adminNgoni Dapira Business Correspondent
ECONOMISTS have urged Government to tie-up loose ends on incoherent policies that are derailing progress made so far to increase investor confidence since the launch of Zim-Asset.
This was in view of the cash shortages currently being experienced in shops and banks which they have cited as avertable.
Economist and Africa University business management lecturer, Mr Thomas Masese said although there were some uncontrollable factors to the cash shortages, the authorities were partly to blame.
He said there were uncontrollable global trends such as the appreciation of the United States dollar against regional currencies that is stirring up a propensity by business and end users to prefer importing goods from South Africa thereby exporting money out of the country.
Mr Masese said, despite the timely intervention by President Mugabe on Monday to clarify on the Indigenisation Law, the damage had already been done as the uncertainty over the issue had already choked diaspora remittances, donor funds and foreign direct investment from potential investors.
“I feel that uncertainty over the April 1, Indigenisation Law ultimatum must have been the major blow to the sudden cash shortages. Such drastic measures by Government are avoidable. The impact has far-reaching consequences as we experienced. Most donors and potential investors probably shelved their money to wait and see for the outcome of April 1,” said Mr Masese.
Another economist, Mr Tendai Mukarakati said despite having a liquidity challenge due to limited FDI coming into the country, the import bill of $3.3 billion was not reflecting the reality of a country grappling from a severe liquidity crisis.
He said Zimbabwe’s huge trade deficit averaging $250 million per month was creating a situation where money, which is supposed to circulate locally, to create liquidity, was in fact being exported by financing imports.
“How can we import over $1 million worth of apples in a single month. It will make a big difference of generating employment and enhancing circulation of liquidity locally if such goods are produced and procured locally,” he said.
Mr Mukarakati said the economy had money but much of it was going towards importation of non essential goods at the expense of local manufacturers.
Last week most banks introduced stringent cash management systems including limiting maximum cash withdrawals to $200 per transaction and switching off some of their ATMs following a liquidity crisis that has hit the market.
The Reserve Bank of Zimbabwe Governor Dr John Mangudya confirmed the cash challenge and appealed to the banking public to adopt the use of plastic money in order to minimise high demand for cash associated with traditional payment dates.
He also urged local businesspeople that do not bank their daily takings, preferring to keep the money in safes at home to desist from the practice which was also fuelling the cash shortages.
Mr Mukarakati said plastic money would not work as long as people still had low confidence in the banking system following the loss of savings after the transition to the multi-currency system from hyperinflation.
He added that promoting the use of plastic money in a highly informalised economy such as Zimbabwe would be difficult as cash was the widely accepted form of payment and financial inclusion was still low.
Online Reporter