Leonard Ncube in Victoria Falls
GOVERNMENT should urgently engage the private sector to resolve the currency problem bedevilling the economy with business executives gathered here suggesting a model that allows the market to determine the direction.
The subject dominated discussion at the 6th CEO Africa Round Table conference on Wednesday as business leaders felt delays in resolving the currency question were weighing down progress on the production front and thereby hampering economic growth.
Although Zimbabwe adopted the multi-currency regime in 2009 with the United States dollar as the main medium of exchange, in the last three years the country has experienced acute cash shortages amid concerns over externalisation of hard currency among other illicit financial deals.
In 2016 Government introduced bond notes and intensified use of electronic transactions such as Real Time Gross Settlement (RTGS) and mobile money as stop gap measures.
Delegates to the conference noted how the scenario gave birth to rent-seeking tendencies, which ushered in the scourge of parallel market activities and associated exchange rate distortions and unwarranted price increases.
Contributing during the debate, business leaders implored Government to undertake concrete policy measures to restore currency stability and restore public and business confidence on the country’s financial system.
Among the options proffered was re-dollarisation through abolishing the bond note.
Some suggested the country joins the Rand Monetary Union and use the neighbouring country’s currency to stabilise business.
Most businesses view the rand as a favourable currency in terms of export competitiveness when compared to the greenback.
The rand is also favoured on the basis of the fact that South Africa is Zimbabwe’s largest trading partner and has more of its investments in the country.
Delegates could not rule out the idea of re-introducing a local currency, which Treasury has indicated could be done within 12 months of 2019, but stressed the need to first have supporting fundamentals in place. They warned Government against imposing a currency on citizens stressing the need to seriously consider market forces.
There were, however, mixed feelings on the best approach to take going forward with some advocating for a referendum while others said consultations should be done silently. Some further noted that the problem facing the country was not about the currency alone but management of the currency.
CEO Africa Round Table chairman Mr Oswell Binha said insistence on a 1:1 rate between US$ and RTGS has failed the economy.
Chairperson of Portfolio Committee on Public Accounts Mr Tendai Biti, who was one of the panelists, called for the adoption of the rand and said a referendum was needed to gather people’s views on which currency they want.
Delegates insisted that a roundtable for all stakeholders was ideal as they concurred that the market should decide on the currency.
However, Mr David Farley, who is CEO of ANGU Gold, was sceptical saying a referendum would be tricky as it is difficult to determine who is fit to vote while some people will be driven by different backgrounds such as politics.
Chairperson of the Parliamentary Portfolio Committee on Budget, Finance and Economic Development, Mr Felix Mhona, defended the 1:1 exchange rate saying it was Government policy and should be supported for the good of the economy.
“RTGS is not a currency but its money because it’s a medium of exchange and I can’t be seen criticising Government policy. As CEOs you should be innovative and proffer solutions and petition Parliament . . . We represent people so bring suggestions and we table them,” he said.
The Speaker of Parliament, Advocate Jacob Mudenda, called for self introspection as he challenged business to interrogate management of foreign currency by some companies that have benefited from the Central Bank.
“As CEOs you should interrogate those who received foreign currency from RBZ if they created the multiplier factor because nothing is coming to Treasury.
“I get the impression that the RBZ is pumping money to the private sector yet the private sector isn’t reciprocating. Are they producing to export or for consumption?” he said.
Adv Mudenda also called for an all stakeholder engagement through Parliament. — @ncubeleon