ZimDollar Return Plausible

February 2015 marks six years since we have adopted the muliti-currency system in Zimbabwe. The move was intended to curtail the hyperinflationary forces and the liquidity crisis that have haunted Zimbabwe for more than a decade. It's only four years remaining and we are about to close another decade without any substantial economic gains since we adopted the dollarization system. The much hyped 2011 11.9% GDP growth was not as enormous as it sounded in actual fact. For the record double digit economic growth is celebrated worldwide but in our case maybe we forgot we were counting from zero, and counting from zero any number can translate to bigger percentages. We were oblived to believe the economy was back on track, but the truth is the economy will only be back on track if we find the courage to reintroduce the Zimdollar (Period).

We can not deny that dollarization brought about some positive changes to the economy. Major gains were the ability to buttress the macroeconomic environment. Inflation has been reduced and at some instances in 2014 we went through negative inflation (Deflation). I have mastered the relationship between Inflation and Interest rates in my previous studies and experience and I have been surprised by the way interest rates became adamant to changes in Inflation in 2014. The forces of demand and supply are no longer applicable in Zimbabwe as a matter of fact, of which a market is a sphere in which those two forces takes influence for every good, commodity or service. You can not talk of a market without such forces.

The most insinuating thing is that the economy is on a free fall and it does not take the eyes of a rocket scientist to confirm that. In the news everyday and in social interactions you can tell no single person is even happy with the way our economy is perfoming and also no one would tell were we are heading with the mediocristy created over the years. It has come to my attention that, It's not like the government does not want to solve the economic crisis but they are faced with such an enormous and complex challenge that takes not reading the books or taking example from others but getting down with reality to be solved.

Of note, one thing that the Dollarization of the economy has succeeded is to make Zimbabwe a defunct market guided by survival principles instead of market principles. It has become very hard in such a market to instigate market growth or else to guide the market to expand or contract in quest of growth. Clearly in the process we have surrendered our powers as a country to have a say in our economic functionalities. We have been reduced to optimists and persimists in as far as our future is concerned and hope is our last line of defence. But for how long should we go both the government and the governed citing hope as that which will take us to better days.

Unless we return to the Zimdollar our economy is doomed.

Why has it become difficult to reintroduce the Zimdollar when it is the only solution to Zimbabwean woes

Zimdollar is the only solution and i repeat, but as long as the situation is handled by politicians we will never live to see it coming back mainly because the masses have some snake bite effect with it. politicians guns for the hearts of the populace so that they may be voted into power by the same people. So as a matter of fact confronted with a situation they would take a bad decision if it is in favour of the people and at the expense of the same people and generations to come just because those people had no knowledge how the other side of the story they have pressumed to be bad was going to solve the situation. We are taking advice from the wrong people on this matter. Why the hell should you be found in the street asking a grade seven dropout if they want Zimdollar back and because they have seen the dark side of it definitely they will say no. For the record if you are a politician and 99% of the people say no to Zimdollar you will definitely say no with them so that they will vote for you.

Therefore, once we find a way of separating politics and economics I am very sure an economic turnarround will be plausible. If this means offloading the monetary functionality from the RBZ and create an independent Economic Intelligence Unit to solve the situation then it is woryh considering to do it.

The only loud arguement I have heard so far on why not to reintroduce Zimdollar is people are afraid of the inflation and lose of value in the currency but I am sure even if this can be solved people will still hate it.

If you have any economic view on why we shall not bring Zimdollar back please I am very much available to hear your views and discuss on how best to handle the situation because I believe the is a solution to every situation.

Let's discuss
Twitter: @FrancChinjekure
Email: Fchinjex@gmail.com

The Love for My Country Zimbabwe & The Imaginations of it being an Economic Haven

The reason why the economy of Zimbabwe has stagnated in growth for the past few years after a boom in the years 2010-2012 is that the ugly forces of market liquidity crisis are now sprouting into life. The signs of the problems have been seen and ignored because of the much hyped boom which peeked at 11.9% growth in GDP recorded in 2012. Since then the country had an unprecedented fall in GDP beyond expectations of the government forcing the government to adjust their growth estimates not less than 2 times in 2013. The adjustments clearly have shown that we have been caught unaware in the midst of hyped but not worth a hype moment. 

The reason why 2010 has been a good year in our economy's history was because we had adopted multi-currency regime in the previous year. The decision was a good one in stabilising the once volatile monetary regime and the gain in GDP over the years was just a manifestation of the stability that has been brought henceforth. As an Analyst and economic instigator those years in which our GDP recorded some highs are the years I believe we have mishandled things to bring about some of the economic misharps we are experiencing in this day. We lost it in our own senses to believe that we had found a solution to the liquidity crisis of which we only had make the situation stable. Therefore, the growth gained as evidenced by the increase in GDP was just a stabilization gesture of which real growth was to be expected from 2013 going forwad if and only if we had strategized and planned for it.

Seriously, we have a very serious problem that is life threatening to the economy and is rearing ugly in our watch. We have a serious liquidity problem in Zimbabwe and if we don't find a solution today trust me we are doomed. In 2012 I made very similar calls in one of my articles( http://www.herald.co.zw/insight-into-zims-multiple-currency-liquidity-crunch/ ) and maybe it fell on deaf ears and in this day I am repeating the same calls due to the continous fall in our GDP levels and the distastefull environment our economy and industry are in. 

Some of the manifestations of the Ugly Liquidity Crunch

• Companies are downtooling and closing down
• Corporates are downsizing and retrenching
• Unemployment rates are ever-increasing
• The economy is on a freefall
• Capacity utilization continues to fall
• High interest rates and short term loans
• Emerging of non-perfoming loans
• Short tenor mortgage loans
• Depressed GDP values
• Falling living standards
• Poor service delivery
• Industrial output very depressed
• Non-payment of employees
• Disinvestment
• Property auctioning to repay debts
• Borrowing to repay debts or to pay employees

The bigger question is then, Shall we continously look on as the situation gets out of hand and maybe expect black magic to solve the problem

It seems the government is now waking to try and contain the situation, but let me hasten to say Bond coins are only a drop in the ocean and they will solve the Liquidity crisis maybe by 0.001%. 

Here are some of my suggested solutions to the problem

We need to separate economics from politics

 I have read some of the economic blueprints penned used by our policy-makers on issues related to the economy and I failed to fall in love with any of them because they sounded more like political blueprints instead. Unless we put a separation in those and chose a progressive way instead of populist ways then we will never get it with the economy. Zimbabwe needs a urgently an economic think tank dedicated to solving economic issues without political influence and affiliation.

Creating a new economy

 It is a fact that many of the companies that have not closed doors yet are operating in the negative with just a few being able to make profits in their operations. Trying to restore most of them in this cash strapped environment will take a light of years to accomplish. Take for example the government that is struggling to pay it's workers faced with a challenge to revitalize a company that has made a US$1 million loss in the previous year, had not paid salaries for the past six months, has a gearing of 2:1.7 and the company's management is further being investigated for a clandestine of fraud and that requires hiring some of the most expensive auditing companies. In that situation what would you chose given the other option of supporting entrepreneurs who have some small viable business to enhance their growth so that maybe at some point in time in the future they would buy the struggling company and revitalise it. 

Securitization of Resources

 Kinda lame a suggestion is to securitize our mineral resources. It's quite lame because we need first to establish our resource base to do that and it requires a lot of time and money. The most immediate action is the long overdue securitization of unpaid dues and to be paid dues to ZESA and also the securitization of non-perfoming loans which has been on the cards for quite a long time now. Prepaid meters for ZINWA are very necessary and provides more avenues for securitization. However, for such to be attained there is need to bring new and vibrant skills in those and all other organisations.

Identity

There is also need to restore our identity as a nation that has a culture and a strong standing for itself. A nation full of love, undivided and with a vision. We have to reclaim our status and be supportive of each other. We should at least buy Zimbabwean made products and support each other on this cause.

Restoration of Law and Order

There is need to make it a punishable crime for private and public office handlers to break codes of conduct or ethical behaviours within companies especially to churn out corruption and other corporate governance issues affecting the industry.

Finally,,,

Liquidity Crisis 

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We need to find a solution here.