Business tycoon and politician Dr. James Makamba has come out strongly in support of Zimbabwe’s economic policies which have received praise in the just published IMF Zimbabwe Staff Report for the 2022 Article IV Consultation. The program is generally known as the Staff monitoring program.
He said the report reflects the positive policy intervention by the government of Zimbabwe as competently led by President Mnangagwa.
Dr. Makamba insists that the current stability and relative growth being experienced in the Zimbabwean economy is testimony to the commitment by President Mnangagwa to walk the talk towards the promised Vision 2030.
“When President Mnangagwa set the goals for the attainment of Vision 2030 as espoused under the NDS1 economic blueprint, he knew what was involved in the process to the attainment of that goal.
The President has delivered on his promise to stabilize the economy under TSP (Transitional Stabilisation Program), and subsequent economic growth that is being experienced today. The level of locally manufactured goods on supermarket shelves is a testimony of that remarkable progress,” said Dr. Makamba.
President Mnangagwa is on record pronouncing measures that his government was putting in effort to stabilize the local currency and make it the preferred currency for local transactions.
President Mnangagwa once said: “So, as we go forward, you shall begin to see the policies that my government will begin to put in place to make our currency strong and attractive. When one is holding the US dollar, one must be tormented and feel the urge to seek the Zimbabwean dollar. That’s the trajectory we are taking as a country.”
True to his word, the local currency is gaining bond value and is beginning to appreciate. The result has been a remarkable firming of the local unit on the previously plundering parallel forex market to the point of near convergence with official rates.
Dr. Makamba was particularly full of praise for some of the market instruments that were introduced by the Reserve Bank of Zimbabwe such as gold coins and the upward review of interest rates to the current 200 percent, which he said were instrumental in taming excessive money supply growth which had become the major driver of inflationary pressures on the economy.
“The upward review of the interest rate to 200 percent has the net effect of suffocating speculative and consumptive borrowing at the expense of productive borrowing. This trend, which had created an influx of the ZWL$ on the market, resulting in surplus local currency chasing very little hard currency, has largely been responsible for loss of value by the local unit,” said Dr. Makamba.
“The RBZ economic ingenuity can also be seen in the introduction of the Gold Coin as a secure investment vehicle. Where corporates and investment funds were stampeding for foreign currency as a store of value, these are now making a beeline to invest in a fungible instrument in form of gold coins. The gold coin has sucked liquidity from chasing foreign currency towards a more secure non-inflationary instrument,” he added.
Dr. Makamba alluded to the economic fact that redirecting available liquidity towards productive industries will have a long-term positive effect of stabilizing the country’s balance of payment position through import substitution.
The IMF report credited the Zimbabwean fiscal and monetary authorities for focused interventions, especially in the face of a devastating Covid-19 pandemic that threatened livelihoods and the economy at large.
“The authorities’ swift response to the pandemic, including through containment measures and economic and social support, helped contain its adverse impact. The output recovery that resumed in 2021 would continue, albeit at a slower pace, with growth projected at about 3.5 percent in 2022 and 3 percent over the medium term in line with potential. While the authorities aim to limit the 2022 budget deficit at 1.5 percent of GDP, nominal revenues and expenditures are underpinned by the assumptions of large price increases that deviate from the Reserve Bank of Zimbabwe’s (RBZ) objective of curtailing inflationary pressures.”
“Reflecting good rainfall and relaxation of containment measures, real GDP rose by 6.3 percent in 2021. A tighter policy stance since mid-2020 (relative to 2019) has contributed to reducing inflation to 60.7 percent year on year at end-2021,” said the IMF report.
Makamba expressed optimism about the direction that the economy is taking saying that he hopes for a day the business sector in Zimbabwe begins to demand payment in local currency.
“The business community in the country should now complement government effort in strengthening the local unit by insisting to be paid in local currency. This will boost business and stakeholder confidence in the ZWL$ which is our source of national pride as a people,” said Dr. Makamba.
Author: Hosia Mviringi