Tafataona Mahoso’s ‘foolish’ wisdom

Cash picturePolitical Monday with Amai Jukwa
I  have always found Mahoso and Chivaura a ponderous and tiresome pair. Chivaura’s combative prime-time ZBC show, African Pride, is self-indulgent and largely uninspiring. One gets the feeling that he is talking to himself. Mahoso for his part writes a voluminous column for The Sunday Mail in which he batters the reader with dated talk of “Madzimbahwe” and elaborate European conspiracy theories.

I was recently made aware of a spirited exchange between Mahoso and the Herald Business editor Happiness Zengeni. Mahoso took exception to her assertion that Zimbabwe was not ready for a national currency. At first instance I was minded to agree with Zengeni but after reading through Mahoso’s extensive arguments — delivered in a series of unrelenting columns — I have not only been persuaded otherwise but have also discovered some unappreciated gems of wisdom in what I previously dismissed as the ravings of an unpersuasive propagandist.

The accepted wisdom is that Zimbabwe is suffering from a lack of confidence. The very suggestion of the return of the Zimbabwean dollar unnerves investors and arouses a sense of uncertainty. As such Government should not only forget about re-introducing the Zimbabwe dollar but should not even talk about it as the very conversation suggests unrighteous contemplation on their part.

The argument seems logical at surface but Mahoso offers an impressive rebuttal, tearing through it and proving that its façade of reasonableness is founded on nothing more than terror.

Mahoso points out that Zimbabwe had a national currency for 29 years. For 27 years that currency functioned decently well under the very same Government we have today. Why should the events of 2007 and 2008, a mere two years, be used to characterise the essence of a national currency? Surely a balanced conversation would also give weight to the 27 successful years in which “schools, clinics, training centres, dip-tanks, roads, laboratories, universities, magistrates’ courts, community centres and libraries” were built on the back of that currency.

Mahoso challenges the vague theme of terror relied upon by those who oppose the national currency. Instead of engaging in logical debate on the specific economic fundamentals necessary or the framework that should support the eventual re-introduction of the currency we are told that we should not even think or talk about it.

To get us in line we are constantly reminded of a 2008 bogeyman that is supposedly ready to pounce the moment it senses the slightest contemplation of a national currency.

Perhaps inadvertently, Mahoso touches on something more sinister. The foundation of this 2008-will-return fear-mongering is the subliminal suggestion that the Government is made up of rapacious money printing beasts that can only be restrained by the inability to print. Once these animals can print again 2008 will most certainly be repeated.

It is not in doubt that Dr Gideon Gono, the then Governor of the Reserve Bank, made expedient decisions that ultimately ruined the currency. Even the most ardent Zanu-PF supporter is now very much alert to the dangers of printing money to finance government expenditure. Instead of pointing to these errors of judgment with the sole aim of frightening people out of meaningful debate, those opposed to a national currency should be offering suggestions on the development of transparent frameworks to prevent the same thing happening again.

The resistance seems awfully visceral. I can accept an argument that says we are not ready for a national currency. However, that argument should set out definite benchmarks on when the conditions will be right. I can accept an argument that says the Reserve Bank cannot be trusted but the argument must in turn make suggestions as to how the discretion of the Reserve Bank can be limited and its operations made more transparent.

Jumping up and down and simply shouting no, no, no hardly constitutes informed debate.
Mahoso demolishes the notion that Zimbabwe should wait blindly until some undefined conditions prevail. Instead, the Government and stakeholders must actively work to set clear benchmarks as to when a new currency can be introduced, the framework upon which its value will derive and what protections will be built in to prevent a re-run of 2008.

His argument cannot be faulted. It seems grossly negligent for a sovereign nation to sheepishly rely on external currencies without making any tangible plans for its own.

Government has already intimated that the re-introduction of the Zimbabwe dollar would not be absolute; it would run alongside other currencies. This is encouraging as it suggests that Government recognises that it cannot employ brute force but must instead win the confidence of the public.
We must accept two uncomfortable truths: The Chinese are not going to help us. Chinamasa, quite irresponsibly, continues to entertain fantasies about a possible “substantial” bailout package. The second perhaps more obvious truth is that the Western world is not going to help us either. We are on our own.

It is quite a pity that Gono is a discredited figure; at this moment we could certainly use an unconventional thinker (I suspect Gono feels the same way given the rather crude attack on Chinamasa by Fingaz a few weeks back). Our policy makers are displaying a desperate lack of imagination and have, in cowardly fashion, discounted viable possibilities in appeasement to a noisy but largely ignorant media.

The problem is both Chinamasa and the Central Bank have taken the unhelpfully orthodox view that the solution to our problems can only come from an external injection of funding.

This is quite simply not true; Government has the capacity to inject billions of dollars of liquidity into the economy within a matter of months using nothing more than the resources we have in the country. There is precedence to this effect. The fact that they are not exploiting these avenues does not speak to impossibility but incompetence.

Consider Germany’s similarly desperate circumstances in 1923. Hyperinflation had wiped out the value of its currency. A loaf of bread cost 200 billion marks. Prices jumped by the hour. At the very end 4,2 trillion marks were equivalent to one American dollar. I suspect this sounds quite familiar.

Shops were empty. Marks were virtually worthless and farmers refused to supply stores with food instead opting to barter with individuals. Angry food riots broke out. Vicious urban mobs marched into the countryside, attacking farmers and digging up potatoes. It was chaos.

Germany was also considered a pariah. Onerous reparations had been imposed for its aggressions in the First World War. Given its rogue status, it was not possible to borrow externally to use foreign exchange to shore up a new more stable currency. Gold was equally not an option since the country had exhausted its reserves. It seemed as though there was nothing the government could do.

What is remarkable is that the Germans moved from a completely debased currency to a perfectly functional one in just a matter of months. Contrast this with Zimbabwe. Five years have passed since the Zimbabwe dollar collapsed.

In those five years we have failed to produce even a single white paper on a possible framework to support the reintroduction of a national currency. Not only so, our officials actually boast that we should feel secure in the knowledge that we will not have a national currency for at least another five years as though a national currency were a menace. It’s pathetic.

It is helpful to note that Germany’s currency stabilisation had absolutely nothing to do with the vague “economic fundamentals” our pseudo-experts are fond of referring to. It was simply a matter of innovation.

The German government recognised that any new currency would have to be backed by something if it was to win public confidence. It managed to circumvent the lack of foreign exchange and an absence of gold reserves by mortgaging land and industrial plants and used this to back a new currency, the Rentenmark. Hyperinflation came to an immediate stop.

The crucial point is not so much the specific methods employed by the Germans but the display of possibility. The French at one time also backed a currency, the assignat, using land seized from the church.

Initially the land could only be sold to holders of the assignat and the currency proved effective. However, the government ended up printing too many leading to hyperinflation.

The point here is that we are not without options. One possibility would be to mark out vast residential and industrial stands and only allow their purchase in the local currency. This could possibly include placing a value on resettled land as well and allowing transfer of title only in the local currency.

We recently read of a Manicaland farmer who was using merely one hectare of a 490-hectare farm.
Such land could be seized and mortgaged with payments made in the local currency. The demand for land and governments monopoly over it would make such a currency highly sought after and locally tradeable with international currencies.

It is tempting to dismiss Tafataona Mahoso as a crank but his lone arguments on the national currency are the stuff of wisdom. We ignore him at our peril.

Ndatenda, ndini muchembere wenyu Amai Jukwa

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  • idi amin

    bravo!! good intro! brilliant and accurate. after that aint never seen so much trash in one article, totally devoid of economic fundamentals. in other words you just wasted my time. study economics or at the very least finance then we will talk, till then leave it to the pros!

    • Allan

      Idi Amini instead of simply dismissing the article offhand, why don’t you give an alternative?

  • farai

    Mai Jukwa’s articles are the same as Mahoso’s – unotonzwa musoro kuedza kunzwisisa kuti zviri kumbonziiko?

    • Hacha Ndizvo

      That’s true. Why can’t these guys use plain English – or write in Shona. What Mai Kukwa has written can be put across in 600 words using concise and straight to the point language. No wonder why they are at logger heads with the editors. A book called Newsmen’s English put it across in a very illustrative manner as follows;

      A Mupedzanamo fish vendor decided to boost his business by putting up a large sign that read “Fresh Fish Sold Here.” His friend can by and told him that he had wasted his money putting up that post. The vendor asked why and was replied as follows;

      - The word “fresh” is unnecessary. None would expect you to sell rotten fish so it is unnecessary communication.
      - The word “Sold” should also be struck out because the it is obvious the fish is for sale. No one would expect to get them for free.
      - The word “here” is also not necessary because anyone can see that you are doing business here.
      - The word “Fish” may remain but is not really helpful because anyone can smell the fish 100 metres away.

      Mahoso and company may just as well shut up.

  • zimbabwe1980

    Makes sense to me…

  • wolfgang mozart

    The need for a currency is as basic as it is essential. That almost goes without saying. Anyone who moots this does not have to be a patriot or an Economics pundit. Lets face it , we are in the 21st century and business transactions are enabled by currency i.e conventional legal tender. It follows that scarcity or inadequacy of same stiffles all forms of business. This then gives impetus to the crusade for reintroduction of our moribund zimdollar. There is an ostensible catch!! Currency, like commodities, is also prone to the vagaries of the marketplace that is supply and demand and emotional factors like market sentiment and confidence levels. From an elementary persepective, a currency tends to appreciate when there z local and external demand for it, inversely it depreciates due to negative sentiment. It is intructive to note tt Mai Jukwa goes ahead to cite the classic Bavarian example of buoying a currency with resources a workable buffer in the event of marketplace jitters. Granted, to alleviate our liquidity crunch we need our own currency but will it cope in the cut throat financial climate????? Do we have investors flocking towards our country??? Wat do rating agencies Fitch, Moody et al have to say regarding our business environment?? Have we got identifiable, quantifiable soveregn assests like mineral reserves that we can use to buoy our cherished zimdollar??? A recent press report hinted that our bullion resrves are only worth a lousy US$500 000. An appaling status quo for a country located in the Persian gulf of minerals. Had the gold ingots in our centrall bank been at least in excess of our GDP , I wud have jumped on Mahoso’s bandwagon advocating adoption of the theZ$, considering that the pertinent questions I raised that will millitate against it dont have immediate answers. In deed, at some point in tym, we nid to reintroduce the Z$ but at the moment, Its a bridge too far…….

  • Chando

    Mortgaging land to support the local currency? Who will buy that land? The same people who were dispossessed of the tracts of land during the land reform programme will buy that land thus reversing the indigenisation of same.
    The solution is for you and your colleagues in power to step aside and allow dedicated men and women to take charge of government and remove corruption within the system. Your looting and stripping of assets is the root of the fall of our currency. Be wise for a second and allow common sense to prevail. There will never be stability of the local currency as long as the current crop of leadership prevails.

  • mhofuyomukono

    Mother you have made my day.What you say is true. Keep it up mama.

  • chemutengede

    Events in Ukraine, just as those in
    Syria, show that the US and its Western puppet regimes are up to their
    necks in criminal regime change

  • papaigwe

    3 issues: 1) Most of Mahoso’s articles make sense, we just disregard them becoz they are written by Mahoso-change the name and say its an expert and we will give the articles attention-not that we will adopt everything but we will pay more attention to his proposals.
    2) Why do we like to say “so & so’s argument”-it makes it sound like there is a disagreement. Why not take the meaningful aspects of an article and critically analyse to see if we can get something out of them. we can argue and argue and argue but if we intelligently analyse each person’s proposal we will come up with agreeable positions/proposals.
    3) we need to go beyond just offering suggestions but explaining the HOW part. How can the new local currency be introduced…we have had many suggestions but without being told how to implement the suggestion…e.g. how many times have we heard “we need FDI” but who is it that has told us “do this and you will get FDI” e.g. read Memory Nguwi’s article in the Sunday Mail of yesterday, the guy doesn’t say we need to stop high executive salaries at SEPS-NO- he tells those that would want to do it how it can be done…at the moment we need people who will boldly tell us “DO THIS AND THE ECONOMY WILL IMPROVE”

  • SG

    It makes sense to me also. The problem that most of us, esp. Zimbabweans is an unshaken belief is some external source for solutions, be it experts, donations/donors or FDI. Over-reliance on abstract textbook economics (theory) can also be fatal. It tends to produce theorists who do not even agree amongst themselves on most issues. Shall we keep waiting until they reach consensus? This is what I gleaned from my stint at Business School.

  • ian

    Some points to ponder- how will the prices for the land be determined? Also, how do we ensure that the land does not end up being in the hands of the monied ” cashbert’ few? Will this not cause disharmony with the land reform programme?

  • makwavararama

    with this dead manufacturing industry and economy Zim dollar does not work

  • tinono

    Of all the Mahaso ish talk, Mai Jukwa avoids the crix of the matter, that YES Zimbabwe has teh capacity to restore fiscal order and pursue a pathway to economic stability, BUT cannot do so because at the helm we have a group of hench men who have declared the country and its national resources as personal acquisitions. LOOTERS! They rely on their political power to fleece the economy of every little bit, and will not alow any resources which will improve the lives of you and me. THAT IS THE PROBLEM!How doy you explain the fact that those Chiadzwa diamonds have done absolutely Nothing to improve your life and mine, yet those at the top of teh food chain take turns to awarsd each othyer limitless salaries and benefits!

  • makanda

    Mai Jukwa, your patriotism is very encouraging, though you miss a number of important realities on the ground. The first, and perhaps the most important one, is that our politics has a very symbiotic relationship to our economic viewpoint. This would not be a problem, as this appears to be the relationship elsewhere in the world, but in or case, our politics has precedence over the economy. A few weeks ago, an announcement was made to the effect that our bloated civil service would receive a substantial salary increment, in order to fulfill promises made prior to the last harmonized elections, won resoundingly by ZANU-PF. No-one in government found it necessary to explain how this could be achieved without corresponding economic growth in the country. Right now, the Minister of Finance is experiencing sleepless nights to raise the back-dated increments and to devise ways to sustain them, in the face of diminishing revenue collections. How do you think he would have resolved this dilemma if Zimbabwe had its own currency? You are right, he would have simply ordered the central bank to print more paper. Let us first build a mental capacity to separate fiction from reality before we start talking about a return to the Zimbabwe dollar. By this I mean, let’s develop a model were the politics have no power, whatsoever, to override the parameters upon which we reintroduce the local currency. And if ever we reintroduce one, it should have adequate defences against sanctions imposed by our enemies. Attack of the Zimbabwe dollar was the key to European and North American sanctions against us and the removal of the Zimbabwe dollar has been our sharpest tool against these illegal sanctions.

    • logic

      More like sleepless nights trying to think of what lie to spin to the civil servants and indeed to all the people over the near-total failure of systems. The problem is once the government has been known to lie to its people, they will never trust it again.

  • masvukupete

    Forgot to add. Our problems started way back in the early 1980s, when Gukurahundi started the writing was on the wall. The 1990s it was apparent and the distaster only manifested itself in 2008 and 2013. Its all downhill from here as long as we keep the same people in power. All the countries around us have changed their leadership and it is all uphill for them, its that simple. Zimbos wake up, proof is all around us.