Ngoni Dapira

MANICALAND captains of industry and commerce unanimously called for consistent market led interventions policies to buttress confidence in the new currency, the Zimbabwe Gold (ZiG).

This was said last week Thursday during a Zimbabwe National Chamber of Commerce (ZNCC) Manicaland chapter 2024 Monetary Policy Statement (MPS) review breakfast meeting held in Mutare, officiated by the new Reserve Bank of Zimbabwe (RBZ) governor Dr John Mushayavanhu.

Thomas Masese

Manicaland based economist Thomas Masese who was amongst the panelists, in his analysis of the MPS said there is need for government to show confidence in the new currency. He said the black market can be driven out without coercion through the police if government strategically uses market led interventions.

“The moment there is equivocation fallacy our basket currency system becomes difficult to stabilize. From my perspective prices should be pegged in ZiG. When we peg most prices in US$ we are already portraying ZiG as a second class currency. Why don’t we show that ZiG is our preferred currency,” he said.

Adding,” This will also entail ensuring what was promised by the Central Bank that banks will have enough money, both ZiG and US$. If that is done then slowly the market led forces will choke the black market because who will want to buy or sell money on the streets when there is no shortage in the formal market systems? If the importer can get money from the bank why risk going on the streets?,” said  Masese who also serves as the chairperson for the macro-economic committee’s for ZNCC and the Confederation of Zimbabwe Industries (CZI) Manicaland chapters.

Masese said given the corruption levels in the country, eventually the police and people, including money changers, become one, so the only solution is through market led interventions which will be supported by strict policing without selective application of the law as was previously done when past currencies were introduced and failed.

“This has been happening before. Due to high unemployment we have a lot of economists on the streets that survive on manipulating the currency exchange rates as their day to day business. We know government is struggling to strike a balance between survival and macroeconomics then there is also politics, this becomes very difficult to manage but let’s learn from our past mistakes and this time stick to fundamental economic principles to support ZiG,” he said.

CZI past national vice-president Richard Chiwandire said there is need for realistic financing structures for start-up and re-tooling businesses, collateral security solutions as well as easy access to foreign currency for businesses to stay away from the black market.

“We still have the problem of institutionalized corruption in the public sector and this will have a bearing on the performance of our ZiG, just like what happened with the previous local currencies,” said Chiwandire.

A structured currency is generally defined as a currency that is pegged to a specific exchange rate or currency basket and backed by a bundle of foreign exchange assets. In the case of Zimbabwe, gold is being used. Dr Mushayavanhu said the structured currency is different from the ZW$ in that it is anchored by a composite basket of foreign currency and precious metals like gold, held as reserves for this purpose by the Reserve Bank.

He assured the nation that the Central Bank will not be printing money willy-nilly. ZiG notes and coins shall be issued in denominations made up of 1ZiG, 2ZiG, 5ZiG, 10ZiG, 20Zig, 50ZiG, 100ZiG and 200ZiG, which will be distributed through the normal banking channels. Answering, Masese on his concerns about introducing the ZiG notes and coins separately, Dr Mushayavanhu said contrary to what had been communicated in some circulars, the ZiG notes and coins will be distributed simultaneously on Tuesday (today) to avoid arbitrage.

On international recognition of the ZiG, Dr Mushayavanhu said ZiG is a local currency that has not yet achieved convertibility. “We will gradually work to strengthen the currency to attain full convertibility, consistent with the regional agenda for macroeconomic convergence under the SADC Protocol on Finance and Investment.”

Dr Alexander Rusero speaking.

Media and political analyst Dr Alexander Rusero said there is need to invest in the perception index of the ZiG in this digital era where there is lot of proliferation of mass news in the form of fake news, disinformation and misinformation.

“The way disinformation and misinformation spreads is very viral and in my analysis the RBZ communications team is lagging behind in this area. When policies are put out there perception can be fixed. I know you said you cannot legislate trust from the people but perception index can be fixed to avoid polarizing ZiG on political lines and avoid arbitrage,” said Dr Rusero.

ZNCC Manicaland vice-president Raymond Mavhumashava in his presentation said over the years a lot of questions have been raised about governments accountability in implementing suitable monetary policies and measures to address rising prices due to inflation.

“The consequences of unchecked inflation can be severe, impacting the purchasing power of citizens, eroding savings, and undermining economic stability. The business community wants policy makers to demonstrate consistency, especially, given our past experiences when we introduce other local currencies that failed, which all has a bearing on how to boost confidence in the ZiG,” said Mavhumashava.

He added that expenditure control by government will be critical to avoid the temptation of unjustified printing of money.

ZNCC was applauded for hosting the breakfast meetings countrywide, allowing the local business community to interface with the new RBZ governor.