By Shingirai Vambe
ZIMBABWE – Barely three months after Covid-19 (C19) lockdown, the country is faced with deep economic challenges as the Central bank introduced two new higher denomination bond notes, ZWL 10 and ZWL 20 respectively.
Wednesday afternoon , the Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya referred to the Zimbabwean economy as being demon possessed.
“There is a demon that is in this country which is causing economic instability; you can’t touch it, but you feel it and we need your support as Members of Parliament to trace this demon,” Mangudya said.
The central bank governor confessed that he did not know the cause of the dying economy.
Economic analyst John Robertson told Post on Sunday that Zimbabwe had grossly lost a number of international market products which could have brought in foreign currency into the market.
“Zimbabwe in 1980 used to produce a long list of mineral and agricultural commodities, efficient enough to make profits from their sale abroad.
“We had even a longer list of consumer export goods which include clothing, footwear, furniture, stoves, text and exercise books. We also processed meat,”
Robertson said, adding that these factories would employ more than one hundred and eighty thousand people and sustained training schemes and apprenticeships sponsoring specialised facilities at technical colleges.
He, however, highlighted that government’s unwarranted interference in various businesses and parastatals pushed up costs of goods and services, and in the process increasing minimum wage levels and frequently adjusted while imposing additional taxes and new license fees.
He further highlighted where most of the economic challenges emanated from, citing the high import bill on food yearly since the land reform begun, resulting in the country’s ability to earn foreign currency diminishing.
“Early 2009, the Zimbabwe dollar was rendered valueless, and the coming in of the United States dollar immediately arrested the hyperinflation and permitted the government to abandon many of its controls and regulations. But this did not go far as government then started to to manipulate US dollar values to suit Zanu Pf objectives, announcing extravagant public sector wage increases and introducing subsidies to generate hoped-for improvements in the very poor agricultural performance since the land reform”.
Economist Persistence Gwanyanya told this publication that the journey to dedollarisation had a false start.
“What this means to me is dedollarisation is not an event but a process.
“A country has to transit into dedollarisation, and we all know what happens in transition, and this is costly and unaffordable,” he said.
“According to the World Bank’s definition of dollarisation, which states it as a condition which occurs when foreign deposits are at least 30% of total deposit, Zimbabwe is still dollarised.
The RBZ a fortnight ago brought new bond notes into the market and now citizens feel the country is heading towards the 2008-9 era where the local currency could not afford buying even a sweet.
Comments passed on various social platforms said the new high denominated notes cannot afford to buy even a loaf of bread which is being sold for ZWL35 and two litre bottle of cooking oil going for RTGS 200.00.
Prices of goods and services have, in the past three months of lockdown, gone up as the exchange rate on the parallel market continue to shoot even to the extent that big supermarkets’ price commodities are not on USD 1:25 as regulated by the central bank.
For the past weeks fuel queues have resurfaced, with various service stations wanting to sell the scarce commodity in USD and having the rate at 1:60.
This happened while most of Zimbabweans in the informal market are still locked in due to C19 and they are wallowing in hunger and starvation.
Traders who spoke to Post on Sunday said they risked going out and trade illegally or against Covid-19 regulations as they could no longer manage, with prices of basic goods and food that have risen by more than 60% and security forces continue to chase people out of central business districts in various provinces.
Government has since advised the nation on the arrival of level two of the national lockdown, and business operators who are allowed to operate say the difference is the same, as the socio-economic situation in the country relies mostly on informal traders.
Economic analysts said the printing of the new high denominated bond notes was not by coincidence but came at an opportune time when farmers had just started auctioning their tobacco.
The RBZ spokesperson Alson Mfiri, however, responded and said: “Introducing new notes is dependent on the aspirations of the country and the economic fundamentals that include inflation and the level of financial inclusion?”
Contrary to the previous target of using plastic money, the central bank said it was a substitution of money from electronic to physical cash and that should not affect exchange rates.
Mfiri further added that the printing and introduction of new higher denomination notes was a gradual basis that took into account the country’s economic fundamentals.