In an attempt to solve the cash crisis in Zimbabwe a group of Zim-students at University of Pretoria held a discussion with Dr John Mangudya, the governor of the Reserve Bank of Zimbabwe. Interestingly, Zimbabweans are diplomatically keen and determined in seeing Zimbabwe pass through this economic phase and the government need to acknowledge the flaws in its policies and regulations.
Davidson Matanire(student) said,”There is need for you(Mangudya) alone as Governor to protect the banking system and predatory tendencies within the government. How do you explain politicians getting huge sums of loans… only get exposed when they fall out with the ruling party. How then am i going to go as a citizen to bank with such a bank…”.
Dr John Mangudya said “Because of the political exposed persons (PEPs) statuses in the economy they get something that you or I cannot get. It is an internationally accepted principle that they get more provision in bank… however we need to mitigate this.
Such a response in a confused economy would leave Zimbabweans wondering if this is incompetence or another Gono era of deliberate political lies. The way in which the reserve bank is responding to the cash shortage can only be summed up as a political strategy to win the 2018 election.
This is why the “noble” political benefits end up causing corruption, disrupting democracy, reducing local investment, undermining innovation and even boosting military spending to a country that can ill-afford it.
Following our last press release on the cash crisis in Zimbabwe, a new cyclic bull market of cash barons owning an estimate of over 4-5 million greenback dollar and bond note everyday has emerged. The unanswered question remains, who is giving them the cash when banks limit withdrawals and declare bankrupt?
The issuing of bond by the Reserve Bank of Zimbabwe in November( 2016)was to help ease the economic recession ironically 90% ATM’s run dry of currency and 9 months later long queues outside banks persistantly wait to withdraw $30 silver coins.
Any patriotic Zimbabwean would say the (2007-2008) tragedy bedevils them again with the US dollar now being sold at 32 % per dollar and the bond note 30%.
There is a very real possibility that the black market economy is rising and will thrive with cash barons accumulating million dollars from desperate citizens who want cash. Reports of people being unable to afford transport, rentals and food are becoming common as the Chinese and Indian shops refusing transfer or ecocash.
The price of goods is also rising and basic food prices fluctuate in small shops depending with the form of payment you are going to make for instance if you want to purchase 2 kg slat in a tuck-shop u pay 20 cents on top.
In a press release Mangudya said, ‘we do not have a cash shortage but rather we do not generate enough foreign exchange’.The bond notes are stated not be a currency in itself but rather legal tender near money pegged equally against the US dollar. Presumably this ‘near money’ is no currency, it is ‘gold’ to its fellow Zimbabweans who are purchasing it at a very high cost.
Since June 2016 there has been a rampant collapse in market confidence and companies are feeling the squeeze. This is because there is no local production and most of Zimbabwe’s goods are all exported using the US dollar.
Firms are falling behind on some payments and asking suppliers for credit terms longer than before.The inability of individuals and firms to obtain desired nominal balances of cash have even led firms to shutdown business. Zimpharm Private Limited, Monday blues,Lancashire Manufacturing and hundreds of them closed due to dry economy in the country.
The birth of wireless transfers in Zimbabwe with the political and economic meltdowns hasn’t solved the issue at hand because there is no indigenous production and the informal sector is charging an extra fee on every transfer being made. If the stability US cash economy doesn’t return, social unrest might lead to violent street activity and with the upcoming 2018 elections we can only anticipate disaster.