Nothing Should Still Come As A Surprise In Zim

EVENTS unfolding this past week have left virtually everyone without a clue of how exactly to proceed from here.

Every so often new measures are implemented and yet we still find ourselves in the same (if not worse) position. Are we, therefore taking the wrong approach in an attempt to address this crisis? Perhaps a look at how some of the “crises” have been handled can shed some light.
Last Wednesday saw the reintroduction of the RTGS system which for many had been a long time coming. At its suspension a few weeks ago, the system had been largely blamed for fuelling the parallel market rate sinking the country deeper into the rampant hyperinflationary spiral Zimbabwe seems unable (or perhaps unwilling) to combat.  But the parallel rate continued as before and perhaps with added gusto.
During last year’s cash crisis, a lot of noise was made about unscrupulous cash barons. Cash limits were introduced which made transacting for the average Joe a nightmare. Despite the activities of cash barons it soon became apparent that there just was not enough cash to go around.  Simply put, inflation began galloping away at a rate much faster than one could churn out notes to support it.
Recently there has been some concern expressed at the performance on the Zimbabwe Stock Exchange. So bullish was the stock market that a one day gain of less than a hundred percent seemed like a flat trading day. As a result, owing to the widespread use of the Old Mutual Implied Rate, again another reason was found for why the parallel rate cannot be contained.  And now be sure to expect a new buzzword that will centre around fraudulent speculators on the Zimbabwe Stock Exchange.
Of course there have been cases of fraudulent players operating on the stock market, but just like the cash barons and RTGS dealers, the rest of the country looks set to suffer for their sins.
Take cash withdrawal limits for instance. At current levels they are hardly useful for anyone as a number of commuter fares have already exceeded that threshold. So while the limit was meant to have prevented individuals from holding on to too much cash, now it just seems punitive. The strange thing however is how much cash one can access walking down any street in Harare. Of course you have to be holding on to the right commodity.
This week the ZSE has perhaps seen some of its worst trading in a long while largely as a result of new measures from the authorities. In real terms some counters on the bourse have become ridiculously cheap. The requirement that all transactions on the stock market are signed by banking executives makes it tremendously difficult for anyone to participate in it. So the bourse continues to plummet.
While this could be hailed as a corrective measure to bring sanity to the market, it is often forgotten how much prejudice will again occur to the average (honest) investor and to the companies themselves.  If values of listed firms continue to plummet be sure to expect predatory speculators who will buy a company for a song only to strip it of its assets and make a killing.
Looking at it more closely, part of the bull run had occurred as a result of limited options for Zimbabwe dollars. No one else was accepting the local currency after a decision to partly dollarise the economy. The increase in cheque frauds occurred primarily because there had been no other alternative to transact. Before, any high volume transactions would naturally go through the electronic funds transfer system which by many counts inherently reduced the likelihood of fraud.
Zimbabweans are going through some of history’s toughest times. Last week this column carried a story on how more and more companies are resorting to a “care and maintenance” approach where no production is taking place save for making general repairs to equipment. With everyone struggling to keep their heads above water, should a few fraudsters spoil the party for everyone else?  After all, the RTGS suspension was meant to quell the parallel rate but in no way did that move achieve that. Then now the ZSE is being touted as the creator of electronic money. That too can go but it is unlikely that the problems afflicting the financial sector will go with it. At the end of it all, we might just run out of cash barons, RTGS dealers and stock market fraudsters and guess what, Zimbabwe could still continue on its downward spiral.