Fuel queues in Zimbabwe, which have become the order of the day for the past six months or so, can disappear in 48 hours if the government takes the Reserve Bank of Zimbabwe out of the foreign currency market and allows the market to operate freely, one of President Emmerson Mnangagwa’s advisors Eddie Cross says.
The former Movement for Democratic Change policy advisor says the price would go up but the process of price formulation would be transparent and highly competitive.
“What we have now is totally corrupt, massively expensive and unable to meet demand – sometimes deliberately, to force the authorities to allocate scarce foreign exchange at a subsidised price. Fuel scarcity is the consequence and it is totally destructive, bring it into free supply and people will sort out their own priorities,” he said.
Cross said Zimbabwe did this before.
“In February 2009 we lifted all restrictions on trade and finance – in 15 minutes we became the freest economy in Africa,” he wrote on his blog.
“After 8 years of severe shortages of fuel, during which we had to buy fuel from the informal sector or our neighbours, not a single fuel filing station had any fuel in the country, in 10 day’s fuel was in free supply at a world market related price.
“How did that happen? Who waved the magic wand? The answer, nobody, we just allowed the market to take over, allocate a scarce resource (foreign exchange) and get the product into the market. Simple.”
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In the past month we have seen the ceremonies that are involved in the appointment of a new Emperor in Japan and a new King in Thailand. What a rigmarole! Apart from the religious angle – which I think is not to be taken seriously, I was fascinated at how much residual political power these two men have in their modern societies.
I have long admired the role of the American General, MacArthur, at the end of the Second World War when he ruled Japan and started to put it back on its feet. He deliberately and against a lot of advice, gave the Emperor dignity and space. He insisted that American troops get the same food rations as the Japanese and in so doing earned the respect and cooperation of the Japanese in the reconstruction process. To a very large extent modern Japan – now the one of the biggest economic players in the World, are the product of his post war leadership.
Mulling over the complete shambles here, I pondered what I would do if I held a role similar to the King and the Emperor in Zimbabwe. What issues would I take up with the democratic structures operating under my authority or dictate?
I think the first thing I would do is to fire everyone responsible for the present shambles in the fuel market. There really is no excuse for this – calling in the police and the army to supervise fuel queues is not a solution. There is absolutely no reason why fuel (as well as any other essential commodity) should not be in free supply.
In February 2009 we lifted all restrictions on trade and finance – in 15 minutes we became the freest economy in Africa. After 8 years of severe shortages of fuel, during which we had to buy fuel from the informal sector or our neighbours, not a single fuel filing station had any fuel in the country, in 10 day’s fuel was in free supply at a world market related price. How did that happen? Who waved the magic wand? The answer, nobody, we just allowed the market to take over, allocate a scarce resource (foreign exchange) and get the product into the market. Simple.
The solution today is just the same – take the Reserve Bank out of the market for foreign exchange altogether, allow the market to source and supply the local demand at a market established price – no dictates on price from ZERA and I can assure you, fuel queues would vanish in 48 hours. We would pay more, but the process of price formulation would be transparent and highly competitive. What we have now is totally corrupt, massively expensive and unable to meet demand – sometimes deliberately, to force the authorities to allocate scarce foreign exchange at a subsidised price. Fuel scarcity is the consequence and it is totally destructive, bring it into free supply and people will sort out their own priorities.
Continued next page
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