A big ‘No’ to cash ex­ter­nal­i­sa­tion

There are tril­lions of ways through which for­eign cur­rency is be­ing ex­ter­nalised. Un­der­in­voic­ing, off­shore ac­counts that are opened on the pre­text of fa­cil­i­tat­ing in­ter­na­tional trans­ac­tions and even the phys­i­cal trans­fer of large amounts of cash out of th

The Herald (Zimbabwe) - - Opinion & Analysis - Vic­to­ria Ruzvidzo In Fo­cus

“Hell hath no fury like a woman scorned”. We an­tic­i­pate quite some gnash­ing of teeth and trem­bling as Gov­ern­ment de­scends on those that have been ex­ter­nal­is­ing for­eign cur­rency in one way or the other as stated by Fi­nance Min­is­ter Pa­trick Chi­na­masa on Wed­nes­day.

Gov­ern­ment ma­chin­ery can be quite sharp and ef­fi­cient when it sets its mind on some­thing, so we ex­pect quite some ac­tiv­ity in this re­gard.

I read with ex­cite­ment news in yes­ter­day’s Her­ald Busi­ness that Gov­ern­ment has launched a probe into a mal­prac­tice that has be­come quite ram­pant in re­cent years.

Min­is­ter Chi­na­masa told Par­lia­ment that the days for in­di­vid­u­als and com­pa­nies caught in the act were num­bered!

Zim­babwe has been un­able to gen­er­ate enough for­eign cur­rency from ex­ports due to a myr­iad of rea­sons that have seen more ex­ports and very lit­tle ex­ports and the few dol­lars avail­able are largely taken out of the coun­try leav­ing the coun­try stranded.

The propen­sity to self-de­struct per­sists in this econ­omy with a ten­dency among us to ar­bi­trar­ily and im­pu­dently en­gage in re­gres­sive acts which could pass for sab­o­tage. The de­featist at­ti­tude merely per­pet­u­ates the chal­lenges we face and yet the state of our econ­omy is the sum of all our ef­forts.

This has been the or­der of the day for years and we are more than happy that de­ci­sive ac­tion is be­ing taken to ame­lio­rate the si­t­u­a­tion. Ma­jor eco­nomic chal­lenges cur­rently be­ing ex­pe­ri­enced stem from for­eign cur­rency chal­lenges that have grossly im­pacted on in­fra­struc­ture de­vel­op­ments, meet­ing debt obli­ga­tions, firms’ re­tool­ing ven­tures, pro­cure­ment of drugs and med­i­cal equip­ment and many other needs that this na­tion has gone with­out for too long.

We could also be us­ing for­eign cur­rency to fur­ther stim­u­late pro­duc­tion and gen­er­ate wealth and em­ploy­ment in the process. For­eign cur­rency should go to the crit­i­cal ar­eas that sus­tain our econ­omy.

Not that the coun­try has ever pro­duced enough for­eign cur­rency in the past few decades but that which is makes needs to be re­tained and al­lo­cated to ar­eas with the great­est need. Min­is­ter Chi­na­masa and a few oth­ers be­fore him have never had the pleasure of al­lo­cat­ing enough re­sources for projects. They are al­ways short of funds and are oft-times forced to take out beg­ging bowls to keep the econ­omy afloat.

What kind of a le­gacy are we cre­at­ing in such a sce­nario? We all care for our fam­i­lies and by ex­ten­sion we should care for the state of our econ­omy within which our busi­ness en­deav­ours op­er­ate.

My­opia surely is not a ter­mi­nal dis­ease, yet we find it so preva­lent in our daily trans­ac­tions.

The Re­serve Bank is do­ing a good job in ad­dress­ing com­pelling and com­pet­ing needs and clearly ev­ery gov­ern­ment is uniquely po­si­tioned to have re­sources, yet re­spon­si­bil­i­ties are enor­mous.

Com­pa­nies such as Pa­cific, for­merly Sa­vanna, con­ceived value ad­di­tion a long time ago and we have a num­ber that have taken this route to im­prove our ex­port earn­ings but there are those that seek to undo such ef­forts.

Ini­tia­tive, re­source­ful­ness, re­spon­sive­ness and pru­dence are the es­sen­tial el­e­ments that will see us grow as an econ­omy.

It would not be as painful if ev­ery dol­lar made from ex­ports re­tained in this coun­try. There are many that have de­cided to “safe­guard” and in­sure their to­mor­row by ex­ter­nal­is­ing the very for­eign cur­rency that could be used to de­velop the coun­try, cre­at­ing an even brighter to­mor­row for all of us and for pos­ter­ity.

In such in­stances of ex­ter­nal­i­sa­tion, in­di­vid­u­als and in­sti­tu­tions have de­cided to be my­opic and quite blink­ered too in their de­ci­sion-mak­ing pro­cesses. To some it would ap­pear they are be­ing witty and that ex­ter­nal­i­sa­tion is a proper strat­egy to build their wealth but the medium- and longterm ef­fects of such ac­tions have been very harm­ful to the econ­omy.

There are tril­lions of ways through which for­eign cur­rency is be­ing ex­ter­nalised.

Un­der-in­voic­ing, off­shore ac­counts that are opened on the pre­text of fa­cil­i­tat­ing in­ter­na­tional trans­ac­tions and even the phys­i­cal trans­fer of large amounts of cash out of the coun­try have dealt a heavy blow to the coun­try’s fi­nan­cial po­si­tion.

Re­cently the cen­tral bank sent a warn­ing shot to whole­salers and re­tail­ers who were not bank­ing their busi­ness tak­ings, cre­at­ing fer­tile ground for mis­use and abuse. Sto­ries have also been told of some na­tion­als who send planeloads of United States dol­lars and other cur­ren­cies back to their home coun­tries in­stead of al­low­ing it to cir­cu­late here to gen­er­ate more wealth in a win-win sce­nario.

In some in­stances, di­min­ished con­fi­dence in the lo­cal bank­ing sys­tem has also led to funds be­ing amassed un­der pil­lows etcetera only to be ex­ter­nalised or used for the pur­chase of quite unim­por­tant prod­ucts by any mea­sure.

While it is im­por­tant that in­di­vid­u­als and in­sti­tu­tions be given the lat­i­tude to make a choice on what they do with their money, re­spon­si­ble be­hav­iour is ex­pected of them, par­tic­u­larly in times of short­ages such as these.

It is com­mon knowl­edge that this econ­omy needs ev­ery dol­lar it can get and we should all feel obliged to do our part in con­serv­ing the lit­tle that is there. Of course, some­times we do un­der­stand that sto­ries of Gov­ern­ment min­is­ters liv­ing large, build­ing pala­tial man­sions and im­port­ing flashy cars like con­fetti may dis­cour­age some­one from putting it into cir­cu­la­tion.

These are in­stances we re­ally en­cour­age our min­is­ters and other Gov­ern­ment of­fi­cials to lead from the front. Of course, some­one’s ill-be­hav­iour can never jus­tify the next per­son’s but as a coun­try we need to work to­wards re­build­ing our econ­omy.

We must surely feel guilty to spend mil­lions buy­ing ar­ti­fi­cial hair although it makes us look good, but the same re­sources could be used to pur­chase crit­i­cal drugs for can­cer, HIV or some such that the coun­try needs to im­port. We also need bil­lions to pur­chase power but we are al­ways sit­ting on the edge as a coun­try be­cause the re­sources are hardly there.

What makes it also sad is the fact that peo­ple are also ex­ter­nal­is­ing bond notes.

We are made to un­der­stand that at bus ports in neigh­bour­ing coun­tries such as South Africa, traders and other for­eign cur­rency deal­ers wave thou­sands of dol­lars worth of bond notes which they ex­change with rands for Zim­bab­weans who will be on their way back home.

How this started and why this hap­pens re­mains a mys­tery. But, of course, there should be some gain depend­ing on the ex­change rate but this gain is short-lived com­pared to what this econ­omy would achieve if all these funds were kept within our borders.

This fix­a­tion with op­por­tunis­tic en­trepreneur­ship serves no one save the well-heeled who care nei­ther for the fu­ture nor the present chal­lenges.

Pro­duc­tive time is lost in queues and ex­ter­nal­i­sa­tion has a part to play in all this. I re­mem­ber at some point it was re­ported that gold worth more than $1 bil­lion was be­ing smug­gled out of the coun­try. The ef­fects of such ac­tions on the econ­omy are ob­vi­ous and quite ev­i­dent.

What do we feel our­selves in those quiet mo­ments? What will we be­queath our very in­no­cent and vul­ner­a­ble chil­dren? This blame game is sim­ply for losers.

What is it that you are do­ing in your sphere, notwith­stand­ing the size?

In­deed, we sup­port the ag­gres­sive stance that Gov­ern­ment has taken and we an­tic­i­pate great re­sults. Those caught on the wrong side must surely face the full wrath of the law.

This coun­try is not poor at all but pure mis­al­lo­ca­tion of re­sources and re­sul­tant fail­ure to max­imise on op­por­tu­ni­ties has cre­ated an un­der­per­form­ing econ­omy.

Of course, we could write books about what has gone wrong but let’s start this first chap­ter with fo­cus on ex­ter­nal­i­sa­tion. Taming it is a low hang­ing fruit that could bring changes im­me­di­ately.

Of course, we should not lose sight on the im­por­tance to in­crease pro­duc­tion to gen­er­ate more for­eign cur­rency but let’s also re­tain the lit­tle that we make in the in­terim.

Philoso­pher Den­nis Wait­ley elo­quently ad suc­cinctly put it: “There are two pri­mary choices in life: to ac­cept con­di­tions as they ex­ist or ac­cept the re­spon­si­bil­ity for chang­ing them.”

My fer­vent hope is for each and ev­ery one of us to make a dif­fer­ence, to have an im­pact, no mat­ter how small, in fash­ion­ing the Zim­babwe we want.

There is no pol­i­tics here, and as for­mer US pres­i­dent Bill Clin­ton fa­mously re­marked: “It’s the econ­omy, stupid.”

When we abuse forex then we be­come like the fa­ther who ex­trav­a­gantly spends the few dol­lars he has on al­co­hol, leav­ing the fam­ily des­per­ately hun­gry, with noth­ing to eat.

I write this fully cog­nisant that that this is not sim­ply a Zim­bab­wean prob­lem.

It is quite preva­lent in most African states. We need to find our­selves. In God I Trust!

Min­is­ter Chi­na­masa

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