Source: RBZ rules out adoption of rand | The Herald October 14, 2016
Business Reporters
THE Reserve Bank of Zimbabwe deputy governor Dr Khupukile Mlambo said the country will not adopt the South African rand as its currency although the United States dollar has not been the ideal option. Dr Mlambo admitted the greenback has given authorities “headaches” owing to liquidity challenges caused by leakages.
However, joining the common monetary area using the rand would not be an option because Zimbabwe does not have its own currency.The Zimbabwe dollar ceased circulating in 2009 when the country adopted a multi-currency system.“We need to understand the South African rand has its own challenges, it is volatile,” said Dr Mlambo at a National Economic Consultative Forum workshop held in the capital yesterday.
There have been calls from business and the general public for Zimbabwe to join the rand monetary union to enhance its competitiveness.The union comprises of Namibia, Lesotho, Swaziland and South Africa itself.“Other countries in the union like Namibia have their own currencies which they use together with the rand. South Africa prints the rand for its market not the region because there is a risk that the money will flow back into the country and become deflationary.
“Personally, I would have been happier if we adopted any other currency than the USD. It has created headaches of liquidity and it would have been better to use another currency,” said Dr Mlambo.The strengthening of the USD against regional currencies weakened the competitiveness of Zimbabwean products on the regional market, which adversely affected the local industry.The USD has appreciated by 45 percent, which means local industry and products also became 45 percent uncompetitive.
According to the International Monetary Fund, South Africa last month regained its position as the region’s biggest economy after the rand gained more than 16 percent against the USD year to August, after over a year of weakness. But projections are that it will weaken in the long term as the US Federal Reserve is likely to keep tightening interest rates.
Dr Mlambo, however, reinforced the monetary authorities’ view that a currency cannot be imposed on citizens and that monetary decisions were also based on past experiences.“We have lessons learnt from 2008. You cannot force a currency on people. In 2008, we realised people were already transacting in foreign currency, Zimbabweans made that choice,” he said.Economists have added their voice to the currency debate arguing that Zimbabwe needs to scale-up production and exports to improve the economy.
Change in currencies alone, be it the rand, pula, kwacha or yuan will not turn around the economy if production remains low. The turnaround will have to be earned through vibrant economic activity.
COMMENTS
With our love for everything foreign, not much production is to happen. Maybe more tobacco and more deforestation and dam siltation. Those with access to, or in control of, (state) funds should take the lead in domestic consumption to boost local production. The average man and women has very little role in this – he is merely trying to survive and will go for the cheapest option available – Chinese imports!
A SIMPLE PLAN FOR ZIMBABWE
As a regular visitor to Zimbabwe, and as a local and international business owner, together with my love of this country and its people, I would request Newsday and the Independent to Publish the below, and I pray that I suffer no recriminations, so I would appreciate that this email be deleted upon any publication, and my name and email details withheld, but I feel I must say what needs to be said.
I have over 40 years of Business and Finance experience, in the Accountancy, Retail and Resources Industries, and have developed a deep caring and empathy for Zimbabwe and its people, in the 5 years that I have been visiting.
I and have been in Zimbabwe for up to a total of 6 months each year in three to six week periods, 4-6 times pa.
I have travelled all over the Country and have met hundreds of wonderful and resilient Zimbabweans during this time.
I have a simple question for the RBZ/Govt on the Proposed introduction of the “Bond Notes aka, New Zimbabwe Dollar” which no one seems to want or accept, and as a consequence, it is further fanning the cash notes crisis, and creating ongoing hoarding of USD$ cash notes by everyone in Zimbabwe.
The Question for the RBZ and Government is?
“If the purpose of introducing these new Bond Notes is to ease the Liquidity Crisis, and as these Bond Notes are supposed to be backed on a 1:1 basis by USD$ Funds, then why bring in these Bond Notes at all, when for the same money, the RBZ can bring in fresh USD$ Notes, which everyone will accept?”
From a number of articles that I have read over the last few months, it appears the original Afriexim Bank facility of USD$200M, has been fully used over the last 6 months to bring in actual USD$ cash notes into Zimbabwe, and as a consequence, there is no more of this Facility available, and the RBZ is unable to provide the 1:1 USD$ backing demanded by the Bond Note printers in Germany, and thus the reason for the ongoing delay in introduction.
This in turn will force the RBZ to print these within Zimbabwe.
Possibly, these Bond Notes will eventually be printed by Fidelity Printers, with ZERO USD$ backing, just as they did the Zimbabwe$ in 2008/9, which will render such Notes/Currency, worthless once again!
Regrettably, it also appears that the RBZ/Government now owes the Zimbabwe Banks in excess of USD$2 Billion in borrowings that the RBZ has forced on the Banks, and who are also complicit in this massive fraud on current Bank depositors (the bank’s customers), and have replaced this money with IOU’s called Treasury Bills, which the RBZ and Government have no ability or capacity to repay, unless they issue these infamous Bond Notes Currency as repayment.
This will then “Force” the Banks to exchange their Depositors Funds, which are currently in USD$, to Bond Note currency, and one wonders why Zimbabweans are hoarding their valuable USD$ notes, and they should be concerned, as they may lose their money all over again.
THE SIMPLE PLAN
How can Zimbabwe rejuvenate itself, create greater export inflows, and create the proper Empowerment for the Zimbabwe people, that they so desperately seek. This is just a simple plan, and yes I am WHITE, but really, what does the color of our skin have to do with anything?
“A 6-month Plan to a Better Future Life for all Zimbabweans”
1 Exclude the color of your skin as a reason for ANYTHING. We are all part of humanity and must have absolute compassion and understanding for all races and religions, but everyone must abide by the local laws of proper justice, and everyone must have compassion and empathy for those less fortunate than ourselves. Racial hatred has no place in today’s world.
2 Abide by the Constitution of Zimbabwe at all times and ensure that there is an immediate separation of powers between the Judiciary, the Government and the Church. This is not the case today, and the intertwining of these crucial areas, is a Country destroyer.
3 Immediately repeal the Indigenisation and Empowerment Act, as there is no Empowerment here, just ongoing theft and corruption via this Legislation. The real empowerment for Zimbabweans is to have a job, receive regular and uninterrupted cash flow from employment, contribute to Government revenue with taxes, assist their families to have a roof over their heads, food on the table and educate and bring up their children to become future employees, business owners, entrepreneurs and leaders in both Community and Government. Handing out shareholdings in Companies that are struggling, or successful Companies built by individual and collective hard work and Capital, and then rely on future dividend payments for cash flow, is not Empowering, it is constricting development of the individual, the Company and the Country.
4 Encourage high level Foreign Investment to facilitate agricultural, mining and industrial growth with tax incentives, asset protection and the ability to repatriate initially 100% of any investment with a reasonable rate of return, with no restrictions, then dividend and profits repatriation, subject to the payment of local taxes. Zimbabwe is blessed with these assets, many of which are grossly under-utilized and under-developed, for lack of available Capital.
5 Maintain the current USD$ based currency, until the Country has sufficient reserves to support its own currency again, and introduce strict rules and regulations for the RBZ, that will ensure that the Hyper Inflation era cannot happen again.
6 Educate your sons and daughters on the evil of corruption, lies and poor ethics and moral judgements, so that they can become the true and strong leaders of the future that you know they can be, with hard work and with a total renunciation of the “Entitlement Culture” that has developed, and encourage all small business owners, whether they be Major corporates, small miners, vendors, retailers or service providers, with easier regulations.
7 The repeal of the above Act and the provision of investment incentives for the Agriculture and Mining Sectors initially, will lead to a resurgence in Foreign Investment virtually overnight, and the improvement in local manufacturing capacity, as generally every $1 spent on these crucial areas, results in up to an additional $5-$8 spent on services and supplies required by those industries. A resurgence in Agriculture and Mining and Manufacturing will increase jobs and critical Government revenues virtually overnight. $1Billion of foreign investment, will create a further $5Billion to $8Billion of additional stimulus to the economy.
8 Advertise globally and locally, from within Zimbabwe and any Country and any race of people that have the willingness and expertise, the best 10-20 Government bureaucrats and invite them to come to Zimbabwe for a two-year period to completely review and refine all current Government Legislation and policy settings in Zimbabwe, and to create the required Fiscal and Policy environment that will attract, not discourage, investors from around the globe. This must include full electronic provision within all areas of Government and business interaction, with global best practice web sites and financial reporting, and asset protection technology software and systems. These are available NOW; we just simply have to pick the best country systems available today. I am certain every developed Country would provide these with set up assistance and commissioning, gladly free of charge!
9 Set up a proper and powerful Anti-Corruption Group, with external assistance from global experts, which would have wide ranging powers to seize corruptly obtained assets and monies from any individual, without the hindrance of political interference, to stamp out this scourge, which has brought the Country to its knees, both morally, ethically and has destroyed the “soul” of Zimbabwe and its people.
10 Undertake an election for all seats in Parliament within the next 90-120 days, with such election being conducted with agreed International monitors with full and proper disclosure of Electoral rolls, so that a fair and proper result is achieved. Regrettably, the ruling ZANU PF Party and the current Government will NEVER LOSE an election, under the current un-reformed Electoral Guidelines, so more of the same, FOREVER.
11 Last but not least, pray every day to whatever God you believe in, that the current Ruling elite can develop the courage and intellectual and moral fortitude to do the above, however there must be no recriminations for the financial sins of the past, however there must be accountability for such in the future, and accountability and prosecution for the human rights sins of that past, which I suppose is the main reason why the current Ruling Elite MUST cling to power. Forgiveness however, is a very powerful and persuasive tool.
12 Encourage at all costs, locally based and managed NGO’s to continue their great work in food, water, agriculture, education etc., and give them the ability to do all this amazing work directly and in consultation with each other, and without major Government interference.
13 The Finance Minister’s mid-term review must be implemented and supported, with a significant reduction in the Public Service work force, and the majority of good and honest Public Servants whom are retrenched over time, will always find good jobs with probably better and more reliable pay in the revitalized Private Sector. Those not so good, and not so honest, must be the first to go!
14 Maintain personal Individual Sanctions, and with the Full Implementation of the above Simple Plan, any other existing sanctions will be quickly removed, as will a large amount of Debt Forgiveness be offered, which level of accumulated debt and interest is currently further strangling the Economy. Additionally, new facilities for Upgrading Country and Government Infrastructure will also become readily available.
15 Provide incentives and encouragement for the large Diaspora to return to their country and assist with the Plan.
If the above are implemented in the next 180 days, I believe that Foreign investment, GDP Growth, Export Revenues, Tax Revenues, Jobs and Quality of Life will grow exponentially over the next 24 months with a possible End of Plan GDP in Zimbabwe exceeding $15 Billion annually and growing! Currently less than $5 Billion and shrinking.
Only direct capital investment in agriculture, resources, manufacturing and education and training can drive an economy and create jobs, not hand outs and corruption.
Begging for hand-outs and loans from the IMF, World Bank etc., without any ability to repay, is a recipe for Bankruptcy, and NO COUNTRY should ever go there, although Zimbabwe is very close to that precipice.
It is also most embarrassing that both the Finance Minister and the Reserve Bank Governor continue with this “begging bowl” approach across the Globe, and incur further extensive costs of doing so, without any chance of success. They are on a hiding to nowhere and it must stop, however the luxury travel and accommodations at the tax payers expense, is a very hard thing to stop, particularly if there is no accountability at the end of the day. Just another wasted and expensive overseas trip, which has regrettably become the exclusive preserve of the Ruling Elite, from top to bottom.
There are many very smart and clever Zimbabweans both in Zimbabwe and in the Diaspora that could easily implement this Plan, it just requires the Political and Human will to do so, and I am prepared to do my part even as a non Zimbabwean, if asked.
Zimbabweans, the future is in your hands, so grab it with all you have and all you know, and your beautiful country will be an even better paradise for all.
MY HOPES AND PRAYERS ARE WITH YOU ALL.
From
A VERY CONCERNED BUSINESSMAN AND REGULAR VISITOR TO ZIMBABWE
Name withheld by Request
@ Robert –
your ideas are of course 100% correct. But the ZANUPF regime have been told this for nearly 40 years and I have come to but one conclusion – “they don’t know, that they don’t know”
This state of affairs is unlikely to change any time soon as corruption suits the chefs at the top – and there are many of them. Dear leader RGM is of course oblivious to all the goings on as he is computer illiterate and gets his news from the Herald and close associates like his wife and Jonathan Moyo and Mnangagwa etc
The US dollar has failed in Zimbabwe – blast those pesky Westerners – the Rand seems not favoured by Governor Doctor John ‘Bond’ Mangudya and /or Doctor Khupukile Mlambo.
Maybe it’s time we looked east and brought in the Yuan of China – I am sure our dear friends in the east would help us out with a billion or two.
Surprising with all these high powered academics at our central bank that we are in such a mess. Maybe they should take their Doctors and go and be medicine men !