RBZ’s Monetary Policy for the haves, not the poor

IN Zimbabwean writer Shimmer Chinodya’s Harvest of Thorns novel, there is a description of the main character’s father, Mr Tichafa, as probably having been the best minister of Finance that Rhodesia probably never had. This was because he (the father) was running the family on a minimum wage budget, with what his son considered amazing resourcefulness.

Source: RBZ’s Monetary Policy for the haves, not the poor – NewsDay Zimbabwe October 5, 2018

Guest column: Takura Zhangazha

Some years after high school, we would laugh in conversation about comparing contemporary and even past Finance ministers with Mr Tichafa. Even if from a point of ignorance of how national and global capitalism operates, or how hapless most actual minsters of Finance would be. Even if they were trying hard.

I thought of this as I read the Reserve Bank of Zimbabwe (RBZ)’s new monetary policy this week. It was a policy geared to fit into the overall government’s free market economic policy (open for business), also now known as neo-liberalism. Hence, emphasis as expected was on ‘ring-fencing’ or guaranteeing (nostro) foreign currency accounts (FCAs) protection from what eventually turns out as our own version of a currency, the bond note, or the Real Time Gross Settlement (RTGS).

There were other announcements concerning taxes and other requirements of banks and their users.

But that on FCAs and RTGS is perhaps the most significant in so far as they both affect a greater majority of Zimbabweans. This is because the quest for the United States dollars (US$) is a national pre-occupation.

The US$ is deemed to give the greatest net value to transactions or property by many Zimbabweans, not least because of a lack of trust in any local currency introduced by this or any other government. In fact, political parties have generally avoided promising to remove the US$ as the currency of exchange.

Such a move was going to cause anxiety and panic, especially in urban areas that have had a thriving parallel currency exchange market. In addition, the patent lack of trust in the government and the Reserve Bank of Zimbabwe to retain the value of money in its bond note or RTGS form constitutes another problem.

Moreover, the RBZ has taken the risk on the backdrop of a lack of public trust, but on the confidence that the ‘market’ would eventually set itself right, or at least with a reliance that President Emmerson Mnangagwa’s government policies are enough to revive investor confidence and guarantees of support from global financial institutions (International Monetary Fund, African Development Bank, World Bank), as long as there is a strong guarantee of the protection of investments and private property or actual FCAs.

This is, therefore, a monetary policy for the haves not the have-nots, with the assumption of a trickle down effect to those that are already poor. And as is, the cost of living will invariably rise for those that cannot access the US$, or it will at least have a (informal for now) multi-tier commodity costing system (i.e a price in US$, bond/RTGS/other). This development will point to the fact that the majority of people who do not have access to the US$ will be living more expensive lives in relation to costs, or they will simply not be able to afford basic commodities due to their serious disadvantages over the ‘rating’ processes which, at any given point are ‘fickle’.

But as is the tradition of neoliberalism, it will bring out its intellectual and practitioner guns to defend the move as being the only rational way forward. True to fashion, they will pretend free market economics never created this problem and offer the same neoliberalism as the only means to solve it.

What is clearer now is that this government is well aware of the desperation of many Zimbabweans for want of some sort of economic normalcy. And it has decided to shun a people-centred approach to prudent economic policy in favour of private international capital, a process that will mean, if push comes to shove, it may decide to ensure it gets its way through greater political control of dissent in order to achieve its stated objectives.

Others may ask what the alternatives are, and the answer can only be that stable societies are democratic in relation to both their politics as well as their economic policies.
That is, they guarantee not just political rights, but also socio-economic justice and fairness for the majority of their citizens, with or without the United States dollar.

 Takura Zhangazha writes here in his personal capacity (takura-zhangazha.blogspot.com)