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IN his charge to the Zanu PF Politburo this week, President Mnangagwa laid out the most serious economic problem facing the country, and unlike external sanctions, this is speculation, profiteering and greed of a modest-sized group of Zimbabweans.
The President rightly praised the vast majority of citizens whose unity and resilience has not just kept Zimbabwe afloat, but has seen rapid economic growth. Even in one of the worst drought years on record, we have still posted two percent growth this year. So while not moving forward at the same speed as the last few years, we are still moving forward in a bad year, and not falling back.
Those not on board fall into a pair of groups, partially overlapping. First of all there are the sheer greedy, and this excludes those honest business people who while obviously wanting a profitable business want to make their fortunes honestly, legally and ethically. Not only is that allowed but it is praiseworthy, and they are among the leaders of our economic growth as well as being probably the larger contributors to our taxes and employment creation.
But there are those who see the economy as something to be manipulated, for short term gains, and by writing numbers down on pieces of paper, instead of doing proper innovative production and services, decide they are entitled to make money any way they want, without creating any wealth or taking more than they produce. These suck wealth out of those who do the work and create the wealth.
There is a difference between someone who creates wealth and takes a fair share of that new wealth as their reward, and someone who adds nothing but continually increases their share. We need a lot more of the first and none of the second contingent.
A second and murkier group in the darker recesses of opposition politics recognise they are not going, by legal means, to seize power and get their snouts in the trough, although they do try. So they try and influence others outside the country to build up sanctions, rather than dismantle them, in the weird belief that this will bring down the Government and let them assume power and grab the cash.
We hasten to add that there is no problem with those who disagree with Government policy and have their own ideas so long as they are ethical. We are a democracy and these are our natural rights. But we stress that everyone should be looking at building, not destroying and certainly not what amounts to stealing.
The President made it clear that the Government was continuing to work out policies that encouraged growth, that is those who make money by adding value rather than manipulating the economy and trying to use what influence they usually, and now often mistakenly, think they have. And he also made it clear that action would be stepped up against the saboteurs.
We have some of the laws we need, although these need to be applied more firmly in some cases. One major weakness of our economy is its size, it being still on the small side. That often produces monopolies or near monopolies with a very dominant business in too many sectors or products, or allows two or three chief executives who should be in competition to meet quietly on a golf course, or these days on coded Zoom, and remove the competitive elements.
One curious new factor is the high US dollar inflation we are seeing, with US dollar prices rising as a result of such lack or paucity of competition among producers or importers of some products. People wonder why, and the reason is generally our manipulators. There are odd products where there is a better reason, but for too many it is a combination of greed and manipulation of exchange rates.
The black market has largely been killed and now accounts for less than five percent of foreign exchange. Businesses either earn their own through direct purchases or buy what they need from a bank, and often both. But those murky former big dealers who used to run the market still set rates, even though they are not dealing, or not dealing beyond $10 here and $20 there. While those rates thus have zero connection with reality, they are used to manipulate prices.
The cheat starts with the correct US dollar price, converts to ZiG at that virtual black-market rate then converts back to US dollars at the official and real rate to get a new US dollar price. They then sell at that price, even though it is meaningless, except as a form of profiteering. That jump in prices is legal, sort of, when the hidden calculation is not made public, but needs to be stopped.
Price controls are not the way forward, but there does need to be an investigation into price gouging, and usually that means investigating monopolies, near monopolies and probably cartels. We have the law already, and it must be applied more vigorously. Evidence can be accumulated from a wider range of agencies, including the RBZ Financial Intelligence Unit, the Competition and Tariff Commission and the Consumer Protection Commission, as well as the detailed price data collected each month by ZimStat, which can be the start of the needed analyses.
We are already seeing retailers moving into new external suppliers for some goods, and wanting to do more, and that damages a lot of our industry. And a glance at tuckshops will see that they are now mostly stocking imports, even when there is an identical local product, because the rise in US dollar prices in Zimbabwe makes no sense.
It may need the addition of civil penalties or changes in tax law to hammer this sort of profiteering. During the Second World War, Britain introduced an excess profits tax, that hit 105 percent at extreme levels of profiteering, to allow normal profits but not obscene levels.
This may even be overtaking the former problem of those dreadful people who had bright ideas of profiteering by trying to corruptly gain sole contracts through influence. As the Government hammers that, we now need to extend the range of the Government action, as the President noted. Economic corruption has largely moved into local urban authorities, if the hard evidence coming forward is anything to go by.
The pure saboteurs are possibly easier to nail down, although since most sabotage is down for personal gain as well as to deliberately damage the country, the same techniques used to kill non-political profiteering will help there as well.
Online Reporter