Zimbabwe is on the right side of history

IN the past five years, President ED has literally moved mountains through an ambitious infrastructure development drive unlike any other witnessed in independent Zimbabwe.

From turning a 112-year-old idea into an imposing dam — Lake Gwayi Shangani — that will prove unfathomably transformative and empowering, particularly to the predominantly dry Matabeleland region; bringing the long-mulled Kunzvi Dam that will provide succour to both Harare and Chitungwiza to life; constructing the country’s first-ever major traffic interchange (the Mbudzi Traffic Interchange); to spearheading a truly majestic new capital in Mt Hampden; among other innumerable projects, ED’s milestones, which are likely to shape his legacy for generations to come, are there for everyone to see.

But perhaps his biggest project yet, and one that could be experientially impactful to every Zimbabwean, is establishing a stable and transactable currency to anchor the current impressive economic growth.

Time and again, Bishop Lazi has argued that a volatile currency, which naturally harks back to the period of vertiginous hyperinflation, has often led some to be sceptical, stoic and even cynical about the major developments taking place all around us.

After the demise of the Zimbabwe dollar following its demonetisation in 2015, especially after being buffeted by sanctions from the United States, the United Kingdom and Europe for more than 14 years, introducing a new currency was always going to be onerous and difficult. But on February 20, 2019, we took the plunge and introduced the RTGS dollar, which subsequently morphed into the new Zimbabwe dollar and effectively became the country’s sole currency on June 24, 2019.

But it was not smooth sailing.

In a country where the trauma of hyperinflation still lingered, the episodic bouts of volatility that affected the new currency had the adverse effect of undermining its confidence as a store of value and reliable unit of exchange.

And pitted against King Dollar (the US dollar), the outcome was inevitable — another mad rush and scramble for the greenback, which unfortunately inadvertently worsened the deterioration of the local currency. If gold rusts, what will iron do?

But, as a largely untethered fiat currency, without any asset to underpin its value — other than the prudential management of both the fiscal and monetary policy by Treasury and the Reserve Bank of Zimbabwe (RBZ), respectively, which managed to keep a lid on Government spending and borrowing — the Zimdollar, always subject to attack by hostile external forces, expectedly floundered.

Despite ED routinely stepping in with bold measures that brought a modicum of exchange rate and price stability, it became apparent that there was need for a durable solution that would sustainably anchor the new local unit and insulate it from external attacks.

But the new currency also needed to be circumspectly designed in a way that would make it better able to adapt to the evolving global financial system, where emerging economies, particularly those under the BRICS (Brazil, Russia, China and South Africa) + bloc, are increasingly switching from the US-based payment systems to trade in their respective local currencies, which, however, would likely be ultimately underpinned by gold.

For now, it seems the BRICS have settled on using gold as the basis for international exchange. What this simply means is that people will have to use bank accounts, bonds, loans and cryptocurrencies denominated in gold, rather than the US dollar. For example, last year, India began experimenting with gold-based government bonds. Folks, the world is changing — and we must change with it. And this is what informed the introduction of our new currency, Zimbabwe Gold (ZiG).

While speaking to the Russian media at the recent St Petersburg International Economic Forum (SPIEF), President ED critically indicated that ZiG spent two years in the oven before it was introduced by John the Second, during his maiden Monetary Policy Statement on April 5.

“Before I introduced ZiG, we had researched for two years, and we realised we wanted a solid, structured gold reserve-backed currency,” ED told scribes in St Petersburg. And he is confident that the new currency won’t fail, as there are sufficient gold reserves to back it.

You see, for centuries, gold was, and has always been, used as money.

It precedes the US dollar, which was only conceived in the late 18th century.

Overall, gold is essentially a timeless medium of exchange, whose value can neither be doubted nor questioned.

So, the bold and pre-emptive move to use it to anchor the local currency is a masterstroke.

It also makes it possible for the RBZ — which is now buoyed by the continued inflows of mineral royalties, especially ever since the new law that makes it mandatory for mining companies to pay their royalties in kind became effective on October 1, 2022 — to defend it.

Gold is wealth.

In the Holy Book, the Bible, it is mentioned more than 400 times, while money is referred to a little over 140 times.

1 Kings 10:21 says: “All King Solomon’s drinking vessels were of gold, and all the vessels of the House of the Forest of Lebanon were of pure gold. None were of silver; silver was not considered as anything in the days of Solomon.”

Genesis 13:2 adds: “And Abram was very rich in cattle, in silver and in gold.”

Our gold-rich country can definitely not be poor. This gives us the comfort that ZiG will not fail.

As they say, if gold rusts, what will iron do?

Right side of history

But Russian President Vladimir Putin’s invitation of his counterpart, ED, to SPIEF — and more so as one of the only two Heads of State, including Bolivian Luis Arce, to grace the event — is pregnant with meaning, particularly at a time when we, too, are angling for membership in the BRICS, an emerging centre of an evolving new multipolar world.

Bishop Lazi would like to draw you to what Putin told Chinese President Xi Jinping during the latter’s State visit to Russia in March last year, which is critical to understanding the emergence of a new world order.

He said: “Right now there are changes, the likes of which we haven’t seen for 100 years. And we are the ones driving these changes together.”

And last week, between June 10 and 11, foreign ministers of countries belonging to the BRICS, which have now been enlarged to include new members (Iran, the United Arab Emirates and Egypt), gathered in the central Russian city of Nizhny Novgorod to hash out, among other things, the establishment of a new international payment system that would be “unmoved by political pressure, abuse and external sanctions”.

As Putin said at SPIEF, “It is no secret, of course, that the reliability of, and trust in Western payment systems has been thoroughly undermined, and by the Western countries themselves. Together with foreign partners, we will increase the use of national currencies in foreign-trade settlements, and increase the safety and efficiency of such operations through the BRICS line”.

As Zimbabwe, we know this all too well, as various entities have been sanctioned by the US Office for Foreign Assets Control (OFAC) since the enactment of the Zimbabwe Democracy and Economic Recovery Act (ZDERA) in December 2001 for violating the unilateral coercive measures against the country.

Standard Chartered Bank, for example, was slapped with a US$18 million fine in April 2019 for these purported transgressions.

So, the envisaged BRICS payment platform, which will undoubtedly be anchored in gold, will give a lifeline for sanctioned countries such as Zimbabwe and Iran.

Therefore, the adoption of a gold-linked, gold-backed currency such as ZiG, which was instructively preceded by the introduction of gold-backed digital tokens, puts our systems in good stead to seamlessly handshake with the planned alternative global payment platform.

In essence, by virtue of being gold-linked, ZiG can be conceivably convertible and transactable on such a platform.

All these possible potential benefits make the BRICS important for Zimbabwe.

When the bloc meets in Kazan, Russia, from October 22 to October 24 this year, our path to membership will be clearer.

Our new engagement and re-engagement diplomatic offensive, which is premised on making our bilateral relations more comprehensive to include economic ties, is redefining and deepening our connection with fellow comrades, helping to leapfrog our development to a modern, prosperous and highly industrialised country.

Ceteris paribus (all things being equal), in November, in no small part due to the assistance of the Russians, we will be launching our second satellite — ZimSat 2 — into orbit, a major milestone that also symbolises our ambitions and aspirations.

Lest we forget, the Russians are a people of consequence. They were the ones who crushed Hitler’s army and turned the tide of World War II. The Russians were the ones who were the first to send a man, Yuri Gagarin (a cosmonaut), into space. They were also the ones who helped us in our war of liberation.

They will definitely help shape our future once again.

We are on the right side of history.

Bishop out!