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OpenZimbabwe's Policymakers Are Conflicted And "Hate" ZiG, Says Mutisi
ZANU PF-aligned political commentator Kudzai Mutisi believes that Zimbabwe’s policymakers are conflicted, which is why they aren’t properly promoting the use of the ZiG, as it might hurt their personal interests.
In a post on X, Mutisi argued that regular people shouldn’t be blamed for the ZiG’s poor performance, as they have always supported local currencies over the years.
He claimed that it’s the policymakers who “hate” the ZiG, as shown by their refusal to sell fuel in local currency or accept ZiG for wheat.
Mutisi suggested that these policymakers likely own fuel stations and are involved in wheat farming, which is why they hesitate to accept ZiG in these sectors.
He also recommended that 90% of the people at the Reserve Bank of Zimbabwe (RBZ) should be fired, saying they can’t be trusted to support the ZiG because they were there during the Gideon Gono and John Mangudya eras, and have repeatedly failed to deliver.
Gono served as the Governor of the RBZ from 2003 to 2013. His tenure was marked by significant economic challenges, including hyperinflation and the introduction of the Zimbabwean dollar redenomination.
Mangudya succeeded Gono and served as the Governor from 2014 to 2024 when he was succeded by the incumbent, John Mushayavanhu.
Mangudya oversaw the introduction of bond notes and the reintroduction of the Zimbabwean dollar. Wrote Mutisi:
1. The Reserve Bank of Zimbabwe (RBZ) suffers from TOXIC INSTITUTIONAL MEMORY, that’s something needing urgent attention. More than 90% of the people working at the RBZ were there during the Gono era and the Mangudya era. These people have clearly proved to be INCAPABLE, INCOMPETENT, and MANIFESTLY CORRUPT, they can’t be trusted to save the ZiG. Governor Mushayavanhu should be allowed to select a NEW TEAM, RBZ needs that.
2. The ZiG is experiencing two things: Ever increasing supply and ever decreasing demand. This is a recipe for disaster, and that’s what policymakers should be focused on. The simple question that needs an urgent answer is: What will make a Zimbabwean citizen or business ACCEPT the ZiG and KEEP IT??? This is a very simple question but the answer to this question isn’t simple, it involves implementing DRASTIC POLICY CHANGES! It requires courageous policymakers, not the current crop of lazy policymakers who take years even to adjust interest rates. They don’t have what it takes to manage a currency, more so a currency in perpetual competition with the USD.
To slow down (ZiG) money supply growth, the RBZ should increase interest rates. The 20% interest rate introduced at the introduction of ZiG was not well thought out, it was a gamble. The interest rate should be increased.
To increase demand of the ZiG, the Ministry of Finance, Economic Development and lnvestment Promotion should take the lead. Mthuli Ncube and George Guvamatanga have been enemies of the local currency, their love for the USD is destroying the local currency. IMTT on ZiG should be removed without delay, RBZ should drastically cut bank charges and other transaction fees, businesses should pay tax in ZiG (this will force them to accept the ZiG, keep the ZiG and to look for the ZiG), and the RBZ should introduce higher denominations for the ZiG (without enough ZiG Cash, the USD will fill the gap making it the preferred currency especially in the informal sector). Without making these changes, NOTHING and NO ONE will save the ZiG. It will collapse faster than the ZWL.
3. Introduction of a FREELY FLOATING EXCHANGE RATE will cure a lot of the problems facing the Zimbabwean economy.
Currently, formal businesses HIKED USD prices… they did so because the FORMAL EXCHANGE RATE is not a MARKET DETERMINED EXCHANGE RATE… to hedge against exchange rate losses, formal businesses hiked their USD prices… that pushes customers away and it will lead to the further collapse of the formal economy. The RBZ MUST STOP dictating the exchange rate to anyone, let businesses make their own decisions. If the RBZ wants businesses to use the Official Exchange Rate, then it should ensure that the forex market is FULLY liberalised. Markets always reject COMMANDIST policies, it will NEVER work! In fact, monetary authorities in Zimbabwe should know better.
With a Floating Exchange Rate, more people will be willing to sell their forex and even fuel dealers won’t hesitate to sell fuel in ZiG.
Dr Mangudya spent 10 years trying to dictate the exchange rate to the market AND FAILED. It’s shocking that Dr Mushayavanhu, in his wisdom or lack of it, wants to follow the same approach.
4. Ultimately, the demand for a local currency has to be created BY LAW. The ZiG has no capacity to compete against WELL ESTABLISHED and WELL MANAGED currencies like the USD… it will always lose that contest. This is why smart governments COMPLETELY outlaw the use of foreign currencies for domestic transactions. This automatically creates HUGE demand for the local currency.
In Zimbabwe, the challenge is that policymakers have CONFLICT OF INTEREST. The policymakers are farming wheat (and demanding payment in USD), they own fuel companies (and DEMAND payment in USD). It’s the policymakers who HATE the local currency, ordinary citizens in Zimbabwe have CONSISTENTLY embraced the local currency.
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