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GENERALLY speaking Zimbabwe’s economy continues to grow far faster than global averages and is one of the fastest growing in Africa, and a lot of economic problems have been sorted out or are being sorted out, so the sort of emergency work we have seen in recent months and years worked.

For a start we have largely tamed inflation. The monthly rate fell to 1,1 percent last month, which when annualised is only a little over 14 percent, something Zimbabweans could live with. Although the Reserve Bank of Zimbabwe in its recent Monetary Policy Statement thought that the blended inflation rate, the weighted average of inflation in US dollars and Zimbabwe dollars, should be used as the official rate, we still need to look closely at the two constituents as well.

Averages tend to describe an overall system, and so are very useful in their place, but few in Zimbabwe split their transactions in exactly the proportion of 70 percent foreign currency and 30 percent local currency, so we all need to look at the two currency inflation rates, as well as the blended rate.

But we have now reached the stage where the annualised Zimbabwe dollar rate of just over 14 percent a year and the US dollar inflation rate of around 8 percent a year are not very far out of alignment, and that is more critical than what the actual numbers are and what the blend produces.

With local currency inflations falling fast, and both the Reserve Bank and the Government determined to keep implementing the policies that keep it low, we can move away from the swings and roundabouts that speculators adore.

As President Mnangagwa noted over the weekend, the sale of more than 28 000 gold coins has sucked a lot of the spare cash that was bedevilling the economy out of circulation, about $22 billion worth.

Even if the coin buyers cash in some or all of their coins as the minimum retention of six months expires, the released money will be inside the formal banking system, rather than floating around the black market or other dubious areas, and be available for productive purposes.

Those who worry about the actual mass of gold now in coins should relax. It is around 870kg, just over two percent of what our miners produce each year, or about an eight day supply of gold.

Even if every gold coin buyer wanted to cash in on the same day, the Reserve Bank would cope without panting. Gold producers can mint coins without upsetting their economies, although those who would have to import gold for the minting might run into trouble.

The general set of innovative policies that killed inflation in the last few months of last year were largely market driven. The gold coins gave the legitimate businesses and others a legal way of guaranteeing value. These were people who, reluctantly, were either dipping into the black market or were hoarding raw materials or consumer goods.

Given a legitimate and legal way of doing this they switched to gold, and that incidentally tells us that most businesses are honest and want to be legal.

The Financial Intelligence Unit has found the odd business that seemed to think the black market was a good idea, and froze their accounts, and there are still a small number of Government contractors who race to the black market when they are paid, instead of buying their coins if they are worried about value preservation, but numbers are falling.

At the same time using positive interest rates, and when you look at the falling inflation very positive interest rates, to kill speculative borrowing worked well.

Even the cut back from 200 percent to 150 percent by the Reserve Bank as the minimum rate banks are allowed to charge still keeps interest rates very positive indeed. And the President, the Reserve Bank and the Ministry of Finance and Economic Development are all in perfect alignment that both the coin sales will continue and the interest rates will stay positive.

The laws are still there and back up these market-related measures, but generally the switch to making it profitable to be honest, with bankruptcy threatening the speculators, work better.

The other switch recently was the decision that exporters can retain 75 percent of their export earnings in foreign currency, although this crashes to 50 percent if they do not meet the deadline for accounting for every cent of exports, so again there is an incentive to be honest and efficient.

The rise from the previous average of 60 percent, means that all net exporters will be paying more of their Zimbabwean bills in foreign currency, or converting more of their foreign currency to local currency; it does not matter much which except for some taxes which must be in local currency.

Zimbabwean companies selling locally and having customers wanting to pay in US dollars can keep 85 percent of that money as foreign currency. This means that more companies will have their own foreign currency to buy imports, rather than hitting the auctions, and that is a Government policy.

Finance and Economic Development Minister Professor Mthuli Ncube explained over the weekend that the main reason for high export retention is to get around the financial sanctions, by allowing Zimbabwe’s private sector a lot of independence.

He also made it clear that redollarisation is not on the Government agenda. The Zimbabwe dollar remains and should continue to become more important in all sectors, especially now as it is starting to retain its value.

Rapidly growing inflows, hitting US$11,6 billion last year, means that the 25 of export earnings that have to be converted to local currency on arrival, plus the 15 percent of domestic foreign currency sales that must be converted, are enough to supply auction demand for importers who do not earn foreign currency, or more precisely do not earn enough.

Auction demand is falling. When the auctions started we were still importing maize, wheat, most of the raw material for cooking oils, all our steel, and well over half our dairy products.

More than two years ago our farmers, backed by the Government, pushed Zimbabwe into maize surplus. Last year they went into wheat surplus, and this season the huge expansion in soya, sunflower and cotton hectarage will bring us to vegetable oil self-sufficiency or at least close to this.

Dairy farmers are diligently raising production, and the Manhize steelworks start up their furnaces this year. The original biggest auction buyers are buying local instead.

With lithium and steel exports entering the big time this year, plus the general expansion of what we already sell in world markets, the gap between our exports and imports will continue to grow, and that may require some to start rethinking, as the fundamentals really start building wealth instead of just holding the line.

In fact President Mnangagwa is now more worried about the growing surpluses of foreign currency building up.

This sort of cash in private sector nostro accounts, needs to be used productively to expand the economy even faster, rather than being hoarded or spent on consumption. The private sector should be pushing investment.

By fixing problems, encouraging investment and generally sorting out our problems, Zimbabwe is now moving into the self-sustaining economic growth that converts us to an upper middle income country, just what the main vision of Government and national policy says we can do.