By Dr Tafataona Mahoso
RETURNING to the subject of the bankruptcy of economic reporting in Zimbabwe, one could start with Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya’s interview with Independent Media Online which was published on September 9 2016 on page 14 of NewsDay and entitled ‘Mangudya: We Messed Up’.
Then one could go to the front page of The Sunday Mail of September 11 2016: ‘Plot to block US dollar use’.
The Sunday Mail story opened as follows:
“The US has set in motion a plan to ‘collapse the Zimbabwe economy overnight’ by restricting US dollar imports into the country.”
This is a surprising opening for the story, given what this column reported on June 3 2016 based on a Financial Gazette story (page three) on May 27 2016.
Moreover, the US sanctions legislation against Zimbabwe, the Zimbabwe Democracy and Economic Recovery Act (ZDERA) has been renewed repeatedly since the days of the Bush administration (2002) and it is clearly concerned with denying Zimbabwe access to foreign financial resources.
To understand how the public has been misled by Harare-centric elites and the press on the US dollar and the national currency issue, it is important to put these stories into a broader and more historical context.
In 2009 and 2010, I wrote in my ‘African Focus’ column in The Sunday Mail that the issue of the need for a national currency for Zimbabwe would remain the most critical, most urgent and persistent story among the people, but it would either be displaced or suppressed in the city-centric press because of class collusion between publishers, broadcasters, technocrats and politicians.
The US dollar could not permanently and adequately serve both as foreign currency reserves and national currency to provide popular and accessible liquidity for the majority.
On April 25 2010 The Sunday Mail published my ‘African Focus’ instalment on the same issue which in script form I entitled, ‘Shelving the Zimbabwe dollar: Where Minority See Stability, Povo Experience Stagnation and Depression’.
That stagnation and depression finally hit the cities in full force by 2016; but it was there in the rest of the country in 2009 and 2010.
But by 2014, both The Sunday Mail and The Herald had rejected the idea of recreating and re-launching a national currency.
The Herald had become even hostile to my arguments and both papers were welcoming views contrary to ‘African Focus’.
In December 2013, The Sunday Mail published a letter to the editor which abandoned debate in favour of personal attacks, suggesting I was not an ‘economist’ and therefore had no right to ask the RBZ to create our own money and to do all in its power to buffer and protect our own money according to Section 317 of the Constitution.
On May 27 2016 The Financial Gazette carried a story of critical importance for the entire economy and relevant to the national currency question.
It was misleadingly called ‘Banks seek Chinese help: As (Germany’s) Commerzbank shuts down Nostro Accounts’.
For lack of space, I can summarise the significance of this story as follows:
l The so-called ‘liquidity crunch’ was likely to get worse because of a recent decision by Germany’s Commerzbank to stop serving as a correspondent bank for several of Zimbabwe’s financial institutions.
In layman language, the German bank decided to stop providing US dollar notes to Zimbabwe because it had been fined US$1,4 billion for breaking US sanctions against Zimbabwe and other countries similarly under a US embargo.
l The US$1,4 billion fine against Commerzbank in May 2016 followed on the heels of a similar US$2,5 million fine against Barclays Bank in February 2016, specifically for clearing Zimbabwe’s foreign transactions forbidden by the US government.
l As a result of US actions and the Western banking industry’s response, it was becoming more and more difficult to move US dollar notes and payments into and out of Zimbabwe for normal business.
l Because Zimbabwe does not have its own currency, the difficulties of moving US dollar notes into and out of the country precipitated by the US actions automatically translated into difficulties for Zimbabweans just wanting to transact business for and among themselves.
l Foreign banks keen to supply Zimbabwe with US dollar notes had noted with concern that the volume of such notes being ordered by the country were not tallying with the degree of internal productive economic activity, thereby raising suspicions that there was rampant money laundering in Zimbabwe using the US dollar.
l The profile of Zimbabwe as an importer of US dollar notes was unusual when compared with countries of similar size in population or in GDP, precisely because Zimbabwe was relying on the same US dollar notes as national currency.
l Using US dollar notes as national currency made it hard for authorities to account for the foreign currency, let alone to control its movement in and out of the country.
In other words, Madzimbahwe were using scarce foreign exchange as commonly disposable cash, making it easy for neighbouring states to access US dollar notes via Zimbabwe even at a time when the majority of the people of Zimbabwe were failing to transact business for lack of cash.
l The fumbling and stumbling of the RBZ in May 2016 over the arrival of serious cash shortages at its doorstep in Harare meant that the authorities had no plan to fall back on in case those who owned and controlled the flow of US dollars around the world decided not to continue giving this country special and positive treatment.
RBZ Governor’s interview with Independent Media Online published in NewsDay, September 9 2016.
Given the preceding, one would have expected that by September 2016 the press would be so alert and so willing to educate the public about fiscal and monetary challenges that any major development or story similar to the German Commerzbank story on May 27 2016 would receive the deserved publicity and attention.
There was no change, except for NewsDay.
Even then the story was placed on page 14: ‘Mangudya: We messed up’.
The opening was brief: “Reserve Bank Governor John Mangudya openly admits the country messed up in 2009 when it dollarised.”
Considering the fact that at the time there were cash queues at almost all the banks in the capital and other cities; considering the fact that the Minister of Finance and Economic Planning was presenting a much-delayed Fiscal Policy Review that very same week, to be followed by the RBZ Governor’s own Monetary Policy Review – this Independent Media Online interview was a top-of-the page bombshell.
The RBZ Governor was implying the financial elites had misled gullible politicians about the wisdom of pretending that the US dollar could simultaneously and adequately serve as foreign currency reserves, as a national currency providing popular and accessible liquidity, and as disposable income for individuals to do with as they wished.
The RBZ Governor was also implying that all this ‘messing up’ by economists and so-called technocrats happened despite loud warnings issued by our own intellectuals through such platforms as ‘African Focus’ in The Sunday Mail, Herald Analysis in The Herald, African Pride and Zvavanhu on ZTV and various columns in The Patriot newspaper!
But the story just ended on page 14 of NewsDay of September 9 2016.
This is astounding; given the currency situation the majority of the people are facing as the new rains approach!