Zimbabwe News and Internet Radio

Economic stabilisation steps ‘inadequate, unhelpful’

By Letwin Nyambayo and Shamiso Dzingire

Long-suffering Zimbabweans have expressed disappointment in the government’s latest economic stabilisation measures that were announced on Monday, adding that they feared that things could take a turn for the worse in the country.

Reserve Bank of Zimbabwe Governor Dr John Mangudya (left) makes an address during the mid-term monetary policy presentation in Harare as Minister of Finance and Economic Development, Professor Mthuli Ncube listens
Reserve Bank of Zimbabwe Governor Dr John Mangudya (left) makes an address during the mid-term monetary policy presentation in Harare as Minister of Finance and Economic Development, Professor Mthuli Ncube listens

In a bid to mitigate rising prices and the acute shortages of foreign currency in the country, authorities announced a raft of new measures then, which they hoped would go a long way in halting the local economy from declining further.

However, a wide cross section of Zimbabweans who spoke to the Daily News yesterday said while they appreciated the fact that authorities were trying to mitigate the dire situation in the country, President Emmerson Mnangagwa’s government had missed “a trick” with its new steps.

They also feared that most of the measures announced by Finance minister Mthuli Ncube and Reserve Bank of Zimbabwe (RBZ) governor John Mangudya were likely to end up hurting ordinary people, instead of offering relief to citizens.

Of major concern to many people was the shockingly high government debt that was revealed by authorities, as well as the new taxes on electronic transactions and the controversial move to create Foreign Currency Accounts (FCAs) for exporters, while leaving the rest clutching onto their RGTS accounts which are now effectively Zim dollar accounts.

An unimpressed Zimbabwe Congress of Trade Unions (ZCTU) warned that there could be a serious backlash from disgruntled workers on account of the new steps, as ordinary people would now have to contend with the “punitive measures”.

“We have been inundated by calls from workers around the country who are complaining bitterly. As an organisation we are very worried about the mafia-style of policy formulation and implementation that has been adopted by the government.

“How can government just announce such policies with such a huge impact on all citizens without any consultations and notice?

“This simply shows that we are in trouble as a nation. Modern governance norms call for national debate on such issues before implementation. We should all have been given an opportunity to contribute inputs.

“Stakeholders ought to have debated the impact of such measures, both negative and positive,” said ZCTU president Peter Mutasa.

“Citizens or workers are failing to make ends meet and the government is now coming in to squeeze their last breath.

“This is an attack against the poor. Workers of Zimbabwe are heavily taxed and cannot afford new tax increases.

“We have scheduled a general council meeting this week and am sure a decisive decision is going to be made on the action we will take on all this,” Mutasa said further.

Economist Godfrey Kanyenze concurred with the ZCTU saying Ncube’s new two cents tax per every dollar transacted was “ill-advised and retrogressive”.

“The two cents per dollar tax is a retrogressive and unfair tax because all along government has been encouraging people to use electronic transfers and point-of-sale machines to move away from physical cash.

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“They have been promoting financial inclusion which was the very purpose of mobile platforms such as Ecocash, One Wallet and others which reached places that were previously unbanked like the rural areas.

“But now, by charging these people two cents to the dollar transacted, it means therefore that the government is penalising those that are poor,” Kanyenze told the Daily News.

The Zimbabwe Human Rights Association (ZimRights) said the government’s new measures “would once again” deprive ordinary people an opportunity to enjoy their social and economic rights.

“The increase of electronic transactions to two cents per dollar makes anybody who is very poor remain poor. There is clearly no government will to uplift the standards of people who are very poor.

“These are moves by a desperate government … Let’s do away with the bond note, let’s go back to where we used to be in 2009 when things moved very well with that multi-currency system, but without our own currency,” ZimRights executive director Okay Machisa said.

On its part, the Crisis in Zimbabwe Coalition said both Ncube and Mangudya had sent “a signal that the poor were the biggest losers”.

“The increase in taxes is equally a measure of a government which has an appetite to consume without taking care of the golden goose which lays the eggs.

“At the same time, there is no evidence that the taxes are being used to help the people of Zimbabwe through service delivery.

“In terms of government policy, this has exposed the government by sending a message that the poor are by themselves, with no one to protect them, while the rich are protected,” Crisis in Zimbabwe Coalition spokesperson Tabani Mpofu said.

Presenting his post-election Monetary Policy Statement (MPS) on Monday, Mangudya announced the re-introduction of FCAs to allow foreign currency earners to hold their hard-earned cash away from RTGS accounts which — although denominated in US dollars — cannot be withdrawn on demand and are not “real” greenback accounts.

“The government is acting unconstitutionally and violating Section 68 by introducing a new RTGS currency which is not recognised at law.

“The law says we have a basket of foreign currencies. On what legal basis do they wipe all that out in a random proclamation. Mugabe days are back,” constitutional lawyer Fadzayi Mahere railed on microblogging site Twitter.

Another constitutional lawyer, Alex Magaisa, said the government had displayed “insensitivity” by introducing FCAs and new transactional taxes without considering the plight of ordinary people.

“What government really meant to say is that the United States dollar you deposited doesn’t exist anymore … we call them RTGS FCA — it’s pretend forex, we admit that the bond note has failed and we haven’t yet got new lines of credit so we have come back to squeeze some dollars from you,” he said.

However, and while ordinary people were not happy with the separation of accounts, business largely welcomed the reintroduction of the FCAs, which it said was long overdue.

“The separation of the accounts will help to ensure that those that generate foreign currency are assured of their money because forex is actually private property. Now, they will at least have rights to their forex.

“The separation will also ease some of the challenges that exporting businesses have been facing. As more exporters have confidence in that policy, it will lead to more people exporting and then hopefully, our forex balances will grow,” said Confederation of Zimbabwe Industries (CZI) president Sifelani Jabangwe.

But business also bemoaned the new tax on dollar transactions that were introduced by Ncube in his fiscal policy statement.

“We are … concerned with the two cents per dollar transaction fee introduced by the minister of Finance in his fiscal measures.

“We believe the cents per transaction tax should have been kept because when this measure is applied to RTGS’, it means that every business now has a burden of two percent increase of cost of doing business,” Jabangwe said. Daily News.