Inconsistent Statements Fuel Uncertainty Fears

ON a recent visit down south –– across the Limpopo –– it was hard to miss the anxiety the citizens there seem to be under. For starters, the swine flu virus has gotten everyone in somewhat of a panic.


While the traditional flu season is coming to a close, this global phenomenon seems to be picking up momentum in South Africa. With the first few cases of fatalities already recorded, anyone would start fearing for their lives, their future and that of those around them.
Tragic as it has been, the threat posed by the flu is not the only thing the people of Mzansi are worried about. A few months ago the country went through an election in which the ruling party easily cruised to an almost two thirds majority victory. With that came the uncertainty of a new administration. Was it going to be extreme and radical in its attempts to achieve some of its election promises? Prior to the election, a lot of hope existed especially among the poor that significant changes would be brought about to immediately lift them out of the ruthless cycle of poverty. It is probably too early to tell if this will occur as some expected.
Ironically, some of the new administration’s most vehement critics in the run up to the election are beginning to warm to it and those who supported it are becoming somewhat impatient with it. Critics have been impressed by, for example, President Jacob Zuma’s surprise visit to one of the country’s municipalities only to find the mayor “away sick”. Generally, this has been viewed as a step in the right direction to improve service delivery.
On the other hand, the unions are taking turns to take to the streets demanding better pay and working conditions. Workers from the municipalities, the construction sector, the national broadcaster and more recently from Eskom –– the Zesa equivalent –– have either taken part in strikes or at least threatened to do so. Even kombi drivers felt they could not be left out. Reasons often include trying to force the government’s hand to deliver on prior promises made.
Again, it is too early to tell but could this suggest that utterances made by public officials must generally be taken with a pinch of salt?
By now, the general populace in Zimbabwe should be used to it. This week alone we had one authority hinting at the reintroduction of the Zimbabwe dollar and another suggesting otherwise. If press reports are anything to go by then the Reserve Bank of Zimbabwe would like to see the use of the national currency restored but this time with its value backed by gold or any other such measure. Then, at the other end of the spectrum, the Ministry of Finance is considering the feasibility of joining the Rand monetary area.
These inconsistent statements only fuel the uncertainty investors already face. Contradictory pronouncements, especially from such high authorities simply mean that whatever decisions they reach they can just as easily be changed and without warning or consideration of their impact. It is no wonder then that the billions of American dollars which were expected to pour in after the formation of the national unity government are yet to make their appearance. This column has oftentimes commented that it will take more than just the signing of a piece of paper to get the economy up and running again. Consistent and sound policies are what is required.
While unlikely, the reintroduction of the Zimbabwe dollar in the near future is possible. However, it is hard to see what that would achieve. Given the events of the last few years who would quickly gain confidence from it? Despite promises of pegging it to the value of either another currency or gold, it is its management and more importantly the inconsistencies in policy application that an investor would be worried about. Regaining confidence in a local currency will have to be a long and patient process. If it is a matter of providing loose change for easier transactions then the authorities can look at limiting the reintroduction to just that of coins. Some countries that have dollarised have used this alternative.
Adopting the rand does not necessarily present a foolproof alternative either. Issues around the volatility of the rand against other major currencies are of concern to some degree. Relinquishing control of the monetary framework to a foreign authority also presents a few challenges.
While investigations can be done into the ideal monetary structure this country can take, the first step should at least involve uniformity on the part of the relevant authorities. Mixed signals hardly spell confidence for anyone. Given the supposed disillusionment of the South African masses with the status quo, perhaps it should just be accepted that public utterances will not necessarily reflect the reality on the ground. After all everyone is entitled to their own opinion.

 

By Tich Pasi

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