Finance Minister Mthuli Ncube made it abundantly clear that ZESA should not embark on a tariff increase. He uttered these words while presenting reports and answering questions from the parliamentary portfolio committee on Budget and Public Accounts. At the same event, the permanent secretary in the ministry of Finance George Guvamatanga stated that the government has no desire to raid foreign currency accounts as it has done in the past then went on to speak in detail about how the money in the Nostro accounts was adequate to create a viable interbank market.
The minister’s argument is hinged on the inflationary effect a tariff hike would have on the country. This is undeniable, as power is an essential component for many industries and businesses. However, this must be appropriately juxtaposed with the effect of the current load shedding which has left many industries in trouble. Spare a thought for the home industries operating in this troubled economy. This cost may be greater than we can imagine.
The minister, of course, is engaged in his losing battle with inflation. With 9 months in office in the name of the new dispensation, the minister has precious little to show for his term. Inflation is a runaway horse at this point, the interbank market rate is set to double its opening rate any day now (a mere four months after introduction) and the economy is set to shrink.
The price of electricity is problematic. ZESA has been on a quest for a tariff hike for quite some time now. The conundrum here is do you prefer the cheaper unavailable electricity or more expensive available electricity? In theory at least. Bear in mind that we were once lead to believe that prepaid electricity meters would solve all of ZESA’s problems. We may well have a tariff hike and continue with load shedding as ZESA has a US$80 million debt preventing us from importing while generation at Kariba is down due to low water levels. Demand management has proved to be a futile task if we cannot guarantee adequate supply. The same tactic met a similar fate to the fuel situation.
George Guvamatanga has of late spoken about the balances held in post-October Nostro foreign currency accounts in great detail. He highlighted how much money was sitting in these accounts but was not coming to the market for what he called “unknown reasons”. On this occasion, he spoke bluntly and acknowledged that the most important part of a liberal interbank market was a willing seller and we simply didn’t have those because of the price being offered.
His mention of these accounts and the holdings in them in great detail has air covetousness. This has lead observers and commentators to advise people to remove their money held in Nostro accounts as soon as possible or risk a repeat of foreign currency raids of the past. There is a feeling of entitlement to people’s private foreign currency holdings.