wanton use of the US dollar has finally evaporated. Let’s see if the SA Rand will restore the “fundamentals” required for the introduction of a Zimbabwe currency now that the fundamentalists have their way.

Ladies and gentlemen, my primitive logic tells me I should not require US dollars or Rands to buy tomatoes or cabbage at Mbare Musika.

Nor to purchase a second-hand vehicle from my neighbour, nor for the services of a mechanic or gardener.

Those currencies should go towards national productivity.