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PRICES of most goods and services are expected to decline or stabilise in the short to medium term following the freeing up of the exchange rate, after the Reserve Bank of Zimbabwe floated the rate between the US dollar and Real Time Gross Settlement, bond notes and electronic money yesterday. Presenting the 2019 Monetary Policy Statement yesterday, central bank Governor Dr John Mangudya, said

Source: Zimbabwe launches new currency measure | News24

Zimbabwe, without its own currency for a decade, took steps to address its worsening economic crisis by allowing its surrogate currency, bond notes, and electronic funds to float freely against other major currencies, abandoning an official but artificial parity with the dollar.

Zimbabwe has not had a local currency since 2009 when it abandoned the Zimbabwe dollar due to hyperinflation that reached 500 billion percent, according to the International Monetary Fund. To curb the ruinous inflation, Zimbabwe adopted a multi-currency system dominated by the US dollar.

However, a shortage of cash dollars pushed the government in 2016 to issue a surrogate currency called bond notes, to trade alongside electronic money, which are funds electronically deposited into bank accounts.

Most Zimbabweans, including civil servants, are paid electronically into their bank accounts, but they cannot easily convert that money into cash needed to buy groceries and pay bills.

Officially, the government maintained the bond notes and the electronic money were equal to the US dollar. But both have been devaluing quickly against the dollar on the illegal, but thriving, black market, forcing many businesses, including the government itself, to only accept the dollar for some transactions.

On the black market, in order to get $1 Zimbabweans have had to pay up to four times that amount in bond notes or through electronic transfers.

The current crisis has resulted in increased inflation and shortages of fuel and food.

On Wednesday, the government announced measures to address the currency crisis. Reserve Bank of Zimbabwe governor John Mangudya abandoned the parity and announced that banks can now offer market-determined rates to buy cash dollars with the bond notes or through electronic transfers.

Bond notes and electronic funds will be known as a separate currency called Real Time Gross Transfer dollars, or RTGS dollars, said Mangudya in a much-anticipated monetary statement. Zimbabwe will continue using other foreign currencies such as the dollar and the South African rand, said Mangudya.

“The RTGS dollars thus become part of the multi-currency system in Zimbabwe. The RTGS dollars shall be used by all entities in Zimbabwe, including government and individuals in Zimbabwe for the purposes of pricing of goods and services, record debts, accounting and settlement of domestic transactions,” said Mangudya.

Before, most Zimbabweans who were paid their salaries through electronic transfers had to risk jail to change their money into dollars at the back market.

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INDEED, in more recent years, the sudden mention of the words “civil society organisations” (CSOs) into the everyday discourse and narrative of development, politics, government circles or donor priorities, is noisesome, like the rush of air as it feels a vacuum.

Source: Who owns civil society? – NewsDay Zimbabwe February 20, 2019

GUEST COLUMN BY TONDERAYI MATONHO

All sorts of interesting and mixed scenarios are emerging around civil society.

In Zimbabwe, for instance, it is getting attention for agitation or the persistent stirring up of public opinion and in the process gaining or losing credibility or confidence. And what’s more, for getting more associated with the social media – the bane of the ruling Zanu PF regime.

In several developing countries, Africa included, where the State has been forced to retreat from exercising repressive and autocratic governance systems, the vacuum of power and of practice have been filled in large parts by various bodies of civil society organisations.

The Zimbabwe government, on its part, has responded by shutting down the Internet, a part of the whole social media conundrum in order to curb the so-called freedom of choice and expression being exercised by civil society. Was this, in a way daring “whoever owns civil society to own up”?

In the so-called “transition” countries, societies have found themselves overnight with neither government, value systems nor even food security.

Instead, the void has been filled by programmes and projects to strengthen civil society.

Experts note that civil society is more than just the sum total of all non-governmental organisations in a country.

Clearly, it is within this fraternity that many people initially seek today’s CSOs.

Yet still, the question still persists without a clear response: Who is and who owns civil society organisations?

According to anthropologist Chris Hann, civil society denotes an “entity or a group of people or social movements that point to an impoverished view of social life”.

Where many CSOs have been criticised as problem-pointers rather than solution-seekers, they can, according to Hazel Henderson – a leading alternative futures thinker – quickly move to more positive and prescriptive agendas.

According to Henderson, CSOs are often forced to be innovative because existing public institutions cannot respond to their proposals.

Whether it be in politics, development and environment fraternity, CSOs, since time immemorial, have come and gone, representing diverse interests.

Thus, with or without these responses from such public institutions, they have persisted in driving these interests and agendas, many times ruffling the furthers of the State.

In The Emerging Role of Civil Society, Bruce Shearer excitedly describes how “new elements of civil society have emerged with unparalleled rapidity and energy in countries throughout Africa, Latin America, Asia/Pacific and the Middle East.

“They build upon and add to the already present political parties, labour unions, workers’ cooperatives, business associations, membership organisations and religious bodies.
“They also include hundreds of thousands of informally organised local citizens’ groups – community associations, citizens’ movements, social service clubs, savings clubs and advocacy networks alongside NGOs and additional thousands of supportive institutions concerned with networking, financing and servicing”.

They all come in diverse shapes and sizes.

It is this innovative spirit, many times stimulated by poor governance systems and a desperate shortage of resources that has led to the emergence of networking as a new form of communication, first encapsulated by the Networking Institute in Massachusetts, in the late 1970s.

Basically, the art or science of going as directly as possible to a source of knowledge, one needs to share and networking has now permeated much social behaviour in every country, Zimbabwe included. With the advent of advanced technology, networking is scaling new heights.

Notes Henderson: “Because they can tap and organise information laterally across borders, corporate and government boundaries, CSOs can rapidly synthesise overlooked and new information into new approaches and paradigms”.

However, other experts observe that there has been an explosive growth in organisations registering as CSOs in recent years.

Many of these are formed by ex-civil servants whose positions have been eliminated in the scaling down of State responsibilities.

There has been anxiety and even irritation by governments and other long-established CSOs that these organisations are not value-driven, but opportunist attempts to echo and establish foreign interests and agendas or to some extent, access whatever funding is available in a time of hardship and scarce resources.

Other civil practitioners worry that the opportunists may be or have already set the tone for the whole sector, possibly prejudicing the work and reputation of other CSOs, and limiting their ability to engage in collaborative activities with the government and business sector.

According to the United Nations, the advent of advanced technology or the fourth industrial revolution has been the powerful engine of change in the relationship between CSOs and the world body: “The breaking down of States’ monopoly on the collection and management of information leads to their relative decline, while instantaneous access to information and the ability to use it provides non-State actors with knowledge. Knowledge is power and the ability to mobilise public opinion is to master the world.”

Thus, in many instances, advanced technology has led governments to fear CSOs or NGOs and has, therefore, attempted to deal with them, or to try to manage them and even worse still, to shut down the whole technology system, willy-nilly.

Governments are, indeed, often reluctant to grant CSOs and NGOs the importance they so fixedly believe they deserve at policy levels.

They claim that these bodies lack accountability and representativity.

The same accusation is also thrown at governments by the same bodies that they are not transparent and accountable and hence also need constant monitoring, with effective checks and balances in place, which governments interpret as regime change agendas.

Whether CSOs are “owned” or not, the truth is that accountability and transparency are the two key issues that could make CSOs and government seeing, feeling and counting on one another.

They need to take each other seriously as partners in governance, at the same time holding on to social contracts and exercising political will, the two which are currently lacking.

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Source: Why Zimbabwe Is Fed Up With Using the U.S. Dollar: QuickTake – Bloomberg

A decade after Zimbabwe scrapped its own currency to end hyperinflation and began using mainly the U.S. dollar, the economy is back in free fall. Fuel, medicines and other basics are hard to come by and less than 10 percent of the workforce is formally employed. While the new currency regime initially helped stabilize prices, it also increased imports, curtailed exports and gave rise to a chronic shortage of banknotes. To fund government spending and help ease the liquidity crisis, the central bank printed bond notes theoretically pegged to the dollar, while most commercial transactions are conducted using an electronic currency known as RTGS$. This combination of parallel systems has resulted in a convoluted system of exchange rates, with consumers charged different prices depending on how they pay for purchases, and the cash scarcity has only worsened. Now President Emmerson Mnangagwa’s administration intends to introduce a new currency within a year.

1. How did we get here?

Zimbabwe’s woes date back to former President Robert Mugabe’s 37-year rule. Faced with possible electoral defeat, he allowed ruling party-backed militants to violently seize thousands of white-owned commercial farms starting in 2000. Agricultural exports and tax revenue collapsed, and the central bank began printing banknotes to enable the government to pay its workers. Inflation skyrocketed to the point where prices were doubling every day, the economy imploded, and unemployment soared. Several currencies, including the dollar, euro and rand were adopted as legal tender in 2009, making Zimbabwe the world’s only multi-currency economy, and the bond notes were introduced in 2016. While the government insists the notes are valued on a par with the dollar, their value has plunged over the past six months. The military forced Mugabe to step down in late 2017, and he was replaced by his former deputy Mnangagwa, who has made little headway in meeting his pledge to rebuild the economy since taking office.

2. What’s the government planning?

That’s not yet clear. Finance Minister Mthuli Ncube says he wants a new currency introduced within a year, but he has provided scant detail as to what that would entail. While he says the central bank is building foreign reserves to back the unit, there’s no sign of that happening yet, either. Ncube is also trying to restructure billions of dollars of defaulted multilateral debts so Zimbabwe can access new international loans. As a first step toward easing the liquidity crunch, the government has said the central banks is upgrading its systems to enable companies and individuals to transfer dollars electronically. That’s currently difficult to do, and most people resort to using cash dollars and exchanging them on the black market.

3. What are Zimbabwe’s options?

The government could introduce a free-floating currency, which would give it greater flexibility to determine monetary policy, but it would need substantial reserves or sky-high interest rates to protect the new money’s value. The government might also have a tough time convincing citizens to accept such a currency, given how badly people were burnt when the previous Zimbabwe dollar collapsed before it was finally abolished in 2009. Zimbabwe could also peg its new currency to neighboring South Africa’s rand, possibly joining the common monetary area it shares with Namibia, Lesotho and Swaziland. While that could provide currency stability and help Zimbabwe become more competitive, it would require buy-in from the group’s members and effectively bind Zimbabwe to South African interest rate and inflation-targeting policies. Another alternative would be for the government to peg its new unit to a basket of currencies, as Botswana has done. That could provide stability, but also limit monetary and fiscal policy options.

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Source: As economic crisis worsens, Zimbabweans miss Robert Mugabe | IOL News

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