Last month the Mnangagwa government enacted the Statutory Instrument 142 (2019) in which the regime banish the use of the basketful of multi-foreign currencies as legal tender in Zimbabwe leaving the local currency in its multiplicity of formats and names; Bond Notes and coins, RTGS$ and Ecocash all to be known from hence forth as Zimbabwe Dollar (Z$). Zimbabwe is not the first nation to make such a bold move, one of the first to do so was the United States of America in 1862.
In an article “A currency backed by nothing”, eBusiness Weekly, also available in Bulawayo 24, explain is the simplest language why USA’s bold move worked and why Zimbabwe’s is doomed to fail.
“On February 25, 1862, United States President Abraham Lincoln signed the Legal Tender Act, a brainchild of Elbridge Spaulding. Those were terrifying times. The republic was at war with itself and would be till 1865,” wrote eBusiness Weekly.
“Through the Act, Treasury would issue federal dollars backed by nothing. The new currency was quickly nicknamed "greenback", The greenback was to be used for all local transactions except custom duties and interest on government bonds which were to be paid for in the old gold-backed dollars or gold. The National Banking Act in 1863 would make it clear that banks could still issue own banknotes only that now, with the Legal Tender Act, such notes had to be backed by the greenback and not gold as before.
“They were worried inflation would soar once the anchorless currency circulated. They were wrong. Why? Well, war can be good business. Factories keep running because a lot of stuff must be produced and moved quickly to make way for more stuff to be produced. With such activity, the anchorless currency did not chase few goods, it oiled industry.”
In Zimbabwe SI 142 has enacted in a huff, inflation was soaring and traders, workers and everyone with the economic clout to pick and choose which currency to be paid in was doing so to the detriment of the local currency. SI 142 was enacted to banish all foreign currency as legal tender and force everyone to use the local currency. In a country with a skewed trade deficit and little local production, prices of goods and services are tied to foreign currency. Increasing the amount of local currency without increasing production and available foreign currency was bound to fuel inflation.
At the time SI 142 was passed inflation was already 97% and it opened the door for the regime to print more money to meet the lost buying power of the local currency. As slippery slope as this caused a new wave of price increases fuelled inflation. In the last four weeks inflation has already surged to 175% and is set to grow exponential as the latest price and wages increases of 40% and even 1 000% with zero and even negative increased production take effect.
“What made it (USA bold move) work? Hastily, some will say trust and confidence,” concluded eBusiness Weekly. “But, what we know and is irrefutable is that when the greenback was introduced in the early 1860s, industrial production, thanks in part to the war, made it work.
“We must, however, realise that production is an end, it is an outcome of peculiar knowledges and insights of what to produce and how to produce it. Zimbabwe and indeed Africa hasn't quite figured that out. In this is the mission of our time.”
Well our mission is mission impossible in that power and authority to change anything is now invested and monopolized by those who believe they know best when in fact they know nothing.
“I know nothing and that is the only knowledge I have!” said the great Greek Philosopher Socrates (470 -399 BC). The Socratic paradox, given he is one of the “wisest”, as the Pythia, the Oracle of Delphi, readily acknowledged.
What made Socrates such a wise man is his humility to admit he does not know and thus opened his mind to learn and have everything questioned from all possible angles. "The unexamined life is not worth living,” he argued.
Socrates, like his fellow Greeks of his age, had an unquenchable thirst for knowledge, embrace the need for freedom of expression and free speech and gave birth to democracy. Greece prospered and thrived. It was Greece’s golden age!
In Zimbabwe we are ruled by men and women who believe they have the divine right to rule and have been rigging elections to ensure they iron grip on power. They have stifled all meaningful debate there is no freedom of expression and no free media because they cannot bear being questioned much less held to democratic account.
SI 142 is doomed to fail; it is but one of the many Zanu PF voodoo economic policies to fail with disastrous economic consequences to the nation. Even after 39 years of gross mismanagement and rampant corruption and the national economy in ruins; Mnangagwa and his Zanu PF cronies still believe they know best and are they only one competent to rule Zimbabwe.
Our mission is impress on these Zanu PF thugs that they are humans, like all humans, they do not have the monopoly of knowledge. And that after 39 years of blundering from pillar to post, proof their do not know best, they must accept they have failed to govern.
Mnangagwa and his Zanu PF cronies must accept they rigged last year’s elections, this Zanu PF regime is illegitimate and must step down.
As long as Zimbabwe remains a pariah state ruled by corrupt, incompetent and unaccountable thugs, the country will continue to sink into the abyss; is the one thing I do know for certain.
I hope the ordinary people of Sudan will take the trouble to now understand what the interim government is supposed to do and make sure it is done. In Zimbabwe, people switched off after the 2008 GNU was signed and not even one reform was implemented. Not one!
ReplyDeleteChina has never imposed sanctions on Zimbabwe but might as well have done so because, like the West, it has long stopped giving Zimbabwe any financial assistance because Zimbabwe does not pay back her debts! China signed many mega-deals with Mnangagwa just as it did with Mugabe before him but would not spend a dollar until Zimbabwe paid its outstanding debts. The fall out was coming!
ReplyDelete@ Bere
ReplyDeleteFor a country regarded as one with probably the highest literacy levels on the continent to be entangled in a devastating economic situation for close to twenty years is a big misnomer if not a slap in the face of education. The main purpose of education is supposed to empower individuals and society with the capacity to solve their problems, continuously improve their lives and overcome what to the uneducated societies is unsurmountable. Education is even supposed to give a society or nation the capacity to effectively compete with other societies and nations and gain its own economic space. Education is supposed to be the vehicle for economic development. This is not what is in Zimbabwe today.
There is no doubt that political harmony and normalisation of relationship with the global community will add impetus to Zimbabwe’s economic progress. What is flawed is believing that political resolution is all what the country needs to solve its economic problems.
In Zanu PF, we have a regime that believes that it has the divine right to rule the country and hence done everything in its power including denying the people their basic right to a meaningful say in the governance of the country even to the extend of murdering innocent people to retain power. Until we dismantle the Zanu PF dictatorship there is no point is discussing economic policies and strategies because none of them will ever see the light of day as long as Zanu PF rule the roost!
Said Biti," It is fair to say that the new regime is redefining corruption in Zimbabwe. In Dec 2017 US$1.5 billion was transferred directly from treasury to unknown actors of Command Agriculture. In 2018 US$1.4 billion was transferred there is no documentation or vouchers to support these transactions.
ReplyDelete"The levels of brazenness, impunity and greed are shocking. This is truly a failed banana republic at this rate Zimbabwe does not need foreign aid. It simply needs to plug the holes and stop corruption. It needs a radical new leadership. It must resolve the political question and soon."
Tendai Biti when you were Minister of Finance, were knew there was wholesale looting in Marange and Chiadzwa, you complained of not getting the expected diamond revenue. And yet for five years you did nothing to stop the looting. The only reason you are huffing and puffing now is because you are desperate to go into a new power sharing arrangement and, hopefully have your old job back. You will do nothing to end the looting much less implement the democratic reforms necessary to end the curse of rigged elections.
You can huff and puff all you want; we are not interested in another Zanu PF and MDC GNU. We want a new interim administration we can trust to address the country’s economic challenges and, above all, implement the reforms!
About 3 Billion United States dollars disappeared through the system after it was allocated to the Command Agriculture program between December 2017 and 2018 it has emerged.
ReplyDeleteThe matter came to light on Friday Morning when the Parliamentary Public Accounts Committee was receiving oral evidence from Ministry of Lands, Agriculture, Water, Climate and Rural Resettlement on the Ministry's Accounts audited in the Auditor General's 2017 and 2018 Reports.
The report revealed that Treasury released USD$3billion to the Ministry of Agric and Lands to finance Command Agriculture, but there is no supporting documents and parliament did not approve this payment.
As long as we do not have a government that can willy-nilly rig elections and is therefore not democratically accountable to the people there will be no end to the gross mismanagement and rampant corruption in Zimbabwe.
Zanu PF rigged last year’s elections, the regime is illegitimate and it must step down! The party holding back this move is none other than MDC who want a power sharing arrangement for selfish reasons.
@ Nomazulu
ReplyDelete“To say Dr. Nkosana Moyo is 'stupid and greedy' is desperation of the highest order!”
Just read your article and just wanted to put the record right; I have never said I am above everyone else. I have dared to disagree with even those supposedly in the same camp fighting the same enemy Zanu PF. I have used robust language when I felt it was called for and make no apology for it.
When MDC sold-out during the GNU this was a grave matter with catastrophic consequences that everyone must be reminded of at every opportunity, especially when there are still hundreds of thousands still following the sell-out sheepishly.
By participating in the elections knowing Zanu PF would rig the elections Nkosana Moyo and the rest were betraying the fight for reforms and free, fair and credible elections. We all know why they were doing it - greed. Someone needed to hold a mirror to their faces and I did.
Millions of ordinary Zimbabweans today live in abject poverty, with no basic services such as clean water and health care, etc. all because the pretentious opposition politicians have betrayed them just as the Zanu PF thugs before them have done, You, Nomazulu, can give them a slap on the wrist if you wish, I respect you wish. I think they deserve a serious grilling and I am convinced the millions of ordinary Zimbabweans, the voiceless majority whose lives are a living hell, would agree with me.
I am holding our politicians, from both side of the political divide, to democratic account. The country is in a serious mess, proof that things are seriously wrong, and turning up the volume of democratic accountability is exactly what the nation needs. I stand to be corrected; prove me wrong!
History, with the benefit of hindsight, will say Nkosana Moyo and all those who participated in the 2018 elections sold-out and that I was right to condemn it before it happened and after.
“Our mission is to impress on these Zanu PF thugs that they are humans, like all humans, they do not have the monopoly of knowledge. And that after 39 years of blundering from pillar to post, proof their do not know best, they must accept they have failed to govern.”
ReplyDeleteI believe our mission should not be to educate Zanu PF thugs on the link between knowledge, production and stable currency, as eBusiness Weekly suggest. It should not be to impress on the thugs that contrary to their vain claim of knowing best, they know nothing.
I believe our immediate and pressing mission must be to demand the dismantling of the corrupt and oppressive Zanu PF dictatorship to restore the individual freedoms and rights including the right to a meaningful say in the governance of the country and rule of law.
Zimbabwe is a democratic nation and Mnangagwa promised to hold free, fair and credible elections in accordance to the dictates of the country’s constitution. He claims to this day that the 2018 elections were free, fair and credible. Our mission is to hold his feet to the fire on that because the elections were not free, fair and credible.
How can the elections be free, fair and credible when 3 million Zimbabweans (he claimed victory with 2.4 million votes) in the diaspora were denied the vote (he promised they will vote next time)? ZEC failed to produce something as basic as a voters’ roll for Pete’s sake.
Zanu PF rigged last year’s elections, just as the party has done with past elections these last 39 years; we have rewarded the region with absolute power in the past and look where that has landed the nation. We must demand that Zanu PF step down, it rigged the elections and, per se, has no mandate to govern.
We know what a dictatorship is just as we know what a democracy is. We do not need to reinvent the wheel but only to apply it - why is that so difficult to understand!
We should know from history that dictators do not give up absolute power out of the generosity of their greedy and murderous hearts. No amount of appeasing the tyrants has ever achieved change. If we want change we must demand change and make change our mission!
Government has disbursed funds to the first batch of Bulawayo businesses that lost their goods and properties during the January protests which were characterised by looting and burning down of shops.
ReplyDeleteThe money is part of the $19,5 million special fund set up to assist businesses that were looted during the violent protests.
An inter-ministerial team visited most of the affected areas in January before coming up with the fund.
In a country where corruption has been institutionalised, the ruling elite are always coming up with new ways to loot. There is no doubt that a lot of this money will end up in the pockets of the ruling elite and most of the real victims of the January protest will only get a token amount!
As long as we have a regime that is not democratically accountable to the people corruption will remain a serious problem. We must demand the implementation of the democratic reforms to ensure free, fair and credible elections and until we do this, we will suffer the consequence of bad governance.
President Emmerson Mnangagwa and the Chief Secretary to the Office of the President and Cabinet Dr Misheck Sibanda have been called upon to account for the USD$3 billion that went missing after treasury funded the Command Agriculture program.
ReplyDeleteOn Friday the Permanent Secretary and Finance Secretary in the Ministry of Agriculture said they do not know what happewned to the money because the program is running under the Office of the President and cabinet.
Beauty Zhuwawo the wife of former Minister Patrick Zhuwawo said,. "If you called for their CVs you will find they are appropriately qualified however what does one do when they are told the program will be run under OPC. Biti should haul Dr Sibanda to the public accounts committee. He is the weak link. The buck stops with him on this one."
However, Professor Jonathan Moyo said Mnangagwa is the one responsible for the disappearance of the money.
"Yes Misheck Sibanda should be held to account but the buck stops with Mnangagwa! At least Parliament has helped to get govt officials to confirm what has been said here before. Now the command agriculture loot-story is official!"
MDC Treasurer General David Coltart said, "It is common cause that Mnangagwa was the lead actor in Command Agriculture which is where this money disappeared. This is a scandal of unfathomable proportions. But all we get is silence from the regime."
This is a tragic story! How can a nation with a GPD of US$10 billion of so waste US$3 billion in one programme alone and still expect economic recovery? If we are serious about reviving the Zimbabwe economy then we must deal, head-on, with the criminal waste of resources in the country. The only realistic way to end the gross mismanagement and rampant corruption is for the country to end the curse of rigged elections so we can finally have competent and accountable government.
It is interesting to note how discredited individuals like Professor Jonathan Moyo, Zhuwao’s wife and David Coltart are calling for accountability in a system they know is not accountable. They all played their part in creating and retaining the de facto one-party dictatorship. As an MDC leader Coltart had the chance to dismantle the dictatorship but has done nothing!
As long as Zimbabwe remains a pariah state ruled by corrupt, incompetent and vote rigging thugs, Zimbabwe will continue to sink into the abyss!