Planning arm critical for economic boom

RESERVE Bank of Zimbabwe Governor Dr John Mangudya will soon present the Monetary Policy Statement.

Everyone is aware that the economy is facing several challenges, chief among them the excess of imports over exports aggravated by those externalising their money, usually illegally.

The resulting shortages of foreign currency have not only affected business, but have cascaded through to ordinary citizens.

Dr Mangudya needs to help navigate the economy to a position where exports and imports are more in balance and illegal externalisation halted. Since assuming office in 2014, he has emphasised that production is the first step to cutting imports and boosting exports.

He has put in place various facilities in key sectors to drive production in order to grow export inflows. This is still work in progress.

But the imbalance, made worse by the drought last season that forced increased imports of food and decreased exports of agricultural products, has hit local manufacturing. Several companies, as reported in the Nampak Zimbabwe article in the business section, continue to struggle to buy raw materials due to forex shortages and this has a cascading effect on consumers.

Cash shortages for internal transactions are easing, with ever more widespread use of “plastic” and mobile money and the continued steady injection of bond notes. But these stress that a wall is largely in place between internal bank accounts, where the US dollar is a unit of account and foreign payments, which have to be made with externally-held dollars.

The diminishing use of US dollar notes to link the two have made it increasingly difficult for Zimbabweans to travel outside, for example. On Tuesday, Standard Chartered joined a list of banks that have walled off local accounts by making use of its Visa cards impossible outside Zimbabwe without prior approval.

One area that needs to be addressed, along with boosting internal manufacturing and food production to limit imports and boosting exports to earn more foreign exchange, is far better control of externalisation of this hard earned forex.

Last year, Dr Mangudya said Zimbabwe had experienced rampant externalisation mainly from big corporates, but up to now he has not named and shamed nor has he given an update on whether this illegal practice had been stopped or diminished.

We are all aware that foreign currency mobilisation is not the problem. Various lines of credit have been made available and continue to be availed regularly. The problem is on the use. There is the priority list, but from various complaints, it appears overloaded.

The RBZ itself has a portion of export proceeds that it allocates to banks, yet the challenges still remain.

We all know of perceived unfairness. We hear of those able to draw large sums in US dollars at banks and able to make a phone call to activate a foreign transaction.

This is not Dr Mangudya’s problem alone because it is affecting everyone.

We think that we now need an independent National Economic Planning Commission urgently to provide prescriptions on how best we can resolve the challenges.

RBZ is only in charge of the financial sector in what is a highly informalised economy, where the bulk of the population does not even bank its proceeds. It can give advice and take some action, but is limited in controls.

A commission could be comprised of those who have Zimbabwe at heart and could even include some from the Diaspora pool. All sectors need to be brought together to work for the good of this country.

And whatever recommendations this independent commission comes up with can then be implemented with widespread acceptability.