Eddie Cross says Zimbabwe is not a failed State yet – just remove the Reserve Bank of Zimbabwe from the interbank market and prices will fall


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Former Movement for Democratic Change policy advisor Eddie Cross, who has become one of staunchest supporters of President Emmerson Mnangagwa’s economic reform programme, says Zimbabwe is not a failed State yet and it only has to address four issues to get things right: food, fuel, electricity and prices.

He says the issue of food can be solved by adopting the right policies that ensure productivity.

“In the USA 3 per cent of the population lives on farms, in Europe perhaps 5 per cent, in South Africa 70 per cent of all food is produced by 100 companies, in Zambia a small community of less than 1000 farmer’s make that country a net exporter on a large scale,” he says.

On fuel, Cross says the government must lift all controls. In 2009, acting Finance Minister Patrick Chinamasa did so and fuel was freely available in 10 days.

The same applies to electricity. Cross says the country needs new power stations and can also use solar power but tariffs must reflect current costs.

On prices, Cross says the Reserve Bank of Zimbabwe must get out of the currency market because it is mismanaging and manipulating the interbank market and the foreign exchange system as a whole.

He even argues that if the RBZ gets out of the equation, the exchange rate will appreciate and prices will fall.

“The ability of the private sector (or speculators) to make a margin, sometimes a massive margin, on simple currency deals every day is just too great at the moment and the only way to stop the practice is to enlist the market.

“We know how to do this – do we think we are the only country in the world that has had this problem, if we do we are stupid and I do not think that is the case.

“We must make it expensive to secure supplies of local currency by raising short term interest rates to a punitive level. We must make the official, interbank market for foreign exchange work so that the exchange rate in the Banks has credibility and when we want foreign currencies, we can buy them and remit them to clients and suppliers outside the country.

“We cannot do that if the Reserve Bank is allowed to unilaterally take foreign currency out of our bank accounts for their own use and replace it with local electronic currency at a false exchange rate.

“Make all banks sell the foreign exchange that is available on the interbank market every day and allow people to buy from the market through their banks what they need. The exchange rate will strengthen and prices will go down, automatically. Is that so difficult to understand and do?”

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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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