JOHANNESBURG - Zimbabwean business has warned that escaping the country's debilitating cash crisis would remain a mirage unless deep-seated structural challenges are addressed.
Business leaders yesterday said that injecting more bond notes into the economy would not solve the crisis and could instead cause an inflationary spiral across the economy. Confederation of Zimbabwean Industries president Sifelani Jabangwe said unless the R3.6billion worth of bond notes were released into the economy in the form of “coins” and not “bank notes,” the entire amount could be snapped-up by black-market currency dealers that had set-up shop in Zimbabwe and neighbouring countries including, South Africa.
The warnings come after Reserve Bank of Zimbabwe (RBZ) governor John Mangudya last week said that $300million worth of bond notes - the surrogate currency - would soon be injected into the economy to stimulate production and exports.
Mangudya said that it was key for the country to earn increased foreign currency through exports as a way of reducing the current cash shortages, which have been choking the Zimbabwean economy. However, the Zimbabwe National Chamber of Commerce said the injection would not address the problems. It said that the government needed to deal with the country’s economic fundamentals, including the current fiscal deficit, monetary vulnerabilities, policy inconsistencies, lack of transparency and corruption.
Jabangwe said the introduction of the bond notes was meant to fund a 5percent export incentive, and to stimulate the circulation of US dollars in the Zimbabwean economy. However, the bond note had become a major medium of exchange as the dollar stocks ran out.
He said although the bond notes were valued on par with the dollar, their value on the black market had dropped by as much as 40percent, causing price hikes across the economy.
Denford Mutashu of the Confederation of Zimbabwe Retailers said that there was still a need to instil "market discipline" as a way of addressing the current cash crisis.
Mutashu said with the dollar, bond notes and plastic money in circulation, some business people had been fuelling the currency black market by charging different prices for the same commodity depending on the mode of payment. A recent report by Forecaster Ecosa revealed that retailers and businesses were charging extra payments in bond notes or bank cards but less in dollar cash transactions. The report said the same item could have different retail prices, costing $80 when using cash, $100 when using bond notes and $120 when one uses a bank card.
RBZ deputy governor Kupukile Mlambo acknowledged the existence of the three-tier pricing regime, charging that the practice was illegal. “There are retailers who are practising the three-tier pricing system for bond notes, bank cards and the dollar,” Mlambo said. “We want to be clear that this is illegal. We have an act we can invoke.”
But Mutashu said so far efforts to rein-in the unscrupulous retailers and business people or to address the cash crisis seem to have failed.
- BUSINESS REPORT