Zimpapers Logo

Morris Mpala, MoB Capital Ltd
VALUATION is always a headache between two or more parties and the correct valuation of bond notes and other currencies beyond the gazetted 1:1 to the US dollar is problematic.

The gazetted ratio is ideal in that strategic imports can be acquired such as fuel, wheat, medicines and soya at reasonable cost.

Thus keeping prices very low and arresting inflationary pressures.

On the other hand it is causing challenges on the market as players devalue it or are no longer accepting it as a means of exchange and where it is accepted the price is 4-6 times the going price to the utter confusion of non forex earners whose salaries have remained stagnant.

That kind of pricing is extortionate and as such not user friendly.

This has killed the market fundamentals and is slowing trade as it curtails economic trade in the long run.

Allow me to highlight a few areas that need addressing as a matter of urgency and forgo blame games.

Float bond rate

Value in terms of the RTGS balances has already been lost what with bread, orange juice, milk having been officially devalued we can’t keep the fallacy of not having devalued.

Floating also aides the use of the RTGS as it gives value despite it not using the 1:1 ratio as explained by the authorities.

Let the bond note float and it will reach its equilibrium point and at that level convert all RTGS in FCA nostro accounts from FCA- RTGS. Let’s bite the bullet.

The last time we had such the market dollarised without a directive from the responsible authorities and that takes away confidence and trust in the markets.

Zimra obligations

With the introduction of FCA-nostro and RTGS allow everyone that is earning and or selling in FCA-nostro to be charged all tax obligations in the same manner they are charging their customers.

In addition, such entities have to remunerate via FCA-nostro and in turn their tax obligations in FCA-nostro.

Where it is mixed let it be mixed as well to reflect what is going on. By the same token NGOs salaries, tax obligations must be FCA-nostro biased and other obligations based on a floated rate of the bond note.

Penalise some imports by levying a correct tax and let it be paid using FCA-nostro transactions.

It’s the only way we can sort this mess out. Make borders less porous and close in on financial outflows including illicit transactions.

RTGS balances

Most of these balances are institutional accounts as opposed to individual accounts. Where RTGS cannot be accounted for proper taxation equalises all.

Unexplained balances have to be handled using the new laws. Curtail use of TBs issuance to Government to fund current expenditure.

Where funding is required let it be via an auction system that lowers the cost of funding to Government.

Introduce bonds to mop up the excess liquidity from 2-10 years with bi-annual coupon payment in agreed interests depending on either one is individual, corporate, pension fund or banking institution.

Actuarial scientist can thrash the modalities therefore.

Demonetise

After having converted all balances at an agreed floating rate to FCA nostro then demonetise the pseudo currency and re-dollarise. The re-dollarised economy could be reduced figure of the (in)famous $10 billion in circulation.

Bond notes refund

With that kind of money in circulation the low hanging fruit is the refund from the bond notes guarantee fund.

Let’s get the refund in hard currency then pump it back into the economy as hard currency.

Internal devaluation

We can’t work with the mentality that we adopted during the hyper inflation environment and perpetuated into the multi-currency regime. Let’s be realistic in our salaries, perks, bank charges vs deposit rates, insurance premiums, utilities and of course our pricing of goods and services in general.

These distort economic fundamentals to the detriment of the entire economy. The pricing regime needs an overhaul, it’s so warped and as such it devalues real currency in terms of buying power.

Exchange rates

In a proper economy to eliminate speculators and arbitragers, there is need for guided exchange rates to facilitate trade.

All currencies to have regulated exchange rates pertaining switches/cross rates to avoid distortions of currencies thus creating another hectic arena for speculators.

Production, production, production

Effective, efficient production is needed to rival regional and international producers.

Level playing field by levying correct taxes on imports to make sure local producers compete and aggressively offer local market at competitive prices for their products and services.

A trade off between stimulating growth and not holding local market at ransom by being protected but still offer extortionate pricing model.

Buy Zimbabwe campaign

Local is the way to go in the short term so that we gain in the long term.

Demand accountability and responsible transformational leadership. Lobby for sanctions removal, policy consistence, minimise corruption, uphold rule of law and property rights, re look land reform in its entirety, do away with freebies, ask for full implementation of good corporate governance among other corrective measures.

More exports also means more exports services not just goods and a whole lot of import substitution is required. The equilibrium of the above will only see the economy ticking.

Ubuntu and systems thinking

All this needs painful hard work and thinking as whole system as opposed to just a single part.

It is easier said than done. It’s an emotional change that requires maximum dedication, maximum sacrifice and a holistic and very inclusive approach by all stakeholders.

Local currency

After all has been said and done you need your local currency.

When all fundamentals are right and the culture is ready, we then introduce the local currency running parallel with multi currencies.

In due course you withdraw multi/currency regime and remain with local currency to increase competitiveness and have monetary policy authority via an independent and well resourced central bank.

Let’s walk the talk, think about the future generations, act in good faith across all divides in Zimbabwe.

Let’s be guided by the adage “Ask not what the country can do for you but what can you do for your country”.

Let’s concentrate our energies, forces, strategic discussions and resources on what we need not what we don’t need.

IF YOU LIVE IN BULAWAYO PLEASE CONSERVE WATER

IF YOU LIVE IN ZIMBABWE PLEASE USE ELECTRICITY SPARINGLY SWITCH OFF SWITCHES (SOS)

IF YOU LIVE ON PLANET EARTH CONSERVE THE ENVIRONEMNT

– Morris Mpala is the managing director of MoB Capital Limited, a Bulawayo-headquartered micro-finance institution with footprint across the country.