The Zimbabwe dollar has tumbled by wide margins on the
parallel market since last month’s polls, whose presidential result was
rejected by the main opposition Citizens Coalition for Change, sending
shock-waves across a market that had been frustrated by political tensions
mid-year.
Upheavals on the currency front have given impetus to
industries’ view that exclusive trade in the Zimbabwe dollar must not begin as
planned in 2025.
The heads of the Zimbabwe National Chamber of Commerce
(ZNCC) and Tourism Business Council of Zimbabwe (TBCZ) said yesterday factors
like high inflation and weak foreign currency reserves should be tackled before
Harare ends dollarisation.
They spoke as peers at the Confederation of Zimbabwe
Industries (CZI) and CEO Africa Roundtable (CEO ART) warned during a high
profile meeting with new Industry and Commerce minister, Sithembiso Nyoni, that
the country risked slipping into meltdowns if government defies market forces
and acts prematurely.
According to a 2017 Reserve Bank of Zimbabwe monetary
policy, key fundamentals to be tackled also include tying down inflation within
the single digit territory and addressing trade imbalances.
“ There are already a lot of corporate tombstones as a
result of controls in Zimbabwe,” Christopher Mugaga, chief executive officer at
ZNCC, told the Independent.
“A currency is as good as the underlying economy, which
inspires it. But for now, fundamentals are pointing to a market that is not yet
ready for a Zimbabwe dollar.
“We must satisfy required fundamentals first and respect
market forces,” he added.
The country has been under a multiple currency regime since
2009 when authorities capitulated and took respite in dollarisation after the
Zimbabwean unit crashed under 500 billion percent inflation in 2008.
Wengayi Nhau, president of the TBCZ, agreed that dealing
with fundamentals would be crucial in frustrating unforeseen headwinds as
Zimbabwe swings towards the exclusive use of its own currency.
But he said a strong US dollar would continue hammering
industrial exports and service sectors like tourism.
“Business leaders who spoke on Tuesday are hoping that by
2030 we will have addressed the fundamentals,” Nhau said.
“But no country prospers without its own currency. If we
continue using a strong currency like the US dollar exports will suffer.
“It will put Zimbabwe at a huge competitive disadvantage.
Tourism sells services, and packaging Zimbabwean services in US dollars becomes
a deterrent.
“Foreign currency reserves are built as a result of
confidence, which we must work on. We can exclusively transact in the Zimbabwe
dollar within six months if conditions are right. The best we can do is switch
to the South African Rand,” Nhau added.
About 80% of transactions are already taking place in
United States dollars, according to a report released by advisory firm, Equity
Exis this week.
In their frank interface with Nyoni this week, leaders at
CEOART and CZI warned her she had landed into industrial turmoil. They said her
decisions will make the difference between protracted volatilities and return
to stability.
“Topping the list (of our concerns) is the need to
genuinely deal with the boomeranging effects of monetary and fiscal threats,
with the government immediately coming clean on the state of the
dedollarisation strategy,” Oswell Binha, chairperson at CEOART , told the
minister.
“We strongly believe that monetary stability remains a
cornerstone to business sustainability, particularly as we struggle to deal
with legacy issues of value erosion, extraordinarily high corporate mortality
rates, high taxes, death of individual savings, a crippling exchange rate
regime and high inflation.
“While the National Development Strategy 1 places a cap of
2025 to mark the end of multicurrencies, monetary economists and business
believe the country is not yet ready for a Zimbabwe dollar as a mono currency.
“Zimbabwe’s currency crisis can be checked by extending
multi-currency usage up to 2030,” Binha noted.
Kurai Matsheza, president of the CZI, warned that the
economy was already gravitating towards decline, held back by a sea of problems
including water and power shortages. He said a crumbling infrastructure and
high utility and regulatory costs were working against recovery.
“We need a clear roadmap as to where we are heading before
we become clueless in 2025,” the CZI boss said.
“The year 2025 has been set as the deadline by which the
multicurrency system will end. We need to create and follow through the clear
roadmap of what it is that we want to do as a country towards addressing
currency issues.
“Let’s have a clear roadmap on the Zimbabwe dollar. If we
rush it, this may cause other dislocations in the economy.
“There is a huge need for some steps that encourage the use
of the domestic currency,” Matsheza added.
Industrialists gave Nyoni a standing ovation as she entered
a parked Rainbow Towers auditorium to gauge post-election business sentiment on
Tuesday, before flooding her with a flurry of sobering bombshells pointing to
an impending catastrophe. Over 18% of the combined annual overheads are being
drained by commitments to comply with regulations.
Matsheza chronicled how the return of rolling blackouts had
decimated production.
Business’ frustrations stemmed from the fact that in the
weeks before the polls, President Emmerson Mnangagwa had assured them that
blackouts were now history, as he commissioned two key units at Hwange,
following a US$1,5 billion face-lift.
Away from the auditorium, industrialists said they had been
cheated to make firm production commitments to markets, only to begin revising
them as blackouts tore through companies. In an analysis, Zimbabwe’s
researchers Equity Axis said the currency crisis was at the heart of Zimbabwe’s
problems. Zimbabwe Independent
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