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Zimbabwe dollar’s second death predicted

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BY RAY NDLOVU

When Zimbabwean businessman Nigel Chanakira asked 100 chief executive officers at a seminar in Harare on January 27 if they were willing to use the local currency, only one raised his hand.

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That reluctance is a stark demonstration of the government’s failure to win confidence in the Zimbabwe dollar, the reintroduction of which Finance minister Mthuli Ncube has staked the stagnating economy’s recovery on.

For the second time in two decades, Zimbabweans are abandoning their local currency.

At restaurants, a simple request for “the rate” sees one’s bill halved if it’s met in hard currency, and supermarkets openly offer discounts for goods purchased in United States dollars.

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The government paid public workers their Christmas bonuses in dollars, and the revenue service collects a third of its income in greenbacks.

“We can’t deny the reality,” Chanakira, the founder and former CEO of now-closed bank Kingdom Financial Holdings Ltd., said in an interview.

“When you get the Zimbabwe dollar you spend it quickly. No one wants to save in that currency.”

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Between 2009 and 2019, Zimbabwe’s economy was dollarised after hyperinflation led the government to print trillion-Zimbabwe dollar notes before abandoning its currency, leaving the country’s name synonymous with economic malfunction.

While the subsequent dollarisation tamed price growth, it hurt businesses as neighbouring countries using their own depreciating currencies undercut Zimbabwean manufacturers.

“Zimbabwe had become uncompetitive by 2013 and was burdened by an expensive workforce,” John Legat, CEO of the country’s oldest brokerage, Imara Asset Management Ltd., said in a note to clients.

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In February 2019, the government dropped a peg that kept a precursor of the Zimbabwe dollar at parity with the US dollar.

In June, it was rechristened the Zimbabwe dollar and use of foreign currency was briefly outlawed.

Today the currency trades at 115 to the greenback, and more than twice that on the black market.

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While inflation slowed from a 12-year high of 837 percent in July 2020, it was at 61 percent in January, still rapidly eroding the value of the local unit.

Officials including Ncube, a former Oxford University lecturer, and Reserve Bank of Zimbabwe Governor John Mangudya, said government policy is to stick with use of the Zimbabwean dollar.

“The country is not re-dollarising,” Mangudya said in a interview on January 17. “We need to find a home for our currency.”

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Ncube and his ministry didn’t respond to requests for comment.

Alois Burutsa, the lone defender of the Zimbabwe dollar at Chanakira’s meeting, said in an interview that “without our own currency, our exports become uncompetitive.”

He’s general manager of Buy Zimbabwe, an organisation that promotes local goods.

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Capitulation

Yet central bank figures show that 44 percent of transactions in the country are conducted in greenbacks.

The American currency is used to pay for everything from fuel to food, passports, medicines and school fees.

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Econet Wireless Zimbabwe Ltd., the country’s largest mobile phone operator, offers additional airtime and data if purchases are made in US dollars.

With the Zimbabwe dollar untradeable outside the country, companies need foreign currency to pay for imported equipment, consumer goods, and to placate an increasingly dissatisfied workforce.

And it’s not only businesses that are seeking alternatives to the local currency.

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The government itself is increasingly finding it has to pay in US dollars if it wants to get things done.

Already it’s told public workers that they’ll be paid partly in hard currency this year.

According to Imara, the brokerage, 45 percent of infrastructure contracts are being met in dollars.

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“Dollarisation is the ultimate outcome of a failed economic policy,” said Gift Mugano, executive director at Africa Economic Development Strategies, a Harare-based consultancy.

The Zimbabwe dollar “will be in the graveyard” by June, he predicted. Imara says it’ll be largely obsolete by the end of the year.

Chanakira was more optimistic: he said the currency could survive for another two years. – Bloomberg

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National

Ranger killed by elephant in Kariba

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BY NOKUTHABA DLAMINI 

A 62-year-old ranger, Josphat Mandishara, was tragically killed by an elephant in Kariba yesterday.

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Mandishara, who worked for the Zimbabwe Parks and Wildlife Management Authority (ZimParks), was on patrol in the Gatche-gatche area with fellow rangers and police officers.

At around 10 pm, Mandishara returned to the harbor where their boat was docked, and that’s when he encountered the elephant. The elephant charged at him, causing fatal injuries. His colleagues were nearby, resupplying at the Gatche-gatche Irrigation Scheme.

Mandishara’s body was taken to Kariba District Hospital for a post-mortem, and the incident was reported to the police.

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ZimParks has sent a team to manage the problem elephant and prevent similar incidents in the future.

The Director General of ZimParks, Prof. Edson Gandiwa, and his team have sent condolences to Mandishara’s family, friends, and colleagues. Mandishara will be remembered for his dedication to wildlife conservation in Zimbabwe.

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ZIMRA customs officer appears in court for criminal abuse of office

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BY STAFF REPORTER 

A Zimbabwe Revenue Authority (ZIMRA) customs officer, Phillip Kuvenga, has been accused of criminal abuse of office for allegedly assisting in the importation of banned motor vehicles.

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Kuvenga, 28, who is stationed at Victoria Falls, allegedly received documents from clients, completed valuation sheets, and carried out the valuation process. However, he is accused of endorsing different chassis numbers to deceive his supervisors during the validation and approval process.

After obtaining approval, Kuvenga would capture the correct chassis numbers in the ASYCUDA World System. He would then alter or replace the documents submitted earlier to his supervisors.

The offense came to light when a motor vehicle that had not yet arrived in Zimbabwe was found to have been already registered. A thorough check by ZIMRA led to Kuvenga’s arrest.

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Kuvenga appeared in court on February 1, where he was denied bail by Magistrate Gift Manyka. He is expected to appear in court again today for another bail hearing.

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Retailers send Mnangagwa SOS as shops continue shutting down over operational woes

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BY ZIMLIVE

The Confederation of Zimbabwe Retailers (CZR) has implored President Emmerson Mnangagwa to intervene and save the sector which has seen various formal retail and wholesale businesses closing shop countrywide due to operational challenges.

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In a statement on Sunday, CZR president Denford Mutashu said the continued closure of formal retail and wholesale businesses is a direct consequence of the tough economic environment that has consistently failed to support formalised sector players who face stiff competition from informal businesses and vendors the majority of whom have no tax obligations to deal with.

Mutashu said his association was concerned that authorities continue to downplay the crisis.

“The recent closure of several outlets under the N. Richards Group, coupled with Spar Zimbabwe’s painful decision to shut down Queensdale Spar, Choppies Zimbabwe’s exit from the market, and Mahommed Mussa’s significant reduction of shop space by 60%, highlights the growing crisis.

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“As the representative association for these and other brands, CZR is alarmed that while formal businesses face enormous challenges, the authorities continue to present a different picture of the operating environment,” he said.

Given the situation, Mutashu said, only President Mnangagwa can rescue the troubled sector.

“CZR therefore calls for urgent intervention from His Excellency, President Emmerson Dambudzo Mnangagwa, to rescue what remains of the formalized retail and wholesale sector,” said Mutashu.

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He said the sector was in urgent need of rescue.

“While CZR acknowledges the continued support from the Ministry of Industry and Commerce, it is clear that the root causes of these challenges are fiscal and monetary in nature. These require urgent and decisive action to ensure the survival of formal businesses.

“CZR therefore appeals to the Presidium to prioritize interventions aimed at saving jobs and mitigating the ongoing wave of shop closures and retrenchments,” he said.

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