Reforms: Elephant in the living room

EMPLOYEES and motorists are spending hours in long queues as the shortage of fuel becomes increasingly unbearable, with no immediate solution in sight.
The grotesque irony is that the fuel crunch comes at a time when world oil prices have fallen significantly. Governments with healthy foreign currency reserves have taken full advantage of the Covid-19-induced glut of petroleum products on the international market. Zimbabwe, which can barely muster a fortnight’s import cover, is not among them.

The fuel crisis is a mere symptom of the government’s failure to implement far-reaching economic and political reforms.Take, for instance, the issue of currency reform. After rushing to re-introduce the Zimbabwean dollar before ensuring that the requisite economic fundamentals — such as a productive economy with a competitive export sector — were firmly in place, the government is now facing a plethora of currency-related headaches. If we are not careful, very soon people will stop accepting payment for goods and services in local currency.

This country needs, roughly, no less than US$20 million per week for fuel imports. We know that the tobacco crop has so far brought in US$64 million from 28 million kilogrammes in the opening 16 days of the golden leaf’s marketing season. This quantum of forex inflows is just not enough to foot the country’s import bill.

The logical solution to the fuel crunch would be the official adoption of the rand as our main currency. The next-best remedy is dollarisation — but the authorities will instinctively oppose both ideas because they want to retain the capacity to print money.

If the government clings on to the beleaguered Zimbabwean dollar, the temptation in the corridors of power to resort to the unrestrained printing of money will be high. Apart from this, government could be left vulnerable to the corrupt manoeuvres of deep-pocketed cartel kingpins.

In the past, we have seen how the cartels never waste a good crisis; they come masquerading as knights in shining armour, offering to structure for the government “win-win” financial deals for fuel imports. Riding on usurious interest rates and sleight of hand, they gleefully grab the creamy milk like the proverbial Cheshire cat and smile all the way to the bank, leaving the hapless taxpayer to pick up the tab.

Leaders cannot continue burying their heads in the sand and buying time. The currency problem needs a decisive solution.
The central bank has frozen the mobile money wallets of major EcoCash agents. Still, the Zimdollar’s rapid slide has continued. Just yesterday, the apex bank imposed daily and monthly limits on the Zipit transaction platform, accusing unnamed speculators of riding on the financial system to engage in illicit dealings.

All this is tantamount to tinkering with the symptoms of a disease whose real cause is known. Owing to the Zanu PF government’s failure to implement genuine economic and political reforms, confidence in the Zimbabwean economy has hit rock bottom. This is the elephant in the room.

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