By Nathan Gurira
NO matter how determined the Reserve Bank of Zimbabwe (RBZ) is to uproot delinquency in the economy, such efforts may come to naught if other arms of the state fail to come to the party.
The RBZ has been naming forex dealers and others who abuse the forex auction system. But the problem continues unabated.
Vice-President Constantino Chiwenga recently fired warning shots at those fuelling the parallel market. Addressing the just-ended Zimbabwe International Trade Fair (ZITF) and the Harare Agricultural Show, Chiwenga threatened to deal with those who are causing chaos in the markets.
The shady dealers driving parallel market rates are the big companies, including local and foreign contractors who are working on infrastructural projects, petroleum firms, fast moving consumer goods entities, and retailers.
While the public expects the central bank to clean up the mess, the monetary authorities need support from other public institutions.
Legally, the RBZ operates in terms of the Reserve Bank Act, Chapter 22:15, whose scope confines the institution to the maintenance of price stability, formulation and execution of monetary policy. It is also mandated to foster a stable financial system.
The apex bank also administers the Banking Act, Chapter 24:20, and a slew of other statutory instruments.
These statutes do not give the bank sweeping powers to extend itself beyond certain boundaries nor interfere with operations of other state institutions.
The bank’s autonomy was surrendered to the Treasury during the unity government (2009-13) when the then finance minister, Tendai Biti’s obsession with clipping the wings of ex-RBZ governor Gideon Gono, led to amendments that compromised the apex bank’s independence.
The RBZ works in an ecosystem with other regulatory authorities which must play their part in fostering economic stability.
In the energy sector, the RBZ has been allocating foreign currency to petroleum companies to supply part of the fuel in Zimbabwean dollars (ZWL$). Nothing of this sort is happening.
The question that arises is; where are the officials and inspectors from the Zimbabwe Energy Regulatory Authority (Zera)?
Fuel imported using foreign currency sourced at the official exchange rate, is being sold in United States dollars to struggling citizens paid in ZWL$.
These daily takings are then exchanged for Zimbabweandollars at parallel market rates to enable oligopolies to queue for more foreign currency allocations at the auction. The vicious cycle goes on.
As the Zimbabwean dollars continues to devalue on the parallel market, prices of basic commodities skyrocket, creating an unstable environment.
Not so long ago, cabinet threatened to take stern action against the culprits, but it was all hot air.
This week, cabinet released another statement to the effect that a technology-based fuel management system, which was developed by the Harare Institute of Technology (HIT), with support from Zera, would be implemented throughout to curtail malpractices in the fuel sector.
Perhaps the starting point would be for the central bank to publish the full list of petroleum companies allocated foreign currency for the purpose of importing fuel to be sold in local currency.
The RBZ would then do spot checks together with Zera.
For such measures to bear fruit there has to be political will.
Additionally, there has to be commitment to flush out culprits and replacing the rotten apples with professionals.
Police also have to fully play their part.
The law enforcement agents should dig beyond symptoms and unravel the whole iceberg.
Parliamentarians have to strengthen legal instruments to combat corruption.
No matter how well an economy is performing, if authorities allow citizens to do as they please, the wheels will definitely come off the rails because greed will ground the economy.
In terms of fundamentals, the local currency should be appreciating because for the first time in many years, Zimbabwe has registered an increase in export receipts of close to US$5 billion, enough to cater for import requirements.
The balance of payments position is sound, partly assisted by robust performance in mining and agriculture, and Treasury has recorded budget surpluses in the first and second quarters.
Combine the fiscal and monetary policy measures with the foreign currency auction system introduced in June last year to stabilise the economy, the worst should have been over by now.
In other words, the positive economic fundamentals achieved thus far should have been inspiring confidence in the Zimbabwean dollar but the local unit has been under speculative attack due to profiteering.
In my view, the list of institutions failing in their responsibilities includes tax authorities who, for the longest time, have battled to plug leakages at porous ports of entry.
Therefore,despite sanctions imposed by the West, the most damaging embargoes are rampant corruption and rent-seeking behaviour by business and ruling elites.
- Gurira is an economist. He writes in his personal capacity. — firstname.lastname@example.org