RBZ’s Monetary Policy for the Haves-not-the-Havenots’

Takura Zhangazha

By Takura Zhangazha*

In Zimbabwean writer Shimmer Chinodya’s Harvest of Thorns novel, there is a description of the main character’s father, Mr. Tichafa, as probably having been the best minister of finance that Rhodesia probably never had.  This was because he (the father) was running the family on a minimum wage budget with what his son considered amazing resourcefulness.

Some years after high school we would laugh in conversation about comparing contemporary and even past finance ministers with Mr. Tichafa.  Even if from a point of ignorance of how national and global capitalism operates.  Or how hapless most actual minsters of finance would be.  Even if they were trying hard.

I thought of this as I read the Reserve Bank of Zimbabwe’s (RBZ) new monetary policy this week.  It was a policy geared to fit into the overall government’s free market economic policy (open for business).  Also now referred known as neo-liberalism.  Hence emphasis as expected was on ‘ring-fencing’ or guaranteeing (nostro) foreign currency accounts (FCAs) protection from what it eventually turns out is our own version of a currency, the bond note.  Or the Real Time Gross Settlement (RTGS).

There were other announcements concerning taxes and other requirement’s of banks and their users.

But that on FCAs and RTGS is perhaps the most significant in so far as they both affect a greater majority of Zimbabweans.  This is because the quest for the US$ is a national pre-occupation.

And it is deemed to give the greatest net value to transactions or property by many Zimbabweans.  Not least because of a lack of trust in any local currency introduced by this or any other government.  In fact, political parties have generally avoided promising to remove the US$ as the currency of exchange.

So the move was going to cause anxiety and panic. Especially in urban areas of the country that have had a thriving parallel currency exchange market. And also because of a patent lack of trust in the government and the Reserve Bank to retain the value of money in its bond note or RTGS form.

But the Reserve Bank has taken the risk on the backdrop of not public trust but more confidence that the ‘market’ will set itself right.  Or at least with a reliance that Mnangagwa’s government’s policies are enough to revive investor confidence and loans/guarantees of support from global financial institutions (IMF, AfDB, World Bank).  As long as there is a strong guarantee of the protection of investments,  and private property or actual FCAs.

This is therefore a monetary policy for the haves not the have-nots.  With the assumption of a trickle down effect to those that are already poor.  And as is, the cost of living will invariably rise for those that cannot access the US$. Or it will at least have a (informal for now) multi-tier commodity costing system (i.e a price in US$, bond/RTGS/other).  A development that will point to the fact that the majority of people who do not have access to the US$ will be living more expensive lives in relation to costs.  Or they will simply not be able to afford basic commodities due to their serious disadvantages over the ‘rating’ processes which at any given point are ‘fickle’.

But as is the tradition of neoliberalism, it will bring out its intellectual and practitioner guns to defend the move as being the only rational way forward.  True to fashion they will pretend free market economics never created this problem and offer the same neoliberalism as the only means to solve it.

What is clearer now is that this government is well aware of the desperation of many Zimbabweans for want of some sort of economic normalcy.  And it has decided to sun a people centered approach to economic policy in favour of private international capital.  A process that will mean if push comes to shove it may decide to ensure it gets its way through greater political control of dissent in order to achieve its stated objectives.

Others may ask what the alternatives are and the answer can only be that stable societies are democratic in relation to both their politics as well as their economic policies.  That is, they guarantee not just political rights but also socio-economic justice and fairness for the majority of their citizens.  With or without the United States dollar.

*Takura Zhangazha writes here in his personal capacity (takura-zhangazha.blogspot.com)

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