By Professor Sheunesu Mpepereki
IN the previous instalment in this series on the US dollar craze in Zimbabwe, we highlighted the preoccupation of Zimbabweans with the US dollar.
We questioned the sustainability of a US dollar-based economy in a country which does not print US dollar currency.
With the diabolic Zimbabwe Democracy and Economic Recovery Amendment Act (ZDERAA) firmly in place after US President Donald Trump renewed it, Zimbabweans’ craze for amassing US dollars is a contradiction difficult to understand.
It is akin to insects that fly persistently to where there is a light regardless of the consequences.
Dollarisation, introduced in 2009, brought great economic relief to Zimbabweans who previously had never dreamt of walking around with wallets full of foreign currency.
Each dollar could buy a lot of goods, especially food imported from South Africa. Many, especially the younger generation, grew obese on the back of cheap oily foods bought with US dollars.
But this new-found financial ‘windfall’ was largely confined to the middle and upper class urbanites. The urban poor continued to eke a difficult living in the nooks and crannies of the artificially improving economy!
Rural folk, on the other hand, continued to face scarcity of both cash and material goods. For the majority of rural populations, the US dollar remained a mirage on their economic landscape.
Government and private sector firms dispensed small amounts in hard (US dollar) currency to their workers. The purchasing power of the US dollar was gradually appreciated by ordinary citizens.
Over time, the appetite for US dollars among ordinary non-banked citizens grew sharper and sharper.
At first it seemed just possible that US dollars were here to stay but as the appetite for US dollars grew within the population, the dollars began to be scarce. The scarcity was a result of several factors.
The dollars were coming into the country ‘clandestinely’. Some organisations bought US bank notes at a premium from external markets.
In such cases, transactions had to be hidden from the long arm of US ZDERA sanctions. Diaspora remittances from foreign-based Zimbabweans also helped to boost US dollar local supplies.
There was no properly organised exchange control to regulate the foreign currency movements. The US dollars were readily available in the streets.
Then the ‘smell’ of US dollars spread across our borders. Citizens and businesses from neighboring countries began to raid Zimbabwe for foreign currency.
With the unprecedented levels of corruption prevailing in the economy, the raiders found ready takers and millions were siphoned out of Zimbabwe through smuggling.
The banking sector also participated in what was politely referred to as ‘externalising’ of funds. These transactions were clearly unlawful but the level of probity within the banking sector had also deteriorated. Literally, billions were ‘officially’ siphoned out of the economy.
When the ‘new dispensation’ came, President E.D. Mnangagwa asked individuals and companies who had externalised funds to return the money to Zimbabwe. Significant amounts were returned by well-meaning Zimbabweans.
Hundreds of buses crossing into SA through Beitbridge are filled with passengers each carrying hundreds if not thousands of dollars. These people are taking forex out of the country, ostensibly to buy goods for resale.
After selling the said goods, the same individuals troop back to SA with wads of forex bank notes. This happens everyday, literally bleeding the country of the much-needed US dollars, rands and other currencies.
An increasing trend is for people to take out foreign exchange and open non-resident bank accounts in SA, Dubai and other countries.
Millions of US dollars’ worth of forex are leaving the country this way. Fuel dealers are also cashing in.
After receiving forex from the Reserve Bank, dealers obtain fuel, sell part in local Bond and RTGS and reserve the balance for sale in forex.
They then travel across the border to deposit the US dollars and rands in non-resident accounts that they open and maintain outside Zimbabwe.
One wonders how Zimbabweans can complain about forex shortages. Few are generating such forex through exports. The majority of the mobile population are engaged in relentless forex externalisation traffic.
The implications are here for all to see.
Zimbabwe faces serious shortages of US dollars to import raw materials and equipment for manufacturing exportable and locally usable goods.
Until Zimbabweans stop and reconsider their commitment to their own country, we shall continue to face dire forex shortages.
Africans have often complained of leaders who siphon forex from local coffers to deposit in Switzerland and other foreign capitals.
For Zimbabwe it is now thousands of ordinary citizens who have joined the externalisation band wagon! Where is our patriotism?
Many have gone on to use the externalised funds to build houses in foreign lands!
These people continue to reside in Zimbabwe and so the houses are occupied by citizens of those countries while Zimbabweans struggle for a roof over their heads!
And many will deposit the rent and other income in the same foreign countries while mother Zimbabwe cries for help in the form of investment!
We have earlier mentioned unprocessed minerals like diamonds and the golden leaf, tobacco, as our main sources of US dollars.
Many syndicates were formed to find ways of externalising US dollars and other foreign currencies.
Law enforcement was at best weak or non-existent. What began as a trickle rapidly became a flood of US dollars leaving the country while banks were shunned by most citizens who kept their wealth under their pillows.
In all the above scenarios, we do not witness a single case of Zimbabweans bringing in foreign currency. Who was bringing in foreign currency into the country?
Manufacturers who exported brought in forex, yes, but very little; tobacco farmers yes; mining firms yes! The tragedy; forex outflows far outstripped inflows. Worse still, the exports were mostly low value raw materials with little or no beneficiation!
Zimbabweans vis-a-vis foreign exchange conundrum
Meanwhile the Zimbabwean population had warmed up to the US dollar such that literally most urban citizens moved around with wads of US dollar notes. The South African rand also became popular but as it weakened against other currencies, the US dollar became the dominant preferred currency. By this time, the appetite for US dollars had sharpened significantly.
The Western education and Christian teachings, daily poured into the heads of Zimbabweans, have succeeded in mentally, and even spiritually, isolating the people from their roots. While people from other countries will beat you up if you criticise their countries in derogatory terms, Zimbabweans will lead in rubbishing their own country.
One cannot help think that colonialism was most successful in inducing Zimbabweans to hate themselves, their country, their own people and even their currency.
They have, instead, turned to worshipping the US dollar!
A harsh judgment perhaps, but how else do we explain a wholesale denial of a people’s own currency characterised by wholesale externalisation of value to other countries?
A US dollar craze indeed!