It is now obvious that importers have accepted that the exchange rate is going to remain highly stable and are planning their business requirements accordingly.
The minute changes in the last two auctions, where the weighted average varied by a fraction of a Zimbabwean cent, moving down one three hundredth of a percent last week and up one two hundredth of a percent this week, have only one explanation.
Despite the top bid being a little over $5 above the average and the bottom bid a little over $2 below, the overwhelming majority of bidders must be bidding at within a cent or two of the what has now become an exceptionally stable rate, probably just rounding off up or down to the nearest cent.
No other obvious explanation, unless we are seeing an incredible coincidence, can explain such tiny movements. Such a bidding tactic makes sense when coupled with the fact that the Reserve Bank of Zimbabwe has been allotting all valid bids in full for over two months, so bidding at the previous week’s average is almost certain to be an acceptable bid and fall within the desired range, regardless of what others bid.
It is also illuminates quite sharply the psychology of those in the productive sectors. If they were keen on speculative gains they would be tempted to vary bids sharply and see if they could make a few dollars doing so.
Instead they seem to want something close to utter predictability when it comes to buying their foreign exchange, which again means they see US dollars as an input and their bids as an input cost.
By going for the narrowest possible band such a business person can actually budget tightly. They know the cost of their other inputs, wages and local costs being the obvious ones, a month in advance and knowing the costs of their imported inputs with almost exact precision means that a whole lot of variables that made business so difficult and pricing such a dodgy calculation are now constants.
That in turn means that they can concentrate on the real management issues, how to increase volumes, how to get more productivity from their staff and their machines, how to manage their cash flows, and how to maintain or expand their working capital.
Those issues are difficult enough, but they are ordinary business issues, the sort of thing where experience is a guide and where business schools and even business books can offer a lot of insight.
Messing around with hyperinflation and the uncertainty over availability and the price of foreign currency absorbed far too much managerial talent and time.
It also explains why so many were pegging prices to replacement costs at expected black-market rates, a process that simplified the calculations but still left everyone trying to guess just what that rate would be at replacement time.
That sort of survival guesswork, along with the effects of the lockdown needed to fight Covid-19 while everyone learned how to minimise risks in other ways, saw volumes fall as goods were priced out of the market.
Predictability clearly has an attraction to the practical business person that might not be so obvious to some theoretical economists and certainly not to those who love to make their money by shuffling paper rather than making stuff or selling stuff in the real world.
This switch in business management is a necessary condition for growing the Zimbabwean economy. Most businesses survived the 17 months of exchange rate volatility, the resulting inflation and the six or so months of fairly tight lockdown rules.
An exception has been the hospitality and leisure industries, where special efforts and funding are still required, but the big productive sectors of mining, agriculture and manufacturing are now out of the woods and can concentrate on growth rather than survival.
At the same time auditors and accountants have made them clear out the fairy tales that were still on their books, things like exchange rate losses, some of which dated to the beginning of last year, or implicit and explicit subsidies.
The whole inherited mess of the First Republic’s printing presses has now come to the surface and been skimmed off.
The biggest implicit subsidies were the interventions of the Reserve Bank into currency allocations, interventions that now seem to be abandoned, hopefully forever after being in force at various levels for almost 55 years since 1965.
That allows the Reserve Bank to do its real job, managing the currency, managing liquidity and checking that no one is cheating. Even the other function that it used to have, trying to fund huge budget deficits, has vanished. The Government has to live on its own.
Admittedly the Reserve Bank still has its import priority list, but if your imports are on the list, then the RBZ does not care how much you buy or when you buy it.
Just go to the auction or negotiate with your banker using the auction rate is the only advice you now get. And new rules, plus predictability based on the reality of proper markets, limit speculation rather severely.
The Government has gone further than just balancing its budget and making sure all line units keep within budget. Price controls now seem an historical anomaly, and even the subsidy regime has largely been abandoned, first being brought into the open with explicit budgeted subsidies and now replaced by budgeted social payments, the sort of thing that almost every country has adopted with success as a way of reducing poverty without giving the rich back all their taxes and financing black markets.
Even national economic policies are now geared for growth and efficiency. Where there is national intervention, such as Government guarantees for farmer loans, the ex-bankers running Government finances seem keen on “know your customer”, that is ensuring that those who borrow know what they are doing and physically exist, that they use the money properly and that they will pay it back.
There are still those State-owned enterprises, but the whole attitude has changed. They have to be run as proper businesses, not vehicles to provide jobs and private perks to a favoured few.
And the auditors are now watching. Private sector standards are expected and will be enforced, even if the Finance Minister has to find a bit of extra cash for the courts and prisons. All these changes mean that “Zimbabwe is open for business” is now longer a mantra.
It is a practical policy. Clarity, transparency, the sort of rules everyone has, like pay your taxes, and predictability are the keynotes, along with fiscal discipline.
What sort of business is your concern, although now that Zimbabwe has moved into the real world the big bucks are in production, exports, and making things from local raw materials.
But that is just allowing market forces to make us all richer in a real world, rather than trying to micro-manage.