BY MTHANDAZO NYONI
CAPTAINS of industry have reacted differently to the government’s move to liberalise the foreign currency exchange market, with some saying the development confirms that the country has redollarised and others saying it will stabilise the market.
Finance minister Mthuli Ncube on Wednesday liberalised the forex trading market in a bid to arrest exchange rate volatility and inflation.
Ncube immediately introduced an electronic forex trading platform based on the Reuters system, which allows registered financial institutions to freely trade foreign currency.
But captains of industry and other stakeholders who spoke to Standardbusiness reacted differently to the development, with some saying it would not address the chronic challenges the country has been facing.
“We are beginning to see policy failure. It clearly shows that it has been trial and error on the government’s approach in fixing our economy.
“Clearly, the currency debate was not given due seriousness. We are back to square one.
“The Zimbabwe dollar is a total failure,” Association for Business in Zimbabwe (Abuz) CEO Victor Nyoni said.
“It does not matter, which approach of allocating foreign currency is used.
“Our fundamental problem is that the economy is not generating enough forex.
“The Abuz view is, therefore, that removing the interbank system replacing it with the Reuters system is in itself not the solution.
“There is simply insufficient foreign currency in the economy.
“The debate should be about productivity, not allocation platforms.”
Professional Business Association of Zimbabwe director Lucky Mlilo said the measures seemed to be short-term and it would be difficult to stabilise the exchange rate.
“We have seen an immediate reaction to these measures with the parallel market rate of the US dollar trading at over 1:40,” Mlilo said.
“The ripple effect is also currently being witnessed with retailers increasing prices significantly.
“Long-term measures are needed. Government needs to curb its expenditure, which is also a source of inflation.
“The level of money supply is too high and needs to be supported by reserves.
“The loss of confidence in the banking sector needs to be restored.
“Once there is policy consistency, people will have confidence in the nostro accounts.”
Mlilo hoped that the establishment of the currency stabilisation task force would not see the same familiar faces that were being recycled from one board to another.
Zimbabwe Congress of Trade Unions (ZCTU) president Peter Mutasa said government was just burying its head in the sand.
“It simply means the experiment in the Zimbabwean dollar has failed and the country has redollarised,” Moyo said.
“The cost of inputs, production and prices of goods and services is going up.
“What is sad is that salaries have been further eroded. Workers are now taking home US$10 a month, which is not enough.
“This is a disastrous move that government has taken.”
The ZCTU boss said the country needed to revert back to a multi-currency system or use the South African rand as a medium of exchange.
“Workers must be paid in a stable currency, which is rand in this case,” he said.
“The government has failed and it can’t control the economy. There must be a change in policy.”
Zimbabwe National Chamber of Commerce Matabeleland chapter vice-president Golden Muoni said: “It’s rather too late.
“Things have gone out of hand. Why didn’t they do this long back? Why did they take so long to react? They are not in control of anything now,” Muoni said.
“They are just chasing after the parallel market. People who are fuelling the black market are known. They should act on them.
“We are in a fix and we need to sit down as Zimbabweans and come up with a way forward.”
Muoni said it was impossible to run an economy “when other players are allowed to invoice in forex while others do so in the local currency”.
Confederation of Zimbabwe Retailers president Denford Mutashu said there were other formal players in the economy who were fuelling the forex parallel market and as such, government needed to deal with them.
He said all financial institutions including mobile money services should work with government to end the scourge, lest the economy crumbled.
“There is need to address the issue of the forex parallel market because it is hurting the economy,” he said.
“Government should track down people who are fuelling the forex parallel market.
“The president has to come down hard on forex dealers. We have to be firmer and go down to the ground and address this issue.”
Economic and financial analyst Persistence Gwanyanya said he was expecting the government to slow down the forex parallel market.
“We were expecting it (the new policy) to slow down the market through various ways. Right now, the market is still unstable and going up,” Gwanyanya said.
“We need to understand what’s causing market unrest and address that.
“We need an immediate intervention that will stabilise the market.”
Gwanyanya said the government needed to address lack of confidence in the central bank for the financial institutions to attract forex.
However, Confederation of Zimbabwe Industries president Henry Ruzvidzo said the move to consolidate trading of foreign currency through a transparent electronic trading platform was a welcome development.
“We hope it will be supported fully by all players in the banking sector,” Ruzvidzo said.
“Inefficient prioritisation of foreign currency in the economy has largely been responsible for its poor performance.
“The development is also signalling consolidation of fiscal and, monetary positions, which should usher in a more stable environment.”