‘Consider paying civil servants in gold coins’
Sikhulekelani Moyo, [email protected]
Government has been urged to explore the feasibility of paying a portion of civil servants’ salaries in gold-backed digital tokens and gold coins.
The tokens have proven to be effective in mopping up excess liquidity from the market while at the same time providing an alternative investment instrument.
Gold coins and digital gold-backed tokens have been identified as an alternative store of value other than the US dollar and contribute in stabilising the economy. In terms of liquidity and traceability, the gold coins introduced in July last year have liquid asset status, that is, they are capable of being easily converted to cash, and will be tradable locally and internationally. The gold coins can also be used as collateral.
Lupane State University business clinic development manager and economist Mr George Nhepera told Business Chronicle that in line with the multiple currency regime, monetary authorities have managed to come up with innovative instruments such as gold coins, digital tokens, and gold-backed digital currency.
He said these instruments offer a very lucrative and competitive offer against the dominance of the US dollar in the market, both as a medium of exchange and a store of value.
It is in this light that Mr Nhepera suggested that the Government should consider using the instruments as part payment to civil servants.
“To this end, they should be promoted in terms of their use for both people-to-people (P2P) transactions, people-to-business (P2B), and business-to-business (B2B).
“Once this has been achieved with full market confidence, surely our Government can take a giant step to include a portion, say 50 percent of the civil servant salaries and benefits, be paid in these innovative instruments,” said Mr Nhepera.
Mr Nhepera said once implemented, it will greatly assist in eradicating the black market menace.
“This strategy will help to curtail the black-market dominance in our market which is not helpful for the economic growth and poverty alleviation of our country let alone achievement of our Vision 2030. The future therefore belongs to innovators hence our monetary authorities are walking the talk in that space and they should be commended for supporting the Government in that respect.”
The economy has seen a resurgence of macroeconomic instability, with inflation being driven primarily by the skewed preference for US dollars as a savings currency.
This has put enormous pressure on the exchange rate as the skewed preferences have continued to increase the velocity of the Zimbabwe dollar.
It has been noted by analysts that price stability is an added advantage of buying gold coins for investment and when compared to other investment options in the market, the price of gold never falls by a significant margin and is rather always stable even during a global financial crisis. Worldwide people look at gold as an alternative to currency, particularly where the local money is prone to losing value.
Gold is viewed as a real physical asset that tends to maintain its value in the market, which, in turn, proves that buying gold coins is a good investment option.
However, other economic commentators discouraged the idea saying paying civil servants in gold-backed currency will reduce the demand for local currency.
Economic analyst Mr Morris Mpala said: “This again defeats the purpose of encouraging the use of local currency to the populace. Noble as it might be in terms of liquidity management it shouldn’t be encouraged”.
“Let’s pay civil servants the right remuneration and let them have a choice in how they save their money and we concentrate on making the fundamentals right for everyone.”
While introducing the gold coins, the Reserve Bank of Zimbabwe (RBZ) said once payment has been received by the selling agent, the buyer of the gold coin takes physical possession of the gold coin or opts to keep the gold coin through bankers of their own choice (custodial services) on terms and conditions of the custodial service provider.
At the discretion of the holder of the gold coin, the RBZ said, the bank or its agents would buy back the gold coins after a vesting period of 180 days in line with the need to promote a savings culture in the country.
For the buy-back, the bank or its agents (including Fidelity Gold Printers and Refiners and Aurex Jewellery) would request the bearer to surrender the original bearer certificate for the specific coin.
Coins are purchased at the prevailing international spot price of gold. — @SikhulekelaniM1.