HomeEditorial CommentZW$50 incendiary if black market is alive

ZW$50 incendiary if black market is alive

THERE are four factors that have presented Zimbabwe’s last three central bank governors with headaches. Throughout the era of brutal headwinds and dreadful economic storms, money supply, amplified by mindless printing, hyperinflation, forex shortages and a powerful currency trade outside banks have been the highlights of several episodes of recessions that have rocked Zimbabwe, with bloody consequences.

Reserve Bank of Zimbabwe governor John Mangudya is well-placed to understand that Zimbabwe’s fragile economy can relapse into further decay if monetary policy fails to respond to these hurdles. This is why despite pressure from economic dynamics to inject fresh liquidity into the market, he has pursued a painful regime where banks run without cash to dispense to depositors.

But ad hoc policies are not sustainable. There comes a time when cash has to be released, no matter the consequences. This is what happened this week when the ZW$50 note (US58 cents) came through, with the RBZ promising to inject ZW$340 million (US$4 million) into the market.

But trouble comes when one realises that there are callous black market kingpins funded by the elite that are waiting for this injection before they pounce. Their role is to play dangerous games, spinning the money in the dark markets for selfish personal gain. In the end, they drive all-terrain flamboyant cars and luxuriate in mansions while victims of their actions struggle.

Backed by their friends in banks, black marketeers will suck the new cash injection out of banks into the streets. Parallel market rates will run amok and the new currency will turn into another curse.

Once these mindless people are left to rule the markets again, prices will rocket, and inflation, projected to drop to 55% this month, will spiral above the current rate of about 160%. A jittery currency means diminished spending power and drives the majority into poverty.

This is the challenge that faces the 500 000 people thrown out of jobs by the pandemic last year. It is impossible for an economy to grow when it is middle class has been decimated. The 7,4%, 2021 growth ambition will go up in smoke.

As the new notes are released, economic terrorism must be kept under check. Bricks of money that usually become a permanent feature at street corners once new notes come through must be avoided. Cash must be found inside banks. This can only succeed if Zimbabweans pulls in one direction.

What Zimbabweans see on the streets are proxies of heavyweights who can brazenly knock on banks and demand any amount before dabbling in black market activities. Their offices are known but nobody dares touch them. But they are not above the law. Authorities must move in full force to bust this evil market and get Zimbabwe working again.

Without action to combat market delinquency now, Zimbabwe could be making the baby steps towards relapsing into another damaging crisis. Getting back to the 500% billion percent inflation rate of 2008 may sound far-fetched but with cash injections coming through without action to instil discipline, Zimbabwe could be on track to break records again.

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