There’s no reason we shouldn’t have a stable currency
IT is now nine days since John the Second (John Mushayavanhu) — the man who replaced the first John (John Mangudya) at the helm of the Reserve Bank of Zimbabwe (RBZ) — released the new currency, Zimbabwe Gold (ZiG), into the market.
It incidentally came at a time when the Zimbabwe dollar was getting a serious beating, especially on the parallel market, which harked back to our past traumatic episodes of hyperinflation.
But it seems some Zimbabweans, if not most, are none the wiser on how the new currency is supposed to work; more so, how it is expected to be any different from the Zimbabwe dollar, whose life will naturally come to an end in a little more than 15 days (April 29), when the currency changeover is expected to be completed.
It is hardly surprising that in a world inundated and saturated by so much news, information and knowledge, we have paradoxically and unfortunately become dumber and clueless.
Conversely, the generations that were exposed to relatively less news, information and knowledge were arguably wiser.
Blame it on Ted Turner and CNN
In an article earlier in the year, Natalia Antelava, a journalist who previously worked for the BBC, provided rich and philosophical insights that somewhat help to explain why the current information ecosystem — which has evolved into a potpourri of legacy media (books, newspapers, magazine, radio, television, et cetera) and new media (blogs, websites and social media) — confounds the very same consumer it is supposed to benefit and nourish.
In her February 27, 2024 article, instructively titled “News is Dead. Long Live Journalism!”, Natalia says: “I found it helpful to think of ‘news’ as a product of a reactive process that is focused on creating incremental pieces of ‘content.’
The ‘when and what’ of the media. Journalism, on the other hand, was the ‘how and why’, a product of a proactive process that is rooted in context.
“News can be automated, journalism is all about human connection (even if it is a human’s connection with a robot!).
“News is food, journalism is nutrition. News is what we need to know to survive as individuals.
“Journalism is what we need to evolve as a society that values individuals . . .”
She, however, critically suggests that “the journalism we work so hard to produce is lost in the flood of ‘content’ in an information ecosystem that puts the equal (or at times higher) value on every reaction, with no credit to the time and thought put into reported pieces”.
These are invaluable nuggets that we should reflect on if we are to engender the thoughtfulness and preponderant ideas needed to move our society forward.
She also surmises that the strident chatter and noise, particularly on social media platforms, which are designed to “commodify human attention”, are killing thoughtful and productive engagements.
“Real conversations are the opposite of noise. But how do you have a conversation in the world that is increasingly designed for shouting?” she continued.
“The problem is that our information ecosystem has a major plumbing issue: our sewage and drinking water are going through the same pipes . . .
“While the social media platforms are the ones who laid the pipes and are currently pumping the sewage into them, it was not Mark Zuckerberg who started the trend.
“It was Ted Turner back in 1980, when he created CNN and, with it, the 24-hour news cycle . . .
“Even though the idea that there is enough news to fill 24 hours is in itself, well, sewage. News as entertainment worked as a business model, but not as a journalism model.”
This, folks, explains why there is so much smog and fog shrouding the debate on the introduction and possible efficacy of the new currency, as well as policy measures announced by the RBZ.
A confident John
But enough on this philosophising; back to the new currency measures.
When John the Second was making his media rounds last week, which were part of the central bank’s awareness-raising campaign on ZiG, he had a halo and aura around him that betrayed the self-confidence and self-assuredness of a man who is seemingly cocksure that the new currency would not suffer the same fate as the Zimbabwe dollar. But he has every reason to feel that way. One of the most distinct, and probably most unique, characteristics of ZiG is the fact that it is backed by foreign currency that is currently sitting in banks and gold stored in vaults at 80 Samora Machel Avenue in Harare.
All told, the new governor has a war chest that is close to US$300 million, which gives him the full instruments that he needs to defend the US$80 million worth of local currency presently in circulation.
“Our behaviour, the way we manage things, should convince the Zimbabwean public that the reserves are there. When there is more money in circulation, you feel it . . . and you are not going to see that happening,” said Mushayavanhu in an interview with ZTN Prime on Friday.
Those who have short memories might have forgotten how the Zimbabwe dollar, which was then not backed by anything except strong fundamentals (current account surplus and a balanced budget), stabilised in 2022 following a slew of measures that were announced by President ED.
For more than seven months, Zimbabweans were able to enjoy the benefits that come with a stable currency, before the Zimbabwe dollar gyrations began once again.
But all the while, the authorities have been studiously watching the market and plotting a path to establishing a durable and sustainable medium of exchange that could help add impetus to the current economic growth.
What better route to take than establishing a gold-backed currency, which is the trajectory that emerging economies, particularly countries in the Global South (read the BRICS), are taking.
Most people who are misled by cynics and trolls on social media make the mistake of believing that the machinery of the Government is inherently clumsy and clueless, which makes it incapable of judicious and effective policies to deal with current challenges.
In Matthew 13:13-15, Jesus said: “This is why I speak to them in parables: Though seeing, they do not see; though hearing, they do not hear or understand. In them is fulfilled the prophecy of Isaiah: ‘You will be ever hearing but never understanding; you will be ever seeing but never perceiving. For this people’s heart has become calloused; they hardly hear with their ears, and they have closed their eyes.
“Otherwise they might see with their eyes, hear with their ears, understand with their hearts and turn, and I would heal them.’”
You just have to connect the dots, and this can be done by applying a little thoughtfulness, and not shouting, as Natalia suggests.
The introduction of the structured currency was a long time in the making.
It started with the directive by President ED for mining companies to pay their royalties in kind, helping to build the current stash of 2,2 tonnes of gold.
By the way, in the period Tendai Biti, whom the opposition likes to call the best finance minister of all time, was in charge of Treasury, he had nothing — zilch! — in the vaults.
But the Bishop digresses.
The historic visit by President ED to the central bank’s vaults presaged the loaded announcement that was made the following day by the new governor.
It was neatly choreographed to deliver a loud message here and yonder of Harare’s resolve to end, once and for all, the nagging challenges that have spoiled the beautiful story of Zimbabwe’s economic revival.
Mushayavanhu can now use the reserves, which will be ever-growing, judging by the new mining projects that are coming on stream, to sustainably defend ZiG.
Unlike before, he can either release or mop up ZiG from the market, thereby intervening to help stabilise the unit.
Do not be fooled by those who say the little men and women who sit on street corners can determine the value of the local unit. Never!
The RBZ now has the preponderant power to influence the direction of the market, which is what central banks ordinarily do around the world.
It will be interesting how companies will pay their taxes in June when half of it — estimated to be around US$150 million — should necessarily be paid in ZiG.
For context, there is only around US$80 million worth of ZiG in the market.
This is why John the Second believes the value of the local currency can only go up. He even fears deflation.
Those greedy retailers who have been foolish to bet against ZiG by discounting it in their pricing are likely to have their fingers severely burnt.
As John says, “It’s game on!”
Just look at the mining projects that were commissioned last week, including the lithium operation at Kamativi, which will ultimately generate US$300 million annually.
Already, revenues from lithium have since leapt up to more than US$700 million.
This simply means more royalties and more reserves for the central bank.
You see, the world is changing, and we must change with it.
Everyone is moving to gold-backed currencies, which are the future, particularly in an epoch where the American empire has begun to crumble.
There is absolutely no reason Zimbabwe, whose economy continues to grow in leaps and bounds, should have an unstable currency when countries that are at war, such as Libya, Sudan, Russia and Ukraine, still have their own functional currencies.
It is preposterous!
But not again.
Bishop out!