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Victoria Ruzvidzo : Business Focus

The Zimbabweanean economy is currently in a very unhealthy state. People are losing hope and many have put on a defeatist attitude that naturally drains energy and is regressive. The negative sentiment is poisonous, though understandable to some extent. People are concerned about the developments in the economy in the last few weeks and already envision a return to the pre-multi-currency era. Doomsayers have been quick to warn people that indeed the economy is rapidly going down the slope they had better take cover.

Of course it is now common knowledge that the sudden rush is largely a result of the impending introduction of bond notes, wrongly perceived to mean the return of the Zimbabwe dollar.

Last week, I visited a certain bank intending to do some transfers and what I saw made my heart bleed. There was a long queue outside the banking hall as depositors waited to withdraw money and I concluded that the banking hall must have been packed with people for the queue to be spilling outside to that extent but to my surprise, there was no queue and very few people inside.

The security guard was mumbling something to the effect that people were queuing but there was no money to give out. You could see mothers looking dejected, with crying babies strapped on their backs. They had been queuing since 5am and it was now after 2pm but there was just no money for them. Not even the $50 each that the depositors have been complaining about.

The automated teller machines outside were said to be under routine maintenance, a language that depositors now understand to mean that there is no money.

This has become the order of the day at most banks since the cash crisis worsened about two months ago. It is unfortunate that such incidents bring back memories of the 2008 era when there was hardly any money in the banks and very little to buy in the shops. The forgettable era of hyper-inflation.

The Minister of Finance Mr Patrick Chinamasa and the central bank governor Dr John Mangudya have tried to reassure Zimbabweans that the situation will not deteriorate to the 2008 levels but this has not helped much. People are panicking. The speculative behaviour is rapidly creeping back into the economy not because of a serious shift in fundamentals but because people perceive that the era of shortages is upon us.

One senior banker recently told me that she witnessed an instance at one of the wholesale shops in Harare where an individual bought a truckload (gonyeti) of cooking oil, obviously for speculative purposes as people anticipate widespread shortages of basic goods and the re-emergence of the black market for foodstuffs and foreign currency.

The social media has been fuelling this, with many posting their own theories that the dreaded era is upon us and people should buy stocks of all basic goods or they will soon starve.

Unfortunately perception is as good as fact so many believe that the economy is likely to be worse than it was before the introduction of the multi-currency system in 2009.

These fears, sentiments and beliefs need to be addressed sooner rather than later to arrest further deterioration.

Last month the central bank issued a statement explaining that the bond notes were an incentive for exporters and would be introduced at a regulated limit and pace.

Dr Mangudya has had several interviews with both print and electronic media but this has not cleared the fears in the economy.

People have lost trust in the authorities and still insist that the economy is headed downwards. This state of affairs, as is already happening, is regressive and has potential to compromise any effort to make things better.

So the central bank, the Government and their social partners need to move expeditiously to further reassure the nation and all economic players that the situation is redeemable and may not be as bad as they think.

The re-assurance need not be merely in word but in deed. It is a tall order but one that can be achieved. The central bank needs to consider all the fears about the bond notes and establish if, by the proposed date of October, it will still be beneficial to launch the notes or a new strategy can be sought.

If indeed the bond notes are the way to go, then the central bank has work cut out for it. It must launch a more aggressive campaign to induce confidence about the bond notes. It must use all available media platforms and distribute flyers even in vernacular to explain the positive impact the bond notes will have and how all this is expected to improve export performance and hence boost the economy.

Telling someone at Siya So — the informal trade centre in Harare — that the bond notes are an export incentive blah blah sounds Greek to them, hence the negative reception. If meetings must be held at such platforms as Siya-so and other home industries where the governor and his team fully explain the benefits and dispel fears, then that must be done.

Be that as it may, the planned introduction of the bond notes has also resulted in a wait and see attitude by investors.

Four months to October is a very long time for investors to be in abeyance. Questions have been raised as to why the announcement was made now and not nearer the introduction time but I am sure the central bank has its reasons. The investors need to know.

However, Dr Mangudya and his team need to manage the situation well because discussions with stockbrokers and other players in the money and capital markets have revealed that investors, even those that are interested in the long haul, have decided to wait and see how things turn out come October.

The negative reception of the bond notes news has sent shivers in the markets while others are still to understand what all this means to the economy.

The markets are full of more questions than answers, given the precarious state of the economy, and the onus is on the central bank to adequately address the matters arising from its pronouncements.

The loopholes fuelling externalisation of funds also need to be plugged urgently. The story of two Rwandese caught at the Harare International Airport as they tried to smuggle out $87 000 is indicative of the fact that Zimbabwe is losing large amounts of money in this fashion. More attention is required to deal with this menace.

Reports that the central bank imported more that $160 million, with more brought in by individual banks, clearly illustrate that cash shortages are a result of externalisation and other malpractices afflicting the economy.

Furthermore, such aspects as political in-fighting and corruption continue to constrict economic activity.

These issues have been highlighted and their effects laid bare on countless times and we hope decisive action will be taken to minimise their damage to investor confidence and the smooth application of ease of doing business systems for both local and foreign investors.

Overall, a more holistic approach to challenges bedeviling the economy is critical. The solutions to the economy are homegrown and we have the intellect and human capital capable of formulating and implementing strategies that will bring sunny days into the economy.

Let’s capitalize on all resources at the country’s disposal to rise from the valley as happened decades ago when the Asian tigers rose from the doldrums to dominate global markets. Zimbabwe not only has the will power to do so, but the resources too.

In God I trust!

Email: [email protected] Twitter:@VictoriaRuzvid1