Linda Masarira The conversation for the past six months has been on currency volatility, inflation and the wage/salary crisis in Zimbabwe.
The global macroeconomic fundamentals are making even the mighty US, UK and Europe scream inflation and rising costs of living.
In our case the situation can only get worse due to inconsistent economic policies.
We are all perfectly aware of the debilitating and lethal consequences of the punitive economic sanctions hovering on our economy for the past 20 years.
As a labour economist I have taken time to look at the macroeconomic and micro-economic factors which are causing purchasing power erosion and the subsequent impact on cost of living.
Cognisant of the fact that bookish economic theories have failed to stabilise our economy as there is a lot of economic sabotage and speculative activities which continue to increase USD rates on the parallel market
We have millions, if not billions, of USD hard cash in private vaults, pillow cases, etc, which are not in the formal banking system. Secondly we have the development partners who continue to pump USDs into CSO activities time and again, which is used at times to manipulate the black market rates. The Financial Intelligence Unit is sitting on its laurels because honestly all the bookish economic theories have evidently failed to maintain economic stability in Zimbabwe.
Yes, there is a global recession but our currency volatility has been in existence way before the current global economic recession. Surely trying to copy notes from countries that have been enjoying stable economies is not the solution.
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We have to agree that partial dollarisation is not working and put our heads together to come up with meaningful economic strategies to stabilise our economy, strengthen the Zimbabwe dollar and grow our economy.
I would suggest the following to arrest inflation and create price stability:
Abolishment of USD for all domestic transactions
Punitive measures to be put in place for all businesses, individuals, companies and government institutions involved in any act of economic sabotage and arbitrage.
Strengthening ZWL with above the ground gold reserves
National advocacy on behavioural change in attitude to encourage confidence in our local currency.
Fiscal discipline and consolidation .
Production and industrialization
We need to understand that if we control food production, we make our country food secure.
If we control our energy, we can control the whole region and if we manage to effectively control our money we can control the world. Russia took a drastic move and the rouble has stabilised and hit a seven-year high against USD. The salary crisis can’t be fixed without addressing currency volatility. A 100% or even 500% salary increment will never make a difference in the quality of livelihoods of all civil servants and workers in general in Zimbabwe who continue to struggle to make ends meet.
The way Finance minister Professor Mthuli Ncube answered some questions in Parliament reveals economic management ineptitude. He is using European models to manage Zimbabwe’s economy, which is definitely not working.
- Masarira is a Labour Economist and president of the Labour Economists and African Democrats (LEAD). These weekly New Horizon articles published in the Zimbabwe Independent are coordinated by Lovemore Kadenge, an independent consultant, past president of the Zimbabwe Economics Society (ZES) and past president of the Chartered Governance & Accountancy Institute in Zimbabwe (CGI Zimbabwe). — [email protected] and mobile No. +263 772 382 852.