When people rise to higher offices
WHEN people rise to higher offices, their heads get lost in the clouds. Some, notwithstanding their strong rural backgrounds, become oblivious to the real situation of the ordinary citizenry. They suddenly are the socrates of this modern world, fathoming far-fetched solutions to what are seemingly very ordinary circumstances.
The high office disease seems to affect everyone without exception, economists, accountants, not to mention politicians. Those of us in ordinary spheres of life are left bereft of direction and puzzled by these high office bearers’ solutions to our daily problems as we struggle to live from one day to the next. Very often, politicians are the most susceptible people to this disease, followed by economists.
My focus in this article is at Number 80, Samora Machel Avenue, home to our esteemed reserve bank. The Reserve Bank of Zimbabwe (RBZ) is the controller of all the banks in the country. It exercises oversight over the financial services sector and manages the country’s monetary policy in close conjunction with the fiscal authorities.
It is the custodian of the local currency. Its pride (or is it its success) should derive from the potency, stability and purchasing power of the currency. The central bank can only brag of success if the currency it has in place is stable. Anything short of that puts the central bank’s success in dispute. When a central bank measures its success away from the strength of the currency it presides over, then there is a problem, big problem indeed.
Suffice to put aside the Gideon Gono era and concentrate on the years after him. A cocktail of measures have been adopted by the reserve bank to try and stabilise the local unit. To start with, the local unit was re-introduced in 2019 after it had long been buried in 2009. When it was introduced, there was public outcry from almost all corners of society that the timing was wrong, that the necessary enabling requisites were not yet there.
Even the incoming Finance minister Mthuli Ncube before he got ensconced in his high-rise office, had correctly observed that bringing back the Zimdollar (bad money) would drive out the good money. No sooner had he gotten into a high-rise office than he started to see things the other way round. It was fatal mistake number one. And one wonders what really gets into people’s minds when they get into higher public offices.
Suddenly they see what we don’t see, even if they saw it before they got into office. Amazing, isn’t it? But don’t they say it’s “unAfrican” to talk while eating.
Blunder number two was the declaration that the newly-introduced Zimdollar was equivalent to US$2,50. As much as we may not be privy to the formula used to arrive at that exchange rate, chances are that it was not a demand-supply determined exchange rate. When economists do those kind of things and they oversee the country’s apex bank, then there is a big problem. Economists are supposed to be masters of demand and supply dynamics and must accordingly be guided. Unfortunately, the market knows no high-rise office bearers, and as expected the exchange rate shot through the roof in a short space of time.
Having failed to tame the stubborn exchange rate, the reserve bank, creative as ever, came in with the foreign currency auction system. Like any medicine administered to some critical patient, the auction system temporarily put at bay the ever-spiralling exchange rate. The apex bank failed to fulfil allocations, sometimes falling several months behind. Again, this bore testimony to the fact that the bank was failing to pinpoint the cause(s) of the runaway exchange rate. But as expected, the bank remained adamant and kept the auction system on. The system is limping on as I write.
But like ever before, the central bank is forever conjuring new tricks to try and harness the elusive exchange rate. In came the gold coins. It was believed they were going to be the magic wand to soak away the inflationary tendency of the local unit. Sales figures of the newly-minted gold coins were published in the Stateowned Press and on television. For sure, people bought the gold coins, and are still buying them, they can continue to buy them adinfinitum.
The fact, however, remains the local unit is still plunging and will continue to do so. It can, therefore, be asked what is the underlying problem that in the face of all these interventions, the local currency is still not stabilising. As far as I can see, it’s all because when people ascend to high positions, they become oblivious to reality. But why? I will come to that latter.
Now our esteemed central bank says it is introducing digital gold coins, whatever that is. What is the probability that this will change anything? The central bank says this will complement the gold coins in a big way. Living above the clouds of course, nothing else. The exchange rate is now at a whooping $3 000 to the green buck.
But let’s face it. What’s our undoing. Is it really that the central bank does not know exactly what needs to be done to fix the problem. I refuse to accept that school of thought. Near barren neighbour Botswana with an economy anchored solely on a few diamond mines and livestock has a currency stronger than ours although we have a plethora of minerals, vibrant agriculture and a reviving manufacturing sector.
If a peasant with two donkeys and a few chickens is doing better for his family than another peasant with a hundred heads of cattle, then the hundred heads of cattle owner has some serious management problems. The economists will of course accuse me of oversimplifying the scenario. They should, however, know that that’s how us ordinary people look at it.
I put our undoing on the lack of integrity, national pride and leadership on the people who hold public office in our country, especially at the very top. There is general failure to strike a balance between political and national interests.
It is my opinion that the apex bank office bearers know exactly what needs to be done to fix the problems of our local unit. Unfortunately, these solutions run right in the faces of politicians who refuse to accept those solutions. Timidity overcomes our otherwise well-meaning apex bank office bearers who give in and follow directions they know are not helpful.
Politicians are not known to accept things that will shed away support from them even if in the long run this will turn out for the better. Giving in to political pressure should not be excusable, it is a weakness.