HARARE – As the national debate about the benefits of Zimbabwe adopting the South African rand as its anchor currency continues to rage, former Finance minister Tendai Biti says the discourse is “futile” — as the country’s deepening economic rot “can never” be stemmed with President Robert Mugabe and his warring ruling Zanu PF in power.
Biti’s entrance into the randisation debate comes as there is growing panic among both ordinary Zimbabweans and businesses — amid fears that the dying local economy is hurtling towards the debilitating lows of 2008, and as the country’s acute cash shortages continue to worsen.
The tough-talking People’s Democratic Party (PDP) leader told the Daily News yesterday that the country’s deepening economic turmoil — manifested by the cash crisis, rising poverty levels and horrendous jobless figures, a thousand other ills — was a result of Zanu PF’s “bad politics, rubbish policies and poor governance”.
“Even my 10-year-old child knows that in Zimbabwe we have a certain political party that is engaged in toxic politics.
“The sad reality is that Mugabe and Zanu PF belong to yesterday and can’t solve today’s problems … because they belong to the past.
“Today’s problems need today’s men and women, not yesterday’s men,” Biti said during and after he addressed the Financial Markets Indaba in Harare yesterday.
Mugabe, the only leader that Zimbabweans have ever had since the country got its independence from Britain in April 1980, is largely blamed — together with his brawling Zanu PF lieutenants — for ruining what was once one of Africa’s most prosperous nations, through poor policies.
Economists have also said — on the back of the country’s deepening crises — that Zimbabwe’s average income levels are now at their lowest in more than 60 years, with more than 76 percent of the country’s families now having to make do with pitiful incomes that are well below the poverty datum line.
This also comes as the country’s ratings have plummeted worryingly, resulting in Zimbabwe being classified recently and officially as the poorest country in Africa.
It was in this context that Biti said yesterday that the country’s problems had nothing to do with issues of currency per se.
“We have to accept that this economy needs some serious structural reforms. The problem with the current regime is that they have no discipline.
“We can’t, for example, continue to have an expansionary fiscal policy when the economy is not performing.
“We must also push the agenda for regional integration. Our market is so small and we have a tiny middle class whose disposable income has been eroded,” he said.
“There are lots of growth opportunities for Zimbabwean companies if we can tap into the Southern African Development Community (Sadc) with over 300 million people, or even the whole African market with over one billion people.
“At the moment we have a lot of idle capacity, and if we start focusing on industrialisation this economy can grow by at least seven percent per annum.
“We must also address the cost structures of our economy … because we are not competitive in the region due to high production costs,” Biti further told delegates at yesterday’s indaba.
He pooh-poohed suggestions that ditching the United States dollar and switching to the South African rand as the country’s anchor currency would address Zimbabwe’s economic rot, and the concomitant cash shortages.
Biti also said Zimbabwe had “passed” the chance to adopt the rand in 2009 when he was still head of Treasury.
“In September 2009, after I had a meeting with South Africa’s former Finance minister Pravin Gordhan, I approached Mugabe … but he said it was not possible due to nationalism.
“Nationalism brought us independence, but it is not enough to run economies efficiently.
“We don’t need to go the rand route now unless we put our house in order. If we adopt the rand as things stand, we will bastardise it the way we have bastardised the United States dollar, and we’ll soon abandon it also,” he said.
The debate on the need or otherwise for Zimbabwe to embrace the South African rand as the country’s anchor currency has been gathering momentum over the past few months.
The Confederation of Zimbabwe Industries (CZI) is among those who have encouraged the government to enact a law which will allow the prices of goods and services, including salaries, to be denominated in rands — as a way of promoting business competitiveness and the wider use of the South African currency.
“We are not calling for the dumping of the US dollar … what we are saying is that we need to look at a framework that ensures the little hard currency that we may have is ring-fenced.
“Our argument is that when we adopt the rand, we cannot have an individual coming from say, Pakistan, searching for the rand.
“We can continue importing US dollars, but history has shown that that alone cannot be a sustainable solution to the problem,” CZI president, Busisa Moyo, said.
But other experts have also warned in recent interviews with the Daily News, that the calls by business to peg prices and salaries in rands were akin to trying to adopt the South African rand via the back door — and that this would not help Zimbabwe.
“The cash shortage is not about the currency, but more about the lack of production. As long as we are not producing enough, we will not get enough rands anyway.
“What we need is producing enough to sell outside Zimbabwe for us to get foreign currency.
“There is also the argument that the rand will not be attractive for people to come in here and take it outside like the United States dollar, but it is not like these people are coming in here and stealing it.
“They are being given the money in exchange for something,” economist Witness Chinyama told the Daily News last week.
Another economist, John Robertson, also said the proposals to have prices and salaries pegged in rand were misplaced, as the country desperately needed to instill confidence among investors.
“The cash shortage is because we are not earning money. What we need to fix is the lack of confidence in the country. That is what is causing externalisation, as people are taking out their money out of this country.
“So, what we are saying is, let’s fix the confidence issue instead of promoting a currency. The issue is, we can no longer make most of the things we used to make because of investors’ lack of confidence in this economy,” he said.
“There has to be confidence by external banks that if they lend money to Zimbabwe, they will get it back. Right now that confidence is not there.
“If we say let’s go for the rand, it’s like saying let’s not fix the real problem, but see how we can cope with a different currency.
“We need to make money by working, and at the moment we are not working and we are not producing. We need to go back to producing goods that will be good enough for foreign markets,” Robertson added.