By Dr Tafataona Mahoso

THE introduction to the very first top-page story in The Herald for  May 5 2020 goes back to an important issue which The Patriot has been raising through this column since 2014 and which I have raised through other columns since 2009:  Zimbabwe’s national currency policy.  

The story was titled ‘Outrage over US dollar priced COVID-19 test kits.’

This is how The Herald reporter introduced the matter:

“While all businesses in the formal sector can now open under strict health conditions as Zimbabwe moves into level 2 lockdown, many were unable to do so yesterday (May 4 2020) with the (required) rapid testing of staff being the biggest single problem as private suppliers were demanding US$25 a test kit, payable only in foreign currency. 

The illegal demand for foreign currency, and high prices of kits, made it hard for many companies, already hit by cash-flow problems after five weeks of lockdown, to restart.”

The question which arises is, why this outrage is being expressed now and why it now makes top-page headlines when we have been warning about the high risks to the whole nation arising from contradictions in our national currency policy.

The answer seems to be hinted on the second page of the same Herald newspaper:   

“Zimbabwe National Chamber of Commerce (ZNCC) chief executive officer Mr Takunda Mugaga said suppliers of test kits were seeking to profiteer. ‘The test kits are very expensive and they are being charged in US dollars. Why are they charging US dollars only? That is unacceptable and should be addressed otherwise only 25 per cent of the workforce will be tested,” said Mr Mugaga. 

The same so-called businesses who have been agitating for dollarisation have now awakened to some of its harmful effects!

The Herald reporter then added, without noting the contradictions:

“It is illegal in Zimbabwe to insist on foreign currency payments, although during the COVID-19 emergency businesses may accept foreign currency payments, but have to quote in Zimbabwe dollars.” 

Since 2009, I have been warning my readers about the following contradictions arising from inconsistencies in Zimbabwe’s national currency policy:

λ The very same officials who were charged with creating, launching, promoting and defending our national currency continue to suffer from a conflict of interest in the sense that they enjoy privileged access to foreign currency at the expense of the majority.  They therefore benefit when the local currency is eliminated or weakened against the US dollar.

λ A dual currency or multi-currency system does not, in practice, operate properly as a multi-currency system in Zimbabwe because speculators use the US dollar to fight the value of the local unit and they employ the local unit mainly as a mechanism for obtaining US dollar notes with which to continue their speculation and not to produce any goods. People who want their own local money for production purposes therefore have a different attitude towards that same currency from those who want it only as a tool for speculation.

λ Moreover, the pretence that we have a multi-currency system ignores the fact that, since the purpose of the US dollar in the hands of speculators is to fight and weaken the national unit, all customers using the local unit are automatically demoted in the eyes of businesses and therefore forced to retreat to the back of the queue where they may be served last only if supply of the goods being bought actually exceeds demand. Basic food producers buying inputs to grow food for the people are placed last in the queue after miners, flower growers, tobacco farmers and EcoCash agents when it comes to treatment by both wholesalers and retailers.

λ This means that making it illegal to force bidders to pay in forex is not a meaningful regulation. The supplier will never use overt force to compel the buyer to look for US dollars. He orshe will find subtle ways of preferring, foregrounding, holders of US dollars at the expense of those paying in the local unit.  There are many ways of doing so without openly forcing anyone.  Those with foreign currency can be given information not given to those using Zimbabwe dollars about availability of goods, medicines, chemicals, fertilisers and, now, testing kits and protective gear.

λ The life-and-death problem caused by poor monetary policy did not begin with COVID-19 and the need to test everyone.  We raised it several times in this column with regard to inputs for food production which are charged in foreign currency.  This undermines food security by limiting access to inputs to a tiny minority with US dollars.  We raised it with regard to rentals extorted from lodgers in foreign currency but then accepted by the Reserve Bank of Zimbabwe as ‘free funds’ which the landlords can use as they wish.  The houses for which landlords demand US dollars were built on land fought for and liberated by our war veterans.  They were built by builders as workers earning Zimbabwe dollars. Where is the justification for the landlord to insist on rent in US dollars?  Does it make sense in an economy where we need to import technology and medicine and we do not have the foreign currency as a nation?  Does it make sense among a people groaning under the yoke of illegal sanctions, one result of which is acute shortage of foreign currency for national priorities?  

Journalists and editors in general have also let the people down.

Nearly two months after the global break-out of the COVID-19 pandemic, it was clearly disheartening to read the following passage right on the front page of The Daily News here:

“The government is coming under growing pressure to return the country to the general use of multi-currencies anchored by the American dollar, as the prematurely re-introduced Zim dollar continues to plummet on the black market… (14 March 2020).”

This kind of illogic is disheartening because, even at the height of the dollarisation frenzy between 2011 and 2012, there were never enough US dollars to make the economy liquid.  

Now, with the flow of visitors to Zimbabwe stopped indefinitely as a result of the COVID-19 scourge, with Europe and North America having stopped trade and travel indefinitely, how did The Daily News and its editors expect to dollarise the whole Zimbabwe economy without the dollar? 

 The editors of The Daily News were not alone.

The Financial Gazette, on July 7 2007 and June 6 2019, published opinions advocating adoption of the South African rand as Zimbabwe’s currency.  

The June 6 2019 front-page piece was titled ‘It’s time to adopt the Rand — Experts.’  This was despite the fact that the same Financial Gazette on April 28 2019 (page 23) had already published the view of the South African Government represented by that country’s Trade Minister, Rob Davies, who had already advised Zimbabweans that they should create their own currency:

‘Zimbabwe should adopt its own currency: South Africa,’ read the headline in the April 28 2019 Financial Gazette.  “South Africa (SA)’s Trade Minister Rob Davies says Zimbabwe should adopt its own fiat currency as a way of addressing the country’s economic crisis.”

I cite the examples of The Daily News and The Financial Gazette merely to show that many in Zimbabwe, especially among the urban elite, do not think through the ideas they promote.  What is usually lacking is the ability to read the real world in addition to theories in books.

The break-out of the COVID-19 is a true global tragedy but it offers opportunity for The Patriot readers especially and MaDzimbabwe in general to think about its implications for what we have been told or taught about the economy, about Government and about the people.

Apart from droughts and the illegal sanctions imposed by the West to defeat our land revolution, contradictions in our national monetary policy also explain why we do not have food but we boast of producing the best tobacco in the world. COVID-19 has merely underlined long-existing policy contradictions.