Ditch ZiG : CEOs

PHILLIMON MHLANGA AND LIVINGSTONE MARUFU

Government should ditch the local currency, the Zimbabwe Gold (ZiG, which is increasingly failing to hold its value, largely due to its unrelenting depreciation relative to all major currencies, hurting businesses more and more, Business leaders have said.

The fragibility of the currency is also threatening the viability of local companies.

The government is under severe pressure than ever to stabilize the economy, stop currency instability, and address a host of other issues that are hurting Zimbabwe’s economy.

The executives yesterday warned that their businesses are becoming unsustainable as a result of ZiG’s failure to preserve value amid claims it did not meet required fundamentals to be a sustainable currency.

The Government is also cracking down harder on companies that violate its regulations on exchange rate.

Additionally, the administration has also threatened to revoke the licenses of offending businesses.

The value of ZiG fell by more than 40% to ZWG27.28 yesterday to the US dollar from ZWG13:US$1 in September of this year, demonstrating that currency distortions have continued despite measures put in place by the Government. ZiG is trading between ZWG40 and ZWG50: US$1 on the parallel market.

Yesterday, the business executives sounded the alarm describing the situation as untenable and dire.

They called for the removal of the ZiG from a basket currency in Zimbabwe.

“(As CEOs) we are calling for the immediate removal of the ZiG from the basket of currencies, allowing other currencies to trade until such time we stop arbitrage,” Oswell Binha, the chairman of CEO Africa Roundtable, said.

He added: “We sit here as decision makers superintending over a country that cannot manage its own currency. We have a lot of cycles of value erosion, and we continue doing this and expect a difference.

“We gather here amid scepticism about the ZiG due to the government’s history of printing (money). All we yearn for is for a currency that is capable of preserving value. Now we have the ZiG which is collapsing like a deck of cards

“Our authorities have proven beyond any reasonable doubt that they are incapable of managing our own currency instead the local currency has been a tool for arbitrage in the economy. It is not no longer benefiting us anymore to be formal, we are too small as the organised businesses to support the huge  informalisation sector burden that the government  is placing on us.”

Furthermore, Binha said, the corporate graveyard is expanding.

William Mandisodza, the CEO of the Institute of Chartered Accountants of Zimbabwe (ICAZ) concurred saying the economic crisis has gotten worse , largely due to the currency conundrum.

“I am going to speak on behalf of the accountants, any variation above 5% is material and talking of 40% currency depreciation is a crisis in accounting. We are in a crisis.

“Our role is to provide financial information or report economic transactions in a currency of choice.  If a person is measuring economic performance in ZiG  his or her results  up to August  1, 2024  are  over 40%, that’s a crisis in our (accountancy) profession.

“I also want economists and the public to honestly look at the operating landscape we have and remove  words like speculation and saboteurs.

When I am doing the work, I am employed to do and someone says I am speculating and I am a finance director to preserve the value of the shareholders, I will not take it lightly.

We are not speculators but preservers of value. For us we don’t use the inflation data for the past, but we use inflation expectation. We do this to replace the stock that I would have sold. If we use the past inflation, we will not be able to stock.”

Economist and banker, Nigel Chanakira, who is also the past president of Zimbabwe Economic Society, weighed in saying:  “What triggered what we are calling a crisis. We call it a crisis because we have a new currency that has features that promise us stability.We have a new governor who said bad policies will not be done under my watch.I gave him the benefit of the doubt.

“Only five months since the introduction, we have experienced a more than 40% devaluation of the ZiG. I think it’s astronomical,” Chanakira said.

He said the movement of the exchange rate on both markets is too much to suggest stability.

“Even with the statistics the central bank gave I’m not convinced to say it’s not a crisis,” he said.