THE threat by President Emmerson Mnangagwa to ban foreign currencies which are legal tender in Zimbabwe is illustrative of his government’s failure to provide prudent economic leadership at a time when the beleaguered local unit has plunged into a catastrophic spiral.
Mnangagwa claims the increasingly worthless Zimbabwe dollar is “under serious attack”. Curiously, he does not care to explain to the nation why the Zimdollar — of all currencies under the sun — would be singled out for attack by invisible forces.
Is he saying these nameless mysterious forces are locked in a deadly wrestling match with the Zimbabwe dollar while allowing the Chinese yuan and the Russian rouble to enjoy life unmolested? Who are his economic advisers?
Mnangagwa proceeds to make a telling remark: “There is no country that can develop without its own currency.” While there is truth in that assertion, it is only logical to add, by extension, that there is no country which can develop without competent leadership. There is no substitute for good governance.
Everyone remembers that it is this same government which tried to trick the world into believing that the Zimdollar is at par with the United States dollar. Citizens were sold a dummy; the 1:1 exchange rate was pure fiction. In a ridiculous ploy to hoodwink the gullible, Afreximbank was even roped in to “guarantee” the ludicrously artificial exchange rate. Who is fooling who?
The brazen manner in which the Zanu PF government has in the past raided nostro bank accounts does not inspire confidence. There is a suffocating sense of impunity.
How many times should our poverty-stricken society lose hard-earned savings, salaries, investments and pensions?
When a head of state speaks out in such an ill-advised manner on a matter that is at the heart of devastating economic turmoil, the markets are bound to react adversely. Spooking the markets is the last thing any government would want to do in such a precarious situation.
By now, President Mnangagwa ought to know that the economy does not respond favourably to political intimidation. Zimbabweans have suffered countless times from the backlash occasioned by ill-thought-out pronouncements.
“What we might do is to legislate against foreign currency, to make sure we use our own currency. So our people must know that our currency is there to stay.”
With respect, this postulation is not grounded in scientific reasoning. It is trite economics that the Zimdollar has been rejected by the market. Instead of legislating against foreign currencies — as Mnangagwa is threatening — the government should be taking remedial policy action to instil trust, confidence and legitimacy in a local unit whose utility as a store of value has hit rock bottom.
The excessive printing of money has been instrumental in fuelling the Zimdollar’s depreciation. You cannot print money without ensuring an equivalent increase in the country’s productive capacity.
Most importantly, political instability and corruption are serious problems that require decisive attention in the national interest. Legitimacy is derived from the consent of the governed. Yet another bogus election on 23 August can only pour petrol into the raging inferno.