“Ever since we dollarised, everybody has been benchmarking against the US dollars,” said Zimbabwe economics lecturer Professor Ashok Chakravarti.
“We are not the United States of America, we are Zimbabwe. We need to start thinking in terms of our local currency, our costs are local costs; we pay our workers in local money, all our costs of production are in local money.”
Ever since we dollarized the US$, British £, SA Rand and Botswana Pula plus all the local currencies were all legal tender. People chose to price their goods and services in US$ for the simple reason that it was the currency most commonly used, most stable and guaranteed to maximize their profits. They paid as much of their cost as they could in local currency because it was the weakest currency they had and were only too keen to get rid of and where cost such as salary was not linked to US$, this helped maximize their own profit! This is common sense and one does not need a degree in economic to understand this!
Professor Chakravarti, Zimbabwe scrapped its local currency, Z$, in November 2008 because it was worthless with inflation peaking at a record 500 billion %. Inflating has been surging upward with monthly inflation rate rising from 5% in January to 80% last Friday. Again, one does not need a degree in economics to know that government should have left no stone unturned to make sure inflation never rose above 10%, especially with the experience of the 2008 still fresh in all our minds.
With inflation at 80% it is obvious why the people were getting rid of their local currency as quickly as possible. Who would ever want to hang on to a currency that will lose half its value every six weeks!
It is the government of the day’s duty and responsibility to implement economic policies to guarantee economic prosperity and stability including a stable local currency. This Zanu PF regime has clearly failed in this. To banish the use of foreign currency at a time the local currency is losing its value was a very sinister ploy to force people to use the local currency. The regime is punishing the people for its own failure.
The effect of forcing people to trade in a currency they have no confidence in will be a significant fall in economic activity across the board. There will be return of the 2008 with empty shop shelves and shortages of everything. There were shortages and human suffering before the trade in forex was introduced but things will get even worse not better.
The banning of the use of the foreign currency at a time when monthly inflation is already 80% and rising was just another foolish blunder by this illegitimate and incompetent Zanu PF regime. We should never forget that Zanu PF rigged last year’s elections and even the party’s main partner in this treasonous crime, MDC A, has now public admitted the elections were illegal.
"Legitimacy is an issue - last year's elections were illegal, and not free and fair. All reasonable observers concede that," admitted David Coltart, Treasurer General of MDC A, finally.
The only way to end this political and economic mess is for Zanu PF to step down so the country can finally implement the democratic reforms necessary for free, fair and credible elections. There is no other way out!
“We need to start thinking in terms of our local currency!” No, we need to start thinking of going our people hope in a stable and prosperous Zimbabwe and giving them a stable currency is a key requirement. If the government of the day cannot give the people a stable local currency because the regime cannot resist the edge to print money then the country must use foreign currency the regime will not print and fuel inflation.
5 comments:
"Listening to Minister Ncube, one did not get the sense that there is a long term plan with a defined path to some end goal, but for the sake of our country I hope one is wrong and indeed the Minister has "struck gold" through this policy change and the raft measures yet to be announced."
In other word she has no clue what is going on and so she is not saying anything!
With the monthly inflation already at 100% it means the local currency is losing half of its value every month. Why would anyone want to be paid money that is losing its value at such a rate? This is common sense surely and to hear an economist much less a Professor of economics argue otherwise beggars belief.
The day Zimbabwe finally implement the democratic reforms, hold free, fair and credible elections and has a competent and accountable government will be a great day for the country. The new competent government will have its work cut out and one of the task has to be some serious spring cleaning of our academic institutions like UZ. We certainly have a lot of corrupt and incompetent individuals who should not be there!
"Mr President, you couldn't provide us with a solid vision with regard to the continent. You couldn't speak to the African continent despite the ongoing massacres in Sudan, instability in Libya, the economic crisis in Zimbabwe which led to huge unemployment and currency crisis, " said Malema.
Frankly I am pleased that President Cyril Ramaphosa said nothing about Zimbabwe’s huge unemployment and economic meltdown; it would have been hypocrisy on his part.
Zimbabwe is in this economic and political mess because the country has been stuck with this corrupt and tyrannical Zanu PF dictatorship for the last 39 years. The only hope for the country to get out of the mess is for the country to implement the democratic reforms to ensure free, fair and credible elections.
The Americans, EU, the Commonwealth and every other democratic individual, nation and institution who observed last year’s elections has condemned the elections. Zanu PF rigged the elections to extend the party’s corrupt and ruinous rule. It was therefore very disappointing that President Ramaphosa is one of the few leaders who said the elections “were alright”!
So for him to then sympathise with the people of Zimbabwe over the country’s economic mess would have been insulting to all thinking Zimbabweans since he is the one who endorse the Zanu PF illegitimate stay in power.
In any case, President Ramaphosa, did not offer SA much of a vision; it is naive to expect him to offer any of substance to Zimbabwe much less Africa.
@ Trevor Ncube
As long as Zimbabwe continue to have a skewed trade balance in which we import far more than we earn from exports to pressure on the local currency to lose its value will never go away.
A free floating exchange rate may be the ultimate goal but long before we get there the economy will have all but completely collapsed!
Indeed, with unemployment already a nauseating 90%, health care that has all but collapsed, 19 hours a day power cuts, workers’ wages so poor they can only afford to work 2 or 3 days a week, etc.; one can say the economy has already collapsed!
It is a great tragedy that millions of our people are being condemned to a life time of selling mobile phone card, Chinese trinkets, tomatoes, etc. because this regime has clearly given up on reviving the national economy. Since the regime will retain its carte blanche dictatorial powers to rig elections, the nation is stuck with the failed regime.
Yes Mr Ncube you will achieve you goal of free floating exchange rate for your national economy dependent on foreign currency remittances!
So the Zanu PF Youths have been threatening to name corrupt Zanu PF bigwigs but have not named even one! This is just hot air!
Why are Zanu PF Youths telling ZCTU members what they can and cannot do? If the ZCTU are breaking the laws it is for the Police, the Courts and other appropriate bodies to decide and act and not these self-appointed thugs! Enough of this bullying and lawlessness.
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