A case of history repeating itself

When a hyena wants to eat its children, it first accuses them of smelling like goats, so says a famous African proverb.

This gives a false pretext to attack under the illusion that it was inevitable and desirable.

The proverb came to light recently when the government accused businesses of sabotage by inflating prices and forcing customers to buy solely in United States dollars despite the economy using a dual currency regime in which the Zimbabwe dollar is also a legal tender.

Business stands accused of hiding point of sale machines to force customers to buy in United States dollars. Critics say the sector is not dabbling in politics in the run up to the harmonised elections coming in the second half of the year.

The bone of contention is the pricing in formal shops against what is happening in the informal sector. Manufacturers are accused of only supplying in the informal sector thereby starving the formal set ups.

Manufacturers have a choice either to supply to established retailers and get paid after 30 days in local currency or supply to tuckshops and get instant payment.

Any rational business will choose the latter. They are in business to make a profit and are not charities.

The elephant in the room has been the exchange rate, which the government has failed to address.

The local currency has lost its function as a store of value. No one trusts it anymore with 70% of transactions now in the greenback.

The local currency is overvalued on the foreign currency auction system against the alternative market, which is widely used in transactions.

The saboteurs are not in business but in government offices. Who paid local contractors in local currency which saw them buying foreign currency on the parallel market leading to the depreciation of the local currency? It is the government.

Who has maintained an overvalued exchange rate, which has fuelled arbitrage opportunities? It is the government.

Who has fiddled with a Dutch auction system, which stipulates that the highest bidder wins and comes up with a Zimbabwean version of an auction, which uses a weighted average?

It is the government.

Who put punitive interest rates under the guise of halting speculative lending thereby seeing a shift to US$ loans and in the process accelerating dollarisation? It is the government.

It has been one boob after another by the government. When cornered, the government finds a willing punching bag in business with hawks girding their loins and ready to pounce.

The attacks on the business sector will be amplified as elections beckon.

It is going to be a long winter for business.

History has some lessons on the government’s previous fights with the business where it came out battered and bruised. The then President Robert Mugabe’s administration came up with price controls, which left shelves empty laying the foundation for the dollarisation of the economy in 2009.

The current administration would not want to go on a similar destructive path.


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