The Zimbabwe National Chamber of Commerce (ZNCC) yesterday came out guns blazing, firing broadsides at a series of measures announced by President Emmerson Mnangagwa on Saturday to calm market jitters in the aftermath of a difficult month.
In the past two weeks, the volatile Zimbabwe dollar has suffered its worst drabbing on the black market, depreciating to US$1:$400 yesterday, after ending 2021 at US$1:$280.
Panicky authorities swung into action at the weekend, cracking down on banks, which have been forbidden to lend, while laying out tougher stock exchange trading measures.
Mnangagwa, who made the announcement, also suspended third party country payments on foreign obligations in a bid to foster market discipline within the foreign payment system, among some of the measures, which the ZNCC said were aggravating an already dire situation.
“The chamber, its executive council and broad membership commend the government, through the Office of the President, for responding to a bloodbath currently taking place in the Zimbabwean economy,” the ZNCC said.
“This is refreshing to note that the man occupying the highest office in the land is hands on. However, the downside is having the Head of State announcing such measures sending a clear signal that politicians are directly involved in economic policymaking, notably monetary policy measures (where a greater degree of central bank independence is required), and in the process rendering the Reserve Bank of Zimbabwe as an arm of political decision making,” it said.
“This comes as a result of the government’s slow reaction to economic chaos which triggers such a confrontational approach and in the process, resulting in unintended consequences, that is, worsening the economic turmoil.
“The perennial existence of arbitrage opportunities will continue threatening economic stability, and to solve it, we need to avoid legislating against it, but rather address its primary drivers. This can be achieved through both market liberalisation as well as improving policy quality and policy response to any emerging threats,” the ZNCC added.
In his announcement, Mnangagwa said government was convinced that the recent exchange rate movements were being driven by negative sentiments.
But ZNCC said government’s financing model for on-going programmes and developmental projects were driving the rapid depreciation in the local currency.
Government has been using short-term financing mechanisms to finance the emergency road rehabilitation programme, construction of dams and funding critical programmes.
On foreign currency withdrawal levy, the ZNCC said the policy signifies that the “government is currently seized with revenue collection as opposed to creating an enabling environment for business to bloom.” -Newsday