Victoria Ruzvidzo In Focus
“The narrative ‘open for business’ means Zimbabwe is ready and willing to embrace a paradigm shift to attract investors, both local and foreign, for the total transformation of the economy in respect of increased production, jobs, exports, fiscal space, access to capital and foreign finance.
Improvement in these economic variables will benefit the monetary environment and, in doing so, enhance financial stability and confidence in the economy. A healthy foreign exchange buffer will strengthen the value of RTGS funds and gradually reduce cash shortages. ‘Open for business’ is not just a narrative.
It calls for a dramatic change in the conduct of business from the business-as-usual approach. We need to walk the talk to rebalance the economy through a tight rein on fiscal deficit — increasing revenue collections and holding expenditures constant — while at the same time enhancing Zimbabwe’s access to foreign finance and increasing foreign inflows from exports and international remittances.
These measures will be buttressed by accelerating the arrears clearance and re-engagement programme under the Lima, Peru, principles of engagement with the International Financial Institutions and Development Partners. ”These words were said by Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya as he concluded the presentation of the 2018 Monetary Policy Statement last week.
This interpretation of the mantra that we are open for business that has driven initiatives and international campaigns by President Mnangagwa is quite profound. It is not necessarily a populist mantra, but one that must deliver results.
It is one that should drive and shape the way we do business as individuals and institutions, one that must energise and re-energise Zimbabweans here and in the Diaspora to deliver the Zimbabwe we want, one that we anticipate, to mark a departure from the business as usual approach that has not yielded much over the past few decades.
It does not take much convincing for all Zimbabweans to embrace the mantra because no one would want to remain in the biblical Egypt while Canaan beckons.
The walk across the desert has been most uncomfortable.
But it takes more than a mere nod of the head in agreement for the desire to be transformed into action that produces tangible results.
It takes a complete departure from the business-as-usual-approach.
It takes self-respect and respect for others in a prosper-thy-neighbour framework where we all pull in the same direction with our eyes focused on one goal to transform the economy.
It is in this regard that I found the words by Dr Mangudya quite instructive.
Zimbabwe is desperate for an environment that fosters foreign direct investment (FDI), increased production, higher export earnings, access to funds by depositors, price stability, better infrastructure and the whole works as stated in the MPS.
President Mnangagwa has been leading from the front in setting the stage for real transformation.
His energy and zeal to spearhead economic rejuvenation is amazing and should be emulated by all.
He has been at work in the literal sense of the word. Already we have started seeing the results of his sweat and more is coming.
Those I interact with greatly applaud his efforts and are largely expecting the initiatives to at least allow them to access their funds in banks sooner rather than later.
This is quite possible and all should be done to facilitate this.
Many of Zimbabwe’s economic challenges stem from the shortage of foreign currency.
An improved injection and allocation of the resource will obliterate such challenges as price instability, lack of capital, shortages of electricity, medical drugs and other critical imports and will abate company closures or production of sub-standards products as firms make do with the little foreign currency that has been available.
Therefore, measures announced by Dr Mangudya in his statement to enhance financial stability and to promote business confidence could be the panacea if implemented effectively.
The Diaspora plays a critical role in the matrix hence the establishment of a Diaspora Investment Desk is something we should applaud the central bank for. We receive loads of inquiries from the Diaspora on where to invest and how to go about it so the desk will take care of all this.
Contribution by the Diaspora is not something that should be trivialised or given half-hearted attention.
Economies of India, Bangladesh and Nigeria, among others have benefited from Diaspora remittances.
Zimbabwe has also looked up to the Diaspora on many occasions.
Despite challenges in the global economy, non-resident Zimbabweans have remained liquid enough to invest back home. This must continue to be encouraged.
Therefore issuance of Diaspora Tobacco and Gold bonds should unlock funds and enhance production levels, hence generating more foreign currency for the country.
Furthermore, enhanced export incentive schemes for horticulture, cotton, macadamia and gold are bound to yield results and help address the foreign currency inadequacies that have constrained economic growth.
The much vaunted investment guarantees to protect investors funds under which the central bank is working with the Africa Export-Import Bank to put in place a US$1,5 billion facility for that and for liquidity support should work well for this economy.
Other measures such as the $400 million enhancement to Nostro Stabilisation facilities should provide the requisite assurance that international remittances and individual foreign currency inflows received through normal banking channels will be available to the owners when required, among other benefits such as meeting foreign currency needs to import electricity, fuel and industrial raw materials.
Measures to curb the multi-pricing system and refusal of plastic money by some operators should release pressure on the need for cash while boosting efforts to inculcate cash-less transactions, an international best practice.
These and a host of other measures contained in the 2018 MPS should transform the operational environment in a big way as the central bank complements efforts by President Mnangagwa and his team to deliver a better economy in which bringing basics such as food to the table will no longer be such a mission for families.
Financial Stability is the bedrock for sustainable economic transformation.
The MPS inflation outlook of between 3 – 7 percent in 2018 which is in line with benchmark is achievable with Financial Stability and good policies to attract investor confidence.
Another sore point in the economy has been high interest rates.
However, the central bank left them at their current levels of between 6 percent and 12 percent which are within international best practice.
Of course, reducing them further would only increase the demand for money which is above the supply of foreign currency.
MPS clearly shows that the increase in money supply and or deposits in the banking sector is mainly attributable to the persistent fiscal deficit which is causing the economy to expand at a faster rate than the rate of supply of foreign exchange.
This then calls for the country to fast-track the re-engagement process to reduce Zimbabwe’s country risk and enhance access to foreign finance.
In God I Trust!