This leaves us with the real economy – where goods are exchanged for hard US$ cash; and in some instances for the Rand when dealing in consumer goods from South Africa (even though the story is that South African traders also prefer to be paid using the US$). It is estimated that the real economy – which is citizen-managed – is worth about US$7 billion; and this can only grow if remittances, money withdrawn from the banks, and incomes from unofficial trading all flow into this economy.
It is unrealistic to expect a shrinking official economy (driven by the dwindling bank deposits of US$4 billion) to match or even overtake a growing citizens economy of US$7 billion). Any resistance to or rejection of the bond note by the market risks it going the way of the Z$ in 2008, and would put bank deposits at risk of becoming unusable – and put the official economy at risk.
In the short-term, the “pre-May 4 situation” can be restored by policy measures, but a “future scenario” would have to wait until production in the economy, local investor confidence, and an enabling business environment are restored.
While waiting for the restoration of these economic production measures, the continued integration of citizens’ economy into the regional and global economy is likely to continue. This is likely to push more Zimbabweans into the international labour and trade markets to earn the required hard currency incomes.
The idea of a predictable six-step cause-and-effect approach to policy making should give the policy implementer a chance to make adjustments if by step 3 the policy is not working; or to even consider abandoning or radically altering it if poor performance persists by step 4.
With the policies of 4 May 2016, I would say we are at step 2 and the results are mixed. The next step will be critical and I am not sure what predictions policy-makers made during the period they formulated the policy.- The Source
By Mungai N. Lenneiye- Lenneiye is founder of Udugu Institute, whose goal is to promote innovative operational research for Africa’s development.
(481 VIEWS)
