By Newton Mambande
Today, Zimbabwe is facing insurmountable cash economic challenges credited to a multiplicity of factors, including political, economic and social. It is, however, argued that most of the factors are indebted to politics and economics as they stand right now.
This means that corruption, public maladministration and low levels of productivity in the economy are the major determinants of currency crisis.
Due to the currency crisis, the Zimbabwean local currency (ZWL) is sliding against the United States dollar (USD) by more than 15 percent at weekly intervals. It’s likely that by September 2023, ZWL7,000.00 will be equal to USD1.00 if there are materialistic and meaningful fiscal and monetary policy reforms.
It is time for fiscal and monetary policy formulation and implementation authorities to do something to stabilize the ZWL for economic growth and development.
First, the government should build bullionism that should be banked at the Reserve Bank of Zimbabwe. The diamond, gold and silver should be used to build bullion, in which the government would be able to use it as a currency stabilizer to support ZWL for growth and development of the economy.
The government, through Fidelity Printers and Refineries, must buy gold at the parallel market price or the global market price. This will minimize illicit financial flows (IFFs) associated with gold smuggling to South Africa and the United Arab Emirates (UAE).
It is alleged that gold being smuggled into South Africa ends up in the South African Reserve Bank (SARB). Then, the SARB used that gold to manufacture gold coins, the Krugerrand. South Africa has managed to mop up gold from the black economy because they are offering lucrative and competitive prices, which their Zimbabwean counterparts are failing to do.
It is a public secret that in the black economy, gold is being used as money to buy food, strong drinks, household essentials, and the services of commercial sex workers. Gold is a widely accepted currency in the gold mining areas, like Chimanimni to Mutare. Such a scenario could be capitalized to ensure that gold can be transformed into official currency regulated by the government, where individuals and corporate companies would be allowed to own gold. This might lead to reduced gold smuggling and the stability of the currency and economy.
Even though there is a facility for gold coins called Mosi a Tunya, it is elitist, meaning that gold coins are solely accessed by the political, business and economic elitists and not the commoners. This is why the concept has primarily failed to resolve the currency crisis. It is very clear that there is exclusion of low-income and economically marginalized groups from financial markets, especially when it comes to exercising economic rights of access to income in the form of gold coin; therefore, something must be done to deepen inclusivity.
The government should promote export-oriented productivity in the economy, where they can pay incentives to foreign currency earners, especially the farmers and entrepreneurs.
Further, it is high time to subsidize productivity in mining and agriculture. This can be done to deal with runaway inflation.
The taxes should be cut off, but there should be a raise in customs duty to make all imports expensive, except machinery and equipment for manufacturing, agriculture, and mining. This might lead to economic stabilisation and the end of the currency crisis and inflation. To add on to that, it would revive investor confidence in the economy.
Importantly, the government should detoxify the political ecology. Since 2000 onward, the country has experienced inter-party and intraparty violence resulting in violations of property rights and fundamental human economic rights. The democratic space should be widened to ensure that the state and independent media exercise their full rights to criticize the governing elitists and government. This means that the scenario of Nick Mangwana and George Charamba threatening the journalistic world not to research, write, report, or comment on certain stories like the Al Jazeera Gold Mafia Scandal must come to an end. A critique is not there to destroy, but it is a mirror used by smart government leaders to do political and economic reforms for the social well-being of citizens and their electors.
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The Zimbabwean currency could be stabilized by reducing crisis management, which would result in policy inconsistencies and reversals.Such a lot of whim of policy changes is detrimental to the economy and stability of currency, so it is recommended that we come up with an economic development policy management system that should be reviewed after 15 years. Today, it is clear at what time policy review is done because of inconsistent leadership.
The change of finance and economic development ministers and apex bank governors always brings change to fiscal and monetary policy rather than continuity.
In summation, Zimbabwe should do something to address economic fundamentals through a comprehensive and concise legal and policy framework that enables the conditions for a free market gold economy and the creation of bullion in quest of currency stability and social well-being – Harare