RBZ must return to its core business

EDITOR — Thank you for a brave editorial comment calling on the Reserve Bank of Zimbabwe (RBZ) to go back to its core business.

The foreign currency the RBZ so likes to control, does not belong to it. It does not belong to the commercial banks either. It belongs to the one who earned it. The earner may sell it to other parties using commercial banks as intermediaries. The RBZ’s role is to regulate fees for such transactions.

In this multi-currency environment, the bond note must stand on its own two feet, its strength determined by forces of demand and supply.

There is need for a paradigm shift in both fiscal and monetary policies before significant FDI finds it safe to call this country home.

Current policies repel FDI and encourage externalisation of hard currency earned from exports through transfer pricing, remittances of inflated fees and interest charges, as well as under-capitalisation of virtually all Greenfield projects, if not going concerns.

As if this was not enough damage, the current policies encourage investment in wrong projects, creating unwanted extra available capacity in the hope of using the same and the priority list to access hard currency, and thus virtually guaranteed profits.

We must abandon the Rhodesian economic model that depended on oppressing the majority and keeping them out of the mainstream economy.

Government should, however, not reduce, but levy all import duties in hard currency and impose a Tobin tax of say seven percent on all import receipts, while allowing commercial banks to dock a further 13 percent, but replacing it with a local currency, so as to have a pool of hard currency for sale over the counter to their clients.

Resource firms must be compelled to settle their utility bills in hard currency, while half their local wage bill should be in hard currency.