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The government calls it the RTGS dollar, but what is it and will it solve the country’s cash problem?

Source: Zimbabwe introduces RTGS dollar to solve currency problem – BBC News

“Nobody knows what it is,” is the verdict of Zimbabwe’s former trade minister and now opposition politician Nkosana Moyo.

He was talking about what appears to be a new currency in the country.

It has been introduced over the last few days but its impact is not yet clear.

Why is it needed?

Zimbabwe has a troubled history with currency.

In 2009 it ditched the Zimbabwe dollar and adopted the US dollar after hyperinflation destroyed its value. At its height prices were almost doubling every day and the reserve bank printed notes worth 100tn Zimbabwe dollars to try and keep up.

But because more US dollars were leaving the country – in the form of payments for exports – than coming in, US dollar cash was in short supply. This led to long bank queues as people struggled to get their money out.

In 2016, the government introduced bond notes and coins, which were supposed to be worth the same as the US dollar, to make up for the cash shortage.

Bank queues are often seen in Zimbabwe as people try to get their cash out

But no-one had faith that they were equivalent and, on the black market, bond notes have lost value against the dollar.

And now the government has introduced the Real Time Gross Settlement (RTGS) dollar, which is being described by some as a new currency.

RTGS dollar?

It’s not a phrase that exactly rolls off the tongue, but the initials are familiar to Zimbabweans who have been using them to describe money that has been electronically transferred into their bank accounts.

As well as paying for goods in US dollars, Zimbabweans have been able to use other foreign currencies such as the South African rand, plus bond notes, debit cards drawing on bank accounts and money stored on a mobile phone app.

But each of them had a different exchange rate, meaning that customers were sometimes charged different prices depending on what payment method they chose.

The RTGS dollar is supposed to bring together bond notes and debit card and mobile money payments to make sure that they are all worth the same.

Significantly, the government has given up on the pretence that the bond note and the US dollar have the same value. Now it is saying that the value of the RTGS dollar against the US dollar will be set by the market.

What makes a currency a currency?

While business journalists and commentators are saying that there is a new currency, the government has not used this phrase.

The Zimbabwe dollar has such a tarnished history that the government is reluctant to be seen to be returning to this.

There were protests in 2016 when the bond notes were first introduced

At its simplest, a currency is something that is widely accepted as a means to buy goods and services.

From now on the government wants things priced in RTGS dollars, rather than US dollars, and people should be able to use the various payment methods denominated in RTGS – debit cards, bond notes and mobile phone money – to purchase them.

So it feels like a currency but there are no plans to have notes and coins with “RTGS dollars” written on them and you cannot use them outside the country.

How much is an RTGS dollar worth?

The government has said it wants the price of the RTGS dollar to be determined by the market.

It initially suggested that it should trade at 2.5 RTGS dollars to the US dollar, but this was significantly less than the black market rate for the bond note, which was selling at more than 3.5 to the dollar.

If the RTGS dollar is truly allowed to float without intervention then the black market should be eliminated altogether.

The old Zimbabwe dollar became worthless because of hyperinflation

How will this affect the ordinary shopper?

At this point it is not clear.

The government hopes that it will make things simpler as there won’t be different prices quoted according to the various currencies and payment methods.

It also hopes that prices will stay the same or even decline as stability and predictability is brought into the market.

Will this solve Zimbabwe’s problems?

Zimbabwe has been hit by rising inflation and increasing levels of government debt for many years.

But if the RTGS dollar is the solution, then the government is “misdiagnosing the problem”, opposition politician Mr Moyo says.

He argues that poor economic management is at the heart of the problem, saying that government expenditure needs to be reined in.

But Finance Minister Mthuli Ncube insists that austerity measures he introduced in last year’s budget are working and government revenue is increasing.

As long as the government does not try to manage the RTGS dollar exchange rate, then this is a step in the right direction, says the chief economist at Renaissance Capital, Charlie Robertson.

But given the history that Zimbabwe has with currencies, it will take a lot to restore people’s trust, he adds.

The post Zimbabwe introduces RTGS dollar to solve currency problem appeared first on Zimbabwe Situation.

Source: RBZ justifies gold miners’ forex thresholds | The Herald February 27, 2019

Dr Mangudya

Business Reporter
The Reserve Bank of Zimbabwe reduced foreign currency retention thresholds for small- scale miners as a way of managing cash challenges the country is currently going through after foreign banks mainly South Africans, cut hard cash supplies to Zimbabwe, an official with the Apex Bank has said.

The explanation, comes as miners who are part of the Zimbabwe Miners Federation, expressed their displeasure with the reduction in retention thresholds saying they were not consulted by the monetary authorities before the MPS was announced.

In the Monetary Policy Statement (2019) presented by Reserve Bank of Zimbabwe Governor Dr John Mangudya on Wednesday last week, retention thresholds for small-scale gold miners were reduced to 55 percent from 70 percent, a development which seems to have irked small scale gold producers.

Last year, small-scale miners delivered 22 tonnes or 66 percent of the 33,3 tonnes that were delivered to Fidelity Printers and Refiners, the country’s sole buyer of gold. But post the 2019 Monetary Policy Statement (roughly 5 days), only 20kgs of gold had been delivered to Fidelity Printers and Refiners against 60kgs per day on average.

Reserve Bank of Zimbabwe deputy director for Financial Markets William Manhimanzi, however, justified the reduction in retention thresholds for small-scale miners saying importing cash has been a challenge.

“Let me come to the fundamental issue that obviously as miners you are interested in. Why did we move from 70 percent down to 55 percent?”

“I think it’s important to note that gold from the small scale miners is paid for in US dollar cash, what it means is we have to import that cash and for us to import that cash we have to earn that foreign exchange first for you to bring the cash into the economy and be able to distribute that cash for whoever is buying the gold,” said Mr Manhimanzi.

“I think you are all aware that we are not officially dollarised, meaning we do not have an agreement with the US that we are going to adopt their currency as our currency, we just unofficially dollarised this economy.”

Mr Manhimanzi also noted that sometimes it’s very difficult to get cash into this economy with some foreign banks derisking and cutting ties with local financial institutions.

“Ordinarily, we import the cash from South Africa and most of the banks, due to what we call derisking issues have now given us notice that they can no longer provide our own local banks with cash (US dollar), so we are in a catch 22 situation.

“The only bank that remained was First National Bank (FNB) and they gave notice in December 2018 that they will no longer be supplying our own local banks with cash,” said Mr Manhimanzi.

This, he said, had an impact on what the central bank can provide to gold miners. He also explained why the central bank had said exporters have to use or sale their foreign currency earnings in 30 days.

“We need the market to have foreign exchange, the RBZ retains only 30 percent of the foreign currency generated into the economy while the rest stays with banks.

So the 30 percent that the RBZ receives is what it uses for strategic imports, and it’s not enough hence we borrow offshore where we also have to pay back.

Mr Manhimanzi said as much as the country is facing cash shortages, there should be enough circulating in the economy roughly putting the amounts to $500 million in bond notes and $2 billion in foreign currency.

He, however, said lack of confidence in the banking sector was preventing money from circulating in the formal system.

“We need to bring back confidence into the banking system, in whatever we do, so that people can bank the money and that money can then circulate,” Mr Manhimanzi said.

The post RBZ justifies gold miners’ forex thresholds appeared first on Zimbabwe Situation.

A 23-YEAR-OLD man from Bulawayo stole and sold a Nokia Lumia phone during prayers after taking it from its owner under the pretext that he wanted to pray for it as it was the source of his misfortunes. Givemore Mujeyi of Paddonhurst suburb stole Mr Shakemore Marange’s phone while they were at a prayer meeting […]

Source: Slain footballer’s family moves to sue govt | Newsday (News)

BY OBEY MANAYITI

THE family of the late Chitungwiza footballer Kelvin Choto, who was allegedly shot by security forces during last month’s protests against fuel price hikes, has given notice to sue government.

Choto’s family is also seeking to force the State to release various critical documents that can reveal the truth about his death. Choto was among the 17 people killed by State security agents deployed to quell the violent protests that were triggered by President Emmerson Mnangagwa’s 150% fuel price hike in mid-January.

Over 80 people reportedly sustained gunshot wounds, according to human rights groups. Choto was shot and died on the spot on January 14 near Chitungwiza Police Station.

The family has written to Home Affairs minister Cain Matema expressing dismay over the way the police handled the matter.

The deceased’s family claims that it had encountered difficulties in accessing critical documents to take their case to the next level after they were initially told to collect the post-mortem report from Chitungwiza Police Station.

“On January 21, 2019, Julius Choto (deceased’s father) went to collect the post-mortem report, but the member-in-charge informed him that the report was not for his consumption and that only the Police Commissioner-General (Godwin Matanga) could release the report,” the family’s letter, copied to Matanga, Prosecutor-General Kumbirai Hodzi and Health minister Obadiah Moyo, read.

“The family has still not been supplied with a copy of the report, nor have they been advised of the outcome of any investigation.”

The Choto family is demanding to be furnished with copies of any consent or authorisation given for the initiation of the post-mortem process in terms of section 4 and 8 of the Anatomical Donations and Post-Mortem Examinations Act or any instructions given for post-mortem by a magistrate.

They are also demanding a copy of any report made by a medical practitioner to a magistrate over their son’s death from unnatural causes in terms of section 7(1) of the Burial and Cremation Act and a copy of the inquest report in terms of section 13 of the Inquest Act.

“In the event that an inquest has not been initiated, we hereby request that the matter be urgently referred to a magistrate for investigation in terms of section 5 of the Inquest Act Chapter 7:07,” the notice, giving the minister seven days to act, reads.

“Finally, we do hereby notify you of our clients’ intention to sue for damages for the unlawful killing of Kelvin Tinashe Choto by the Zimbabwe Republic Police. Damages to be claimed include loss of support, pain and suffering and nervous shock, the sum to be commuted in due course and to be furnished in the summons commencing action.”

The post Slain footballer’s family moves to sue govt appeared first on NewsDay Zimbabwe.

The post Slain footballer’s family moves to sue govt appeared first on Zimbabwe Situation.

Source: Makandiwa implicated in gold mine kidnap, torture | The Herald February 27, 2019

Prophet Emmanuel Makandiwa

Herald Reporters
UNITED Family International Church (UFIC) leader Prophet Emmanuel Makandiwa has been implicated in a case in which five men were reportedly kidnapped and tortured for allegedly stealing gold ore from Havilah Gold Mine in Mutoko, which is believed to be owned by the clergyman.

Lloyd Sande (24), Godknows Mhungu (21), Bornface Mudzonga (29), Julius Mudzonga (age not given) and Clever Masango (20) reside in villages around Mutawatawa Shopping Centre and were employed at the mine, which is commonly known as “KwaMakandiwa”.

They were reportedly subjected to inhuman and degrading treatment involving battery, immersion in water and electrocution.

They were also allegedly beaten with rifle butts, batons and other objects.

The assailants also issued death threats, extracted confessions and confiscated property from the victims.

The assailants in the matter — led by the mine’s security officer Garikai Murambidzi — claimed to be members of the Zimbabwe Republic Police’s Serious Frauds Section and later Central Intelligence Organisation (CIO), according to lawyers representing the five.

They purported to be acting on behalf of Prophet Makandiwa to recover the gold ore following a heist that allegedly took place on or around December 17 last year.

The victims later made reports to Mutawatawa Police Station, but the assailants were not arrested.

In a letter to Police Commissioner-General Godwin Matanga dated February 14, 2019, the victims’ legal team from Harare firm, Chinawa Law Chambers, outlined the grave circumstances of the matter detailing how the assaults had taken place between January 24 and 25 this year.

“Our clients were warned that the assault would not stop and they would not be released but would be killed instead unless if they admitted that they were the ones who had stolen Makandiwa’s gold,” reads the letter.

The lawyers says that the five, fearing for their lives, made confessions to their accusers but the case fell through after it went for due process.

“Our clients were detained at the police station from January 25-27. They were arraigned before the Mutawatawa Magistrates Court whereupon the state declined to prosecute the matter due to insufficient evidence,” said the lawyers.

“Our clients managed to identify one of the four men as Joseph Dzomba, a retired police officer who is now a personal bodyguard and security personnel for prophet Makandiwa,” said the lawyers.

They are demanding an investigation into how police handled the matter.

“Our clients also consider it appropriate to demand an investigation into the manner in which Mr Mafumbate the Officer in-charge has acted as it amounts to connivance with accused persons and shielding them from arrest and interference with investigations and due process of law.

“Our clients now live in fear and still receive suspicious anonymous calls from the perpetrators victimizing them

Contacted for comment UFIC spokesperson Pastor Prime Kufakunesu dismissed the allegations as unfounded.

He said Makandiwa does not own any gold mine as being alleged.

“I am actually surprised to hear about this because in as far as I know Prophet Makandiwa does not own a gold mine,” he said.

Pastor Kufakunesu went on saying he was also surprised where these people were getting all those falsehoods from.

The Herald could not independently ascertain the ownership of the mine at the going to print last night.

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