Time for soul-searching for Mthuli Ncube

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BUSINESS TIMES EDITORIAL

FINANCE Minister Mthuli Ncube is next month expected to present the 2020 National Budget at a time Zimbabwe’s economy is in a topsy-turvy situation.

The Zim dollar this week crashed against the US dollar, a development that immediately ignited debate on the currency issue and the Structural Adjustment Programmes (SAPs)prescribed by international financial institutions.

For many, SAPs prescribed by the Bretton Woods institutions, have come at a cost to developing countries — they have to some extent been blamed for perpetuating the vicious cycle of poverty in these countries.

Zimbabwe, Zambia and Kenya are often cited as classic examples of how SAPs have failed in developing countries. As debate rages on whether developing countries should adopt wholesale prescriptions made by institutions such as the International Monetary Fund and the World Bank, the Zimbabwean authorities should come to the realisation that the current economic policy has not yielded the desired results. And there is need for a relook. Policy, whether domestic or foreign, should have a national buy-in.

The same cannot be said for austerity measures in Zimbabwe that have forced many to tighten their belts. Rising inflation, fuel prices, companies scaling down operations, and the general socio-political environment have made 2019 a difficult year. As we approach the last quarter, the bulk, if not most, of these challenges are still there squaring up against the economy.

The domestic currency has shed of 80% of its value in less than three months and this ordinarily would prompt the authorities to go back to the drawing board. Zimbabwe abandoned its own currency in 2009 to stem runaway inflation which had reached 231 million per cent. Over the last three years, Harare has been making frantic efforts to re-engage with the international community.

The removal of sanctions imposed by the United States has also taken centrestage in Zimbabwe’s foreign policy. Independent estimates indicate that annual inflation for the month of August surpassed 400% and this has rendered the business environment unstable. Domestic savings, which are key in any country’s development – and even more so for Zimbabwe which has no budgetary support and limited concessionary loans to stimulate growth – have been wiped out by inflation. Now the central bank is encouraging savings in hard currency — but there are few takers.

There is mistrust between the authorities and depositors. Yesteryear memories of the central bank raiding foreign currency accounts are still etched on the minds of many people. That narrative should change. The authorities should focus on confidence-building measures to restore the integrity of the financial intermediaries. As bureaucrats burn the midnight oil crafting the 2020 National Budget, more focus should be put on changing the business environment.