THE concession made by Reserve Bank of Zimbabwe governor John Mangudya that Statutory Instrument 127 will now be limited to those who wantonly abuse the foreign exchange auction system, manipulate exchange rate and do not comply with anti-money laundering regulations, shows the folly of the failure by authorities to consult before making key decisions.
In a statement on Tuesday, which revealed plans to punish 18 companies for abusing foreign currency, Mangudya said after consultations with business the bank would restrict SI127 to, among other things, sanction companies abusing foreign currency availed on the foreign currency auction market launched in June last year.
“Going forward and in line with the recommendations from the business community on the need to continue to enhance stability in the economy, the bank’s efforts to foster compliance in terms of SI 127 shall be limited to outliers that wantonly abuse the foreign exchange auction system, exchange rate manipulation and non-compliance with anti-money laundering rules and regulations,” Mangudya said in the statement.
SI 127 of 2021 prohibits business operators from charging above the official exchange rate and empowers authorities to punish those that refuse to accept the Zimbabwe dollar for local transactions.
The reforms under SI 127 of 2021 triggered a wave of price hikes in Zimbabwe and United States dollar terms.
The climbdown by Mangudya and the damage wrought by the Statutory Instrument would have been avoided had authorities widely consulted key stakeholders before promulgating the SI. That Mangudya consulted after the SI wreaked havoc on the market is a typical case of putting the cart before the horse.
Sadly, failure to consult before taking action has become the norm in the Zanu PF administration and even stretches to the Executive.
This was evidenced in last weeks’ confusion when Mnangagwa gave players in the showbiz the greenlight to start holding live shows for the first time since March last year albeit under strict observance of COVID-19 regulations which include not exceeding 50 attendees at the shows. Two days later, his deputy Constantino Chiwenga, who doubles as Health minister, announced a ban on all gatherings except for funerals. The conflicting signals only show disharmony and lack of consultation in the cockpit.
From the disastrous decision to ban the multi-currency regime and making the Zimdollar the sole legal tender which saw a spike in inflation to more than 800%, to the abrupt suspension of the Zimbabwe Stock Exchange which led to investor flight, the consequences of failing to consult are as clear as day.
These knee-jerk reactions by governmentwithout widespread consultations can only spell doom for the country’s fragile economy.