BY ALEX MAGAISA
A few months ago, we examined the ambiguous approach of the Zimbabwean government towards business.
On one hand, it wants to present a progressive face using the mantra that “Zimbabwe is open for business”.
However, this rhetoric is not matched by the policies and conduct of public affairs.
Hence the other face is reactionary and typically anti-business.
This much is evident in the content and diction of the president’s speeches at political gatherings.
Take the recent public boast at how the government handled EcoCash, the country’s premier mobile money company by President Emmerson Mnangagwa.
“Ndokutora tsvimbo ndokurova!” (We took a knobkerrie and beat them up thoroughly).
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The president’s defenders will say it’s just an innocent metaphor.
But there can be no denying that it is also a metaphor of violence.
It has a disturbing consistency with Mnangagwa’s choice of macabre metaphors.
He has previously said glowingly of a morgue that was built in a small town a few years ago.
At the opening ceremony, he offered a prize to the first family to bring a corpse to the mortuary.
In this case, Mnangagwa was telling a gathering of party officials that his regime had dealt decisively with EcoCash, which he accuses of fuelling economic irregularities including promoting the currency black market.
Curiously, this political rhetoric is not matched by regulatory action.
EcoCash and other mobile money companies carry out regulated businesses.
The regulator is the Reserve Bank of Zimbabwe (RBZ).
There is no evidence that the RBZ has taken any regulatory action against EcoCash and/or its executives or agents.
If they had committed offences, one would expect regulators to have taken action.
But there are just political judgments from the politicians, nothing from the regulatory authorities.
The blanket bans on mobile money agents or the very low limits imposed on mobile money transactions apply to all mobile money businesses.
If there was any wrong that EcoCash or its executives had done, one would expect regulatory authorities to have taken specific action against them.
The absence of any such regulatory action suggests that the political rhetoric is just political gamesmanship presented as policy.
It also suggests that regulatory authorities are not in sync with the political authorities when it comes to the real problems and the sources of it.
Of course, suggestions by Mnangagwa and Finance minister Mthuli Ncube that EcoCash created “phantom money”, which was beyond the control of the monetary authorities are only meant to deflect attention to the government’s wrong doing and to hoodwink the gullible.
If anyone created “phantom money” it was the government itself, via the RBZ.
It is the government and the RBZ after all which have the monopoly to print money.
They do so with increasing regularity made easier by technology.
They are the ones who have been generating billions of “phantom money” otherwise referred to as RTGS balances, which they decreed to be a currency in 2019.
This had been happening for years.
The government just printed the US dollar wages with nothing to back them, until they conjured up the trick of printing their phantom dollars, which they called bond notes.
This was all part of the deception, but someone was going to have to pay for it.
Indeed, whenever the authorities have wanted to source foreign currency from the markets, they have simply printed money by generating new RTGS balances.
In the 2019 budget Ncube reported that financing the budget deficit through the issuance of treasury bills had cost US$1,27 billion.
When the Mnangagwa regime took over in November 2017, it went on a massive spending spree.
In the same budget statement, Ncube reported that between January and September 2018 the government had borrowed US$1,11 billion from the RBZ using the “overdraft window”.
Someone had to pay for this.
But the regime does not want to take responsibility for this recklessness. Instead, it points a finger at EcoCash.
Consider also the treasury bills, which the RBZ issued to pay banks in return for the non-performing loans (NPLs) that were bought by the Zimbabwe Asset Management Company (Zamco).
Zamco is a creation of the RBZ.
It was designed to mop up the mess of huge loans given to political elites and their businesses by banks, which they never paid back. Between 2014 and 2018, NPLs worth US$1,1 billion were bought by Zamco from these banks using TBs.
CBZ Bank alone sold US$698 million worth of NPLs, representing 61,64% of all NPLs bought by Zamco.
This money which was used to rescue banks and heavily-indebted political elites came from somewhere.
The regime created “phantom money” to fund these transactions.
In short, the government printed money to pay for these NPLs. But it wants to blame EcoCash.
Then there is the disastrous command agriculture, which gobbled up more than US$3 billion.
Where was this money coming from?
Here are more examples.
In 2010, a subsidiary of Zesa paid US$4.9 million to Pito Investments for the delivery of transformers.
Ten years later, Pito Investments has never delivered the transformers.
In 2017, a company called Solution Motors got two contracts worth US$1,5 million from the Department of Irrigation.
It got a cash advance from the government but only delivered less than half the value of goods.
Where does all this money go? And where does the regime get the money when it is broke?
Apart from confiscating foreign currency from exporters, the government has resorted to the printing machine.
Only a small fraction of the printed money is represented in physical currency. The bulk of it is RTGS balances that sit in bank accounts.
The long and short of it is that if anyone is guilty of creating “phantom money”, it is the government through the RBZ.
However, the regime is fond of deflection and deception, which is why it’s easy for it to point fingers at mobile money companies.
If the companies had done as political rhetoric suggests, it would be a very serious matter which would not only result in regulatory sanctions against the mobile money companies and executives but also criminal prosecutions.
There is none of that because the regime simply doesn’t have the proof. It’s all political gobbledygook.
*This an abridged version of Alex Magaisa’s latest posting on his blog The Big Saturday Read
