Sunday, August 14th, 2022

‘Zim dollar now in real peril’ … back on the slippery slope again 

‘Zim dollar now in real peril’ … back on the slippery slope again 

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When it started raining at dusk and went on all night I knew I had a problem.

With a friend on the banks of a river in a mountainous area where the roads are all steep hills, sharp corners and red soil, I knew it was going to be a treacherous 17km-journey the following morning. Still raining at 7.30am we had to abandon one last walk along the banks of the beautiful crystal clear river and leave it rushing along the pebbles and gushing over the rocks.

The first 15km were bad: heart pounding, hands gripping the wheel and sideways driving we crept along, the red roads sticky, clingy and slick. Three or four bends from the end the wheels gave up, thick red mud in the tread and then another inch on top of that and a steep slippery slope ahead.

We were going nowhere without help, a tow rope and a powerful pull.

Being dragged up the hill was very appropriate for the state of Zimbabwe.

The country again finds itself driving sideways and backwards and on a slippery slope to nowhere.

On the cusp

Zimbabwe is on the cusp of another economic crisis. The last one was between 2005 and 2008 and in just 13 years our leaders are doing the same things all over again: shouting, blaming, arresting, accusing, threatening.

Foreign currency is in such short supply that the value of US dollars against the Zimbabwe Bond dollar is soaring. The government’s auction system where companies and businesses have to bid for US dollars to meet their costs and imports is a joke.

Successful bids for US dollars which are supposed to result in currency arriving in two days are now taking 15 weeks before funds are allocated by the Reserve Bank.

It’s all but impossible for importers and retailers to do business when they have to wait almost four months for the currency they need to keep operating.

In 2019 President Emmerson Mnangagwa ordered the return of the Zimbabwe dollar, saying it was “the strongest currency in the region”.

At that time one US dollar was the same value as one Zimbabwe dollar.

Two years later one US dollar is equivalent to 170 to 200 Zimbabwe dollars on the street (on the black market). Meanwhile, the government continues to insist that one US dollar is worth 88 Zimbabwe dollars.

Arrests

Over the past few weeks scores of foreign currency traders have been arrested. Government says it is weeding out ‘saboteurs’ and ‘fraudsters.’ Government is threatening to suspend operating licences of businesses it accuses of using black market rates to price their goods and services.

Vice President Constantine Chiwenga said the Zimbabwe dollar is being deliberately sabotaged and: “I wish to warn perpetrators of this heinous crime that the long arm of the law will soon catch up with them.”

Chiwenga said people being arrested on “currency manipulation” charges will spend Christmas in prison.

The CZI (Confederation of Zimbabwe Industries) said the Zimbabwe dollar “is now in real peril” and “clamping down on informal foreign exchange trading in the absence of a viable formal market will have catastrophic consequences for the economy”.

Meanwhile for ordinary Zimbabweans the nightmare is getting worse.

Food prices are increasing because retailers are charging more in order to keep up with the cost of buying US dollars to import goods to restock their shelves.

Tel One, the country’s telecommunications provider which is owned by the government, just increased its prices by 30%.

Fuel prices increased from US$1.25 a litre to US$1.35 last week.

And then, to make life harder, my home town is crippled by electricity power cuts which are lasting up to 14 hours at a time, three or four or five times a week. An enquiry to the local electricity supplier (Zesa) requesting the schedule of power cuts elicited the response that it isn’t following its own recently published load shedding schedule anymore, saying it just got instructions from HQ to load-shed – which it does.

Oh Zimbabwe, the slippery slope needs a different approach this time surely?

Copyright © Cathy Buckle

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