In a town hall meeting titled “Road to Davos” held at the Celebration Centre in Borrowdale, the Finance Minister Mthuli Ncube said the Zimbabwean dollar will return this year. The meeting was an interface between the minister and youth citizenry to open up dialogue. Helping people understand the rationale behind government policy and the importance of Davos to us as a nation. In the meeting he was asked many pertinent questions and when the currency question came up he said we will see the return of the Zimbabwean dollar within months, without specifying how many.
Mthuli Ncube was tasked with various questions on many of the policies including the issues of currency, foreign currency tax payments, the 2% tax and macroeconomic policy. He gave some bizarre answers to some questions, claiming the 2% tax is a wonderful tax. He further went on to qualify that people don’t dislike the tax but are concerned with the use of the tax revenue. While continuing to sing the praises of his current policies as we have become accustomed to, he attempted to explain the rationale behind some of the policies and decisions we have seen.
In his view austerity is not a long term goal but something that only needs to be done for a year or so. Stating that within a year austerity measures would not be required. In principle this was a strange thing to say as we have been moaning over government expenditure for years. The current government debt levels surely point to a need to not only employ austerity measures but to engrave them in our very DNA.
He went on to bolster his claim about the concern over use of the 2% tax by saying the intention of the 2% tax is to put money into the government coffers to be used for critical needs such as ambulances. He cited the failure of ZIMRA to collect tax revenue as the rationale behind implementing the tax. This is another one of those answers that leaves you wondering why the ordinary citizen is tasked too make up for what business has failed to remit in tax. Of course businesses are run by people but the move does have the effect of punishing the many for the faults of the few.
The elephant in the room
When asked about the steps towards currency reform the minister proclaimed that currency reform started with FCA separation, which he says was an essential first step in reform. He dismissed the ideas of re-dollarising or adopting the South African Rand saying they are not currency reform but rather capitulation. Stating firmly that currency reform is introducing our own currency. When further pressed to give people an idea of what is to come he responded that the introduction of our own currency would happen within months, less than 12 months. He however was not forthcoming with details of the process and progress towards raising the foreign currency reserves required when asked.
Now the minister is known for making bold pronouncements. He is definitely not one to speak softly. He did after all proffer three possible solutions to our currency problems and said those problems will be sorted out in 2018. Yet here we are. The minister is prone to missteps in his desire to present an image of candor. So perhaps we should not rush into panic mode immediately. He also spoke of getting the right fundamentals in place in order to favor a stable local currency. This is prudent in theory and we would love to see more support on the ground for such measures.
A different view
Ncube also made a statement that we have perhaps needed to hear for quite some time now. Answering a question on the issue of availability of funding for youth entrepreneurs he responded by saying that domestic capital is adequate for some of our greatest needs. “Sometimes we spend a lot of time going abroad to seek foreign direct investment for some infrastructure it’s not necessary. Domestic capital is adequate”. Rightly so. It’s high time we look at domestic capital as money just as we look at foreign capital.
Various important issues were discussed but undoubtedly the return to a local currency within months is the highlight. The process itself was not touched on, so many questions come up as a result. Perhaps it is shrewdness that prevented the minister from going into detail, time will tell. Are we ready for a local currency? Well according to the minister we will find out sooner rather than later.