Barring the temporary easing of restrictions due to the COVID-19 outbreak, the Zimbabwean government has developed a complicated set of regulations, fraught with confusion, concerning foreign currencies and their use in the country. We went from using what was often described as a basket of currencies to using what some are still reluctant to recognise as money at all. Supported by nothing but a brittle economy this “pseudo-currency” has difficulty maintaining its value in both formal and informal markets. This has resulted in both industries and ordinary people yearning for the return of foreign currencies as a medium of exchange.
The government has not done much to help its case—it has been introducing a series of exemptions from its own rules against trading in foreign currency, with some being more questionable than others. The bone of contention is which businesses (or individuals) are entitled to receive payment in forex. One of the simplest (but not the best thought out) arguments is the one usually offered to civil servants and others who used to agitate to receive payments in foreign currency, “You do not earn the country any foreign currency, where do you expect us to get it”.
This means that the only industries which the government has generally found worthy enough to receive foreign currency are the ones who do business directly with tourists, foreigners, or diasporans plus a few others who are part of the aforementioned questionable exemptions. Let us explore and critique the current wisdom, both public opinion and official, that dictates who is more deserving of foreign currency.
First a brief sports analogy
In several team sports (e.g soccer), players have pre-assigned roles or positions in the field. This means that some are more likely than others to score goals. However this does not mean that everyone else in the field automatically becomes less useful, these “attackers” still require the rest of their teams for them to do what they do best. This somewhat clumsy sports metaphor is meant to illustrate my argument that while not all businesses are at the “frontlines” of earning foreign currency for their country, those that do usually heavily depend on their products and services. It is, therefore, folly to suggest that these other companies are any less deserving of “real” money (if you choose to use companies’ role and involvement in bringing FX into the country as criteria). Let us explore just how a few other industries contribute, however indirectly, to the bringing in of foreign currency into their country.
We start with an industry that almost everyone nowadays can acknowledge the importance of, but which has at times in the recent past had much difficulty in obtaining much needed foreign currency. The same industries which were found more deserving of foreign currency depend very heavily on the telecommunication industry to the extent that service disruptions can severely impact their operations. However, since this is an industry which does not directly export its services, for the most part, they are forced to join the queue for foreign currency and patiently wait for their turn.
Teachers were one of the earliest groups of civil servants to demand that their pay be in United States Dollars after inflation did quick work of their salaries. They were quick to be served with the now-standard counterargument—how could they demand foreign currency which they did not earn the country any? To be fair, the public school system, which is manned by the majority of the teaching professionals in the country, is far from being profitable—however, this is by design. This is the same system that not only maintains our impressive literacy rate but has also made Zimbabwean nationals very employable in neighbouring countries and the world over. These expatriates contribute to one of our country’s biggest sources of foreign currency inflows: remittances. In addition to all this, it also provides local industry with an almost limitless pool of literate people for even the most menial of jobs—Zimbabwe has some of the most outlandish educational requirements for jobs as basic as cleaning. Despite all these contributions our preferred rules of foreign currency allocation will still find the employees of this system to be less deserving of foreign currency than gold panners.
The contribution to national wealth by health and social workers, like that of their peers from education, is always underestimated. This is a healthcare system which at the public level struggles to at least maintain a semblance of health among the countless numbers of low-income earners who work for those same industries that are supposed to eventually earn the country foreign currency. As currently being shown by the coronavirus outbreak—unchecked health disasters can topple down whole economies. It is only at a time like this that we are better placed to appreciate the role played by even a health system as crippled as ours to not only help ensure the health of our people but that of the economy as well.
Retailers and Wholesalers
Despite being arguably the biggest culprit in inflating the national import bill at the expense of local industries, the retail industry still contributes significantly to a nation’s GDP. Among other things, retailers and wholesalers provide a launchpad for local manufacturers. They are not only a proving ground for local brands; they also allow future exporters to establish a healthy home market before they tackle even more challenging foreign markets.
These are just a few of the indirect contributors to our country’s GDP. Other businesses contribute by providing goods and services which can reduce our dependence on imports. It is important to note that even the simple act of importing parts for local assembly reduces the cost of foreign labour which we would have been billed for. I leave you to wonder about all the convoluted ways in which you may be earning your country foreign currency.