ECONOMIC consultant John Robertson says without the parallel market exchange rate used before Reserve Bank of Zimbabwe governor Gideon Gono bounced onto the money-controlling scene, every
company producing commodities would be bankrupt.
He said every exporting company came to depend upon the additional Zimbabwe dollars they could obtain by trading part of their export proceeds at the rising parallel market rates.
“Inflation and frequent steep increases in wages and salaries, rents, utility charges and other operating costs meant that these companies would not have been able to meet their payments to staff without selling some or all of their available foreign exchange on the parallel market,” Robertson told business executives gathered in Harare to discuss the foreign currency situation on Tuesday.
“But for the parallel market exchange rate, their exports would have been impossible to sell because by converting 100% of their proceeds at the official rate of exchange, they would not have been able to cover their production costs.” Some individuals and financial institutions have been hauled before the courts accused of abusing the country’s foreign currency regulations as set down by the RBZ. Some executives have however fled the country saying it is unfair to blame them because the money was helping the nation.
Fearing that they would be hauled before the courts on allegations of externalisation, NMB Holdings executives Julius Makoni, James Mushore, Otto Chekeche and Francis Zimunya left the country for the United Kingdom. So did Intermarket Holdings boss Nicholas Vingirai, Barbican Holdings founder Mthuli Ncube and several financial institution middle managers who sought refuge in the UK, South Africa and the US.
The Minister of Finance and Economic Development Chris Kuruneri and business tycoon James Makamba are currently in jail for allegedly externalising funds. Companies such as Telecel and ICL have already been fined while Kingdom, CFX and Barclays Bank are awaiting judgement on their cases.
“In essence without the parallel market exchange rate every company producing commodities, goods or services for export would have been forced into bankruptcy at some stage between 2000 and 2003,” Robertson said. “This is simply because at the rapidly rising rate of inflation, Zimbabwe dollars at fixed official exchange rates inevitably became excessively over-valued.”