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Thursday, July 18, 2024

RBZ governor interacts with Gweru business community on ZIG currency

Story by Tafara Chikumira

THE Gweru business community has highlight the need for monetary authorities to build confidence around the new ZiG currency for sustainability.

Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Mushayavanhu and his team have taken the Monetary Policy Statement and Structured Currency review to the Midlands capital of Gweru, where they interfaced with the business community and other critical stakeholders, with a view to iron out some misconceptions around the new ZIG currency and ultimately create an environment for its acceptancy.

In a no holds barred interface, the business community did no waste time to seek answers on pertinent questions around the new currency.

“What is critical with this currency is actually the issue around confidence. Our past experiences have seen that when a policy statement is announced sometimes it is not backed by the reality on the ground. Right now the policy is that financial institutions should lend at 20 percent interest rates. How will this be sustainable when the country’s year on year inflation is hovering around 50 percent. Are we not likely to experience the past where these policies will only work for a few months and we end up having a recycle of the same problems,?” asked ZNCC past president, Mr Trust Chikohora.

Bata Shoe Company regional manager, Mr Simon Mutisiya said, “Mine from a business perspective is around the issue of financial inclusivity. I understand that 70 percent of the business is informal. We need to harness this and include them in insurance and banking sector for the economy to function. They also need to be part of the taxed businesses for the 50 percent quarterly tax in ZIG to be meaningful. The reality is that working capital is drying up. My concern is also on the bids won before the monetary statement was made. We also need to work around Import substitution for business to remain in the game.”

The farming community also spoke on the pricing model of inputs as well as the issues to do transacting with foreign markets.

“Our major worry is that as farmers, most of our inputs are priced in US dollars. With the volatility of the market, we can’t then manage to retain profits when we are expected to sell in the local currency. ZIG should be able to buy fuel and inputs. We also do business with export market and yet transacting with such markets is a hustle,” said farmers representative, Mrs Matilda Manhambo.

The Central Bank Chief, allayed fears around the ZIG currency misconceptions, highlighting how the new currency will soon become the mode of transaction of choice as businesses will be in need of the local currency by mid-year.

Upsound: (Contrary to the notion that there were no consultations made prior to the monetary statement, I can assure you that the gold backed currency idea actually came from CZI. We have been having a series of consultations ever since the appointing authority offered me this post last year in September. The Reserve Bank’s independence is clear in terms of the Reserve Bank Act. Market determined exchange rate- as far back as January and I said we cannot fight the parallel market so we let the exchange rate float. Rates went up but started going down as market forces got into play.

“We want the market forces to determine the rate. As a central bank we will be watching. ZIG has since strengthened and as such we will be watching in the background. We will be watching and if the rate is too low we go and buy and if it’s too high we sell. So we will be participating in the game. By June this year business will be tasked to pay 50 percent in taxes. Thus when you will see how strong ZIG is. What they are doing now is to buy your ZIG so they can resell it in June when we ask for 50 percent for taxes to be paid in ZIG. What they are doing now is to buy your zig at cheap rates and resell when the time is ripe. So my advice is keep your ZIG and your time to shine is around the corner,” said the Governor of the RBZ, Dr John Mushayavanhu.

The Zimbabwe Gold backed currency, which was introduced to the market last week, is viewed as the answer to the country’s currency volatility that was experienced in the past as gold continues to firm in prices on the international market.

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