Almot Maqolo, Staff Writer 
AMID visible vexation among senior government officials about the state of the country’s economy, business leaders want authorities to ramp up their recent prudent policy interventions.
At the same time, a visiting economic expert from Kenya has added his voice to the growing chorus of sentiments calling for broader use of the under pressure Zimbabwe dollar in local transactions.
These views emerged at the well-attended annual congress of the Zimbabwe National Chamber of Commerce (ZNCC), which was held in the resort town of Victoria Falls last week.
Mike Kamungeremu, ZNCC president
Both in their discussions and in interviews with The Financial Gazette, the gathered business leaders urged the government to keep pushing for lasting solutions to Zimbabwe’s current economic challenges, including the local currency volatility.
These sentiments came in the wake of the recent introduction of widely-welcomed new policy measures by authorities, in response to the Zim dollar’s worrying slide against major currencies over the past few months.
ZNCC president, Mike Kamungeremu, was among those who said the relative stability witnessed within the economy over the past few weeks would not last if the government did not do more to address all issues.
“I have had some people, for example, who got in touch with me alleging that they had not been paid their monies that they were owed by the government.
“Some of these people are exporters and they are saying that they have not yet received their proceeds for surrender requirements. “That leads some to doubt whether stability can be maintained going forward, because it’s more like we are stepping on a landmine … the day that we remove our foot it may explode.
“So, we urge the authorities to take all the necessary steps, including those that we have been recommending,” Kamungeremu said.
Economist and former member of the Reserve Bank of Zimbabwe’s (RBZ) monetary policy committee, Eddie Cross, said one of the country’s fundamental problems remained money supply.
He expressed fears that the apex bank had been liquidating the 25 percent of all export earnings using “printed money”.
“They were also buying gold and printing money to pay for that, and the growth in money supply of about 500 percent in the last 12 months is the primary cause of the instability we have seen.
“The radical measures taken by the government in the last few weeks have largely corrected that,” Cross added.
The former opposition kingpin also observed that the country had become a “dumping ground” for regional products.
“Our local companies cannot compete. The elephant in the room today is the threatening demise of the formal sector and if you do not know that, you have not done a walk around.
Eddie Cross Cross is a former member of Parliament and a member of the RBZ’s Monetary Policy Committee.
“We recently walked from Kaguvi Street to one of the main branches of OK Zimbabwe. I am telling you, the contrast was stunning. There was no activity.
“And the prices in OK Zimbabwe were on average substantially higher than those in the informal sector.
“We cannot get on top of this until the Zimbabwe dollar is our basic means of exchange,” Cross warned.
The central bank’s director for economic research, Nebson Mupunga, said the Zim dollar would continue to gain against major currencies.
“We have identified the challenges that were driving some of the instabilities that we witnessed in the recent past. Some of them indicated that they had to do with money supply.
“The only thing that was injecting money supply was that portion of the surrender requirements that was going towards extinguishing the foreign currency liabilities of the central bank.
“Those have now been taken over by the government. So, we hope that going forward the injection will be moderate, and only to cater for the growth of the economy and the expected inflation so that the economy will be able to transact smoothly,” Mupunga added.
Victor Bhoroma, an economic analyst, said it was imperative that binding reforms were instituted at the central bank so that the economy could operate with one stable currency.
“Without it, the formal sector will play second fiddle to informal operators due to various pieces of legislation that compel formal players to index prices using the formal exchange rate.
“Similarly, there is a lack of an efficient foreign exchange mechanism for funding business operations.
“Lastly, selling in a depreciating currency in a hyper-inflationary economy makes it impossible to plan or invest in the market.
“It is a nightmare for formal businesses to operate within the gray lines of the law and the realities on the ground in the market,” Bhoroma said.
Economist Yona Banda said it would be difficult to sustainably achieve the country’s developmental goals without stabilising the currency situation.
“Formal industry requires the commitment of long-term capital, and the high currency risk and unpredictable monetary policy environment make it difficult for such investments to happen,” he said.
Another economist, Tarisai Pardon, said currency challenges could shut down the formal sector and also have a negative impact on economic growth and job creation.
“Some of the effects include increased business uncertainty and reduced projects by the private sector due to high operating costs and inflation.
“It is, therefore, important for the government of Zimbabwe to take steps to stabilise our currency and reduce the risk of currency conundrums,” he added.
Yet another economist, Prosper Chitambara, noted that macro-economic stability was a necessary factor and ingredient for all economic and business activity.
“The more there is currency volatility and depreciation, the greater the uncertainties in the economy, and the greater the likelihood that a number of businesses could fold and end up going underground.
“So, business activity and economic activities thrive in an environment where there is stability, certainty and consistency in terms of the implementation of policies.
“I think that helps to enhance confidence within the economy. So, we need to bring the macro-economic situation under control and be able to sustain that as a way of incentivising the formal sector business activities,” Chitambara said.
Meanwhile, the chairman of the Nairobi Securities Exchange, Kiprono Kittony, told The Financial Gazette that it was ideal that the Zim dollar was the preferred currency of use in local transactions.
“The monetary policy experts, I am sure, will come up with a way to have a local currency that … has the confidence of business people and the general public,” he said.
This comes as authorities are stepping up their efforts to promote the use of the domestic unit to regain control over monetary policy and avoid the country’s over-reliance on foreign currencies.
