How do we put this right? Firstly, there has to be a commitment to eliminating the worst forms of corruption in our society from the very top. If the President and his Cabinet do not exhibit such a commitment in lifestyle and in practice, then little can be done except vote in the next election, if that means anything.
Secondly, we have to go after the wealth created by corrupt practices – a good example is the action taken at Zinara where an audit report has resulted in the State going after the assets of the CEO who cannot explain where it all came from.
Go after the money, that was the advice to Africa by the Anti-Corruption Chief in Kenya. This will quickly send a message to key players and the exit gates at our airports will soon see some significant departures.
Ask a number of former and current Cabinet Ministers where their wealth came from? Ask them in open Court in front of a senior Judge and the private sector players should not be excluded.
But the real answer, which would be fast and efficient with immediate benefits would be just reintroduce a real market economy – across the board.
For example, if we introduced a few simple rules to the Interbank Market for foreign currency and created a real, transparent, open market operated by the Banks under supervision and insisted that all foreign currency transactions in the formal sector go through that process, I can assure you that the market would establish itself as the determinant of the value of local currencies in all other currencies – just as it does in every other economy in the World.
The consequence, would be that the real market determined rate would fall rapidly to where it should be – 3 or 4 to 1 for the US dollar. Many people will laugh at that assertion – just as they did when I said at a Conference of our Accounting Profession where I said that the Bond Note was the strongest currency in the region. Even now it is trading freely at 5 to 1.
The economic fundamentals, do not in any way, support an exchange rate of 7 or 8 to 1. Last year when the Minister of Finance delinked the local currencies from the US dollar and exposed the myth that we were at 1 to 1, the result was a collapse to 7 to 1 with a quick recovery to 2,8 and 3 to 1.
What is happening right now, in the absence of a real Interbank Market, which people can respect and trust, is that the majority of trades are behind closed doors among people who want the rate to run because they are making so much money from the process.
Even the Banks are involved, exporters and the Diaspora love it because they are making money hand over fist. The only people who suffer are those who face the markets and must pay huge premiums on goods and services because no one knows where the exchange rate is going and everyone expects it to continue to climb.
So simple – we do not need an IMF bailout, we do not need a savior in the form of another Government who will give us hard currency which the thieves in our midst will simply steal, we just need a real open market, run properly. We could do that on Monday and on Tuesday we would be in a different country.
Then we need to open up the market for fuel and basic foods. Let anyone who wants to import and sell anything go to the Interbank Market, buy the foreign exchange they need and import fuel and sell it on the open market.
The fuel and food markets are highly competitive and the resulting free markets, with a stable and real exchange rate, would quickly bring about free supply at real prices. Queues would vanish in a few days and the cartels would collapse.
Then the President himself, should call a National Indaba to decide what to do about wages and salaries so that our people can live again.
Eddie Cross
Harare, 1st June 2019
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