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Addressing the Zimbabwe International Business Conference in Bulawayo on Wednesday, Vice-President Constantino Chiwenga and Finance and Economic Development Minister, Professor Mthuli Ncube had one key message to local business — that they must be disciplined.

VP Chiwenga and Prof Ncube concurred that it was because of indiscipline that some companies were feeding the foreign currency parallel market and wantonly increasing prices of goods and services despite the fact that economic fundamentals that could possibly warrant such behaviour did not exist. The VP warned of dire consequences for those in the business sector who engage in what he described as financial terrorism for narrow benefit while the economy and the generality of the public suffer. “I want to give a stern warning to those practising financial terrorism in the country,” he said.  

“We will react accordingly as Government and nobody should claim that they were not warned. We’ll take very strict measures.  As responsible and patriotic citizens, we should ask ourselves whether our actions are in the best long term interests of the nation.  . . . The market-based framework for the determination of the exchange rate is expected to facilitate financial sector stability, contain inflationary pressures and build public confidence. These objectives will not be attained if individuals and corporates continue to sustain the parallel market through their underground activities. What we’re doing will work and what the financial terrorists are doing won’t work.”

Prof Ncube weighed in, saying the Government has become more disciplined in its spending; eliminating what business previously claimed was the driver of exchange rate volatility. Sound economics enjoins business to determine prices on the basis of the food basket, he said, not movements in the exchange rate on the illegal market.

He said:

“We are doing very well on the fiscal front, Honourable VP (Chiwenga), your Government is solvent, we are running surpluses and we have been doing average surpluses of $100 million since September last year when we came in. In January we had surplus of $102 million, February $85,5 million as we had to take into account cushioning of civil servants. In March our surplus doubled to be just about $200 million,” Prof Ncube said, adding that money supply growth had been contained. 

“So, where is pressure on the exchange rate coming from? Before we knew that it came from the fiscus, we were monetising the fiscal deficit and then money supply would grow but now where is the pressure coming from? So, clearly as the VP said, it is speculation and that speculation is not a good idea, we know who is driving it. Our job as Government is to make sure that our fundamentals that determine value of a currency are still strong. We are not careless in terms of how we spend and we make sure the value of the currency is preserved but you (businesses) should meet us halfway.”

It was not the first time that the Government has criticised business for fuelling the parallel foreign currency market and for discretionary pricing. President Mnangagwa himself has made these points many times.

By now, the message should have gone through to the intended audience which we expect to explain themselves or to just get themselves back to their senses so that the inclusive, sustainable economic growth we all desire is achieved.

We remember the events of October last year when prices of goods and services just went up overnight by up to 500 percent with no justification whatsoever as to why that had to happen. That was an unfortunate experience for all of us because the economy had been stable since late 2017 with everyone bullish about long term recovery prospects.  Investment inquiries and commitments were increasing, but we just woke up to the price hike madness from which the economy hasn’t fully recovered. In an instant, life became more difficult for us as incomes were overtaken by prices. All this happened, not because of any meaningful economic reasons but speculation and indiscipline.  

We will not tire to, once again, appeal to the business sector to be not only patriotic and ethical but to also uphold sound economics.  Any queries that companies might have should be raised with the Government so that both sides discuss them and come up with possible solutions. President Mnangagwa and his administration are very open. He listens and welcomes suggestions.  His regular engagements with his fellow politicians, churches, business, youths, and civil society show that he is running an open government which seeks to take everyone on board. Thus, there is no reason why the Government cannot discuss the challenges that companies might have; challenges that might be forcing them to increase prices so regularly and to be so fixated on the illegal foreign currency parallel market while overlooking the interbank market.

If the Government’s consistent appeals for business to be more patriotic and to respect economic fundamentals are not heeded, there will be no reason why authorities cannot play their last card, which is to invoke relevant statutes to deal with deviants as VP Chiwenga warned on Wednesday.