Lloyd Gumbo Mr Speaker Sir—
Zimbabweans have overwhelmingly embraced the bond notes introduced by the Central Bank in November last year despite spirited attempts by critics to discredit them before their introduction.
One would have thought the surrogate currency would be strongly rejected by ordinary Zimbabweans and service providers.
But critics were left cursing their gods as the bond notes came in handy in addressing liquidity challenges, with long queues now starting to disappear at banks.
Mr Speaker Sir, bond notes were introduced to facilitate local transactions following massive externalisation of foreign currency, predominantly the US dollar.
This is further compounded by the fact that we are spending about 80 percent of our income as a country on imports.
Confederation of Zimbabwe Industries (CZI) officials projected the impact of such a scenario when they raised concerns about the country’s appetite for imports as far back as 2015, well before the current liquidity challenges started early last year.
There were indications that the country had spent about $18 billion on cheap imported products between 2010 and 2015.
“Cumulatively, Zimbabweans have imported on a net basis $18 billion worth of goods, so every year we are $3 billion short in terms of exports versus imports,” CZI president Busisa Moyo said then.
“Zimbabweans are actually consuming; of course there are questions, where’s the $18 billion coming from?
“If you’re a country that’s $14 billion in Gross Domestic Product and spending $3 billion from your economy on a net import basis, at some point you run out of cash.
“So, we should be out of money right now.”
And true to that by early last year, the liquidity challenges came as cash ran out.
Mr Speaker Sir, externalisation of the US dollar was real and for that reason monetary authorities had to find ways of arresting the problem, among them withdrawal restrictions and introduction of bond notes.
But there are other things that need to be addressed if externalisation is to be significantly reduced.
The first one is to do with foreign artistes who come and perform in Zimbabwe.
Ever wondered why foreign artistes flooded Zimbabwe since dollarisation more than they did during the time we were using the Zimbabwean dollar?
Obviously, they knew Zimbabwe was a haven of the US dollar, which they would get in hard currency compared to their countries where they probably got it in plastic money.
These artistes charge between $15 and $20 per person and usually their shows draw thousands of Zimbabwean paying fans, at least 5 000 revellers in most cases.
Before introduction of bond notes, these paying fans would collectively fork out about $100 000, with these foreign artistes taking the bulk of the gate takings back to their countries, yet they would not have spent part of their money here as all their expenses are fully paid for by local promoters.
After that, they would always ship out the money they realise from gate takings.
While the introduction of bond notes is believed to be one of the ways to arrest this problem, it will still go on as long as these foreign artistes continue coming here.
Mr Speaker Sir, even if fans pay in bond notes, the surrogate currency will still be taken to the bank where it will be exchanged for US dollars and still be shipped out.
Even if it is sent to these artistes electronically, that money will be difficult to replenish, yet it has been spent on unproductive ventures.
It is, therefore, important that the Central Bank comes up with mechanisms to protect the foreign currency that makes it into the country.
This can be done by ensuring that all the gate takings that are due to these foreign artistes are wired to them electronically, instead of letting them take it in hard currency.
While the Central Bank’s thrust is to discourage local firms from taking money outside the country to buy things, it is equally important to ensure that it does not frustrate local companies whose enterprise is purely based on foreign imports by denying them or delaying such transactions.
For instance, some of them complain that their electronic transfers to suppliers outside the country, if they are not among the bank’s top priorities, take about a month before they are approved or are sometimes not approved even.
Mr Speaker Sir, this could be shooting ourselves in the foot because if these local companies cannot trade because they cannot get stock from outside the country, it may result in those companies closing shop or opting for illegal forex dealers, which could at the end of the day inspire inflation.
Honestly, if local companies cannot be allowed or are restricted to pay for their stock from outside the country electronically, then why should foreign artistes be allowed to ship the money out?
It is important that the Central Bank play ball if the economy is to improve because one cannot expect it to grow when businesses that rely on foreign imports are denied or restricted from getting their stock.
Some of these companies have downstream benefits but if they cannot get stock when they need it, they could as well close shop in the process sending multitudes home in an environment where employment opportunities are limited.
It is essential that we do not burn the whole house attempting to smoke out a rat.
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