Zimbabwe is currently exporting more than it ever has in history and generating more foreign currency than ever before, at $11 billion in 2023. We even had a huge trade surplus of $125 million in 2023, but irrespective, our currency is still falling. Why?

It’s because Zimbabweans love foreign currency and foreign goods, as a result most of the foreign currency generated from exports does not come back to our taxman, the Reserve Bank, our commercial banks as savings or reinvestment in the economy, to facilitate a seamless foreign exchange system.

Then the little forex that trickles back to the country is immediately used to import fuel, cars, medicines, electronics, inputs, luxuries and machinery, which are then sold in U.S. dollars on the local market.

Even the government and its municipalities demand US dollars for the provision of public services because they can’t stop importing expensive foreign vehicles, while civil servants demand to be paid in US dollars so that they can buy the basics that are sold in foreign currency in our shops.

Consequently, no Zimbabwean wants to hold Zim dollars, whether backed by gold or not, because businesses, investors, and even the common man desire only foreign currency, which causes the local currency to lose value and making it less attractive as a store of value.

This, creates a perpetual cycle that sucks US dollars out of the economy, increasing demand for US dollars and inversely reducing the demand and value of Zim dollars.

So why don’t Zimbabweans get tired of hoarding these US dollars to break this cycle of a depreciating local currency?

The biggest problem is foreign companies like Pick n Pay, PPC, etc., and foreign investors like BlackRock, Sanlam, Allan Grey and others who are slowly dominating our economy, are allowed to repatriate a hundred percent of their profits out of Zimbabwe. So they either transact in dollars or they take their local currency to the black market and hoard dollars or gold in order to repatriate their profits.

In fact, it is these U.S. dollars that attract particularly South African companies to come to Zimbabwe to hedge their rand depreciation losses or to diversify their earning from South Africa.

Then we also have Zimbabwean companies and individuals who also want to save in US dollars or gold and externalize them, because like Cecil John Rhodes, they see Zimbabwe as a cash-cow colony to make US dollars (or gold), externalize them and spend them in nations they desire to live.

This is why you see that most of our top ten biggest companies on the Zimbabwe Stock Exchange have multi-billion dollar businesses outside Zimbabwe, but the question is how did they get billions of US dollars out of Zimbabwe with the strict foreign exchange controls that have prevailed in our country?

It’s because they laundered the money out of the country as US dollars or gold bought off the black market and laundered them out through transfer pricing, under-invoicing and smuggling money bags out of the country to other locales.

This is why, according to the U.S. Bureau of Economic Research, Zimbabweans are the fourth biggest externalizers in the world, with over 63% of Zimbabwean GDP in savings, sitting in tax havens. This is not counting the billions externalized to non-tax havens like South Africa, Canada, Australia, EU and the UK.

Even more interesting is according to CEPII, from where we got the export data for the graph below, Zimbabwe’s exports over the past 20 years have been under-declared by a factor of between 15% and 25%. According to the RBZ, Zimbabwean exports in 2022 were $7.2 billion but according CEPII’s tally of Zimbabwean imports from receiving nations, it was $8.4 billion and Zimbabwe’s biggest trading partner was not South Africa but Dubai which bought $4.48 billion of Zimbabwean gold.

This means that Zimbabwean exports are under declared and the country is a money spinner that is being harvested by foreigners and locals, as most excess value created in the country is not being reinvested in the country to build capacity; employ more people; import new machines, new cellular base stations, or new technology to enhance production of more local products that would give more value to our Zimbabwe dollar.

Instead, the excess value is used to buy US dollars or gold from the black market and as illustrated above, those are taken out of the economy and kept outside; creating a perpetual shortage and demand for capital and dollars in the economy, which fuels inflation, depreciates local currency and forces people not to want to save in a falling local currency.

As a result, as a nation, we could sell $100 billion in resources and still have a falling currency because forex will continue to be scarce as the unending hoarding and externalization will continue, unless Zimbabweans start enhancing Zim dollar and U.S. dollar bank savings, pension savings, equity holding, gold reserves, property investments, or reinvestment in capital accumulation.

Currently, when local companies import GMO grain, wheat, SIM cards, inputs, lubricants, chemicals, fertilizers etc, they simply overprice the imports to enable a large percentage of the foreign currency taken out, to stay overseas. Each time that happens, our local currency suffers yet another blow and no amount of gold backed currency will change this trend.

The cycle will never stop until we address the mindset of the Zimbabwean which is the root cause of our problem. We are a selfish people and this selfishness doesn’t start now because it was the root cause of the decline of the Mutapa Empire, which in its dying days saw Hamuziviishe the right-hand man of Chief Chipfunhu Mugabe, sell our gold, Zimbabwe birds and other sacred relics to Posselts for pieces of cloth. Not too long after that, Zimbabwe was colonized by the British South Africa Company.

This same problem is what causes Zimbabweans to exchange gold, diamonds, our profits, future and labor for pieces of cotton paper known as the US dollar. There is something about Zimbabweans and cloth (machira) that would see us externalize our future for machira.

As illustrated in my inflation graphs over the past few days, it is this same hoarding of dollars by our so-loved foreign investors and white farmers in the late 1990s and early 2000s, that began the cycle of depreciating the local dollar when they got enraged at the government for compensating our war vets for their liberation contribution.

It is through such externalization that many black businessmen who were empowered by indigenization, have homes and wealth outside the country, instead of reinvesting back in the country that made them.

This is one of the reasons we say, for the ZIG to survive, the Zimbabwean government must focus on directing its tenders, licenses, and contracts more to Zimbabweans who prefer living in Zimbabwe, than foreign companies and Zimbabweans who have shown a propensity to prefer using Zimbabwean profits to live outside like colonizers.

No matter how much people may hate people like Phillip Chiyangwa, Mashwede, Kuda Tagwireyi, Scott Sakupwanya, Obey Chimuka, Sandra Mpunga, Divine Ndlakhula, Simon Rudland, Billy Rautenbach, Shingi Mutasa and such, these guys have shown a huge propensity to reinvest back in the country and use its local currency for their business activities.

With their money they have invested in infrastructure construction, fuel supply, buying contracting machinery, building factories, buying conpanies, building hotels and developing Zimbabwe more than some billionaires who after making their money in Zimbabwe, bought dollars on the black market and laundered it out of the country to build empires elsewhere.

The latter love being in Zimbabwe with its warts and all, and our government must invest more in such people because they will be the engine of the economy by reinvesting in it and by so doing strengthening the value of the ZIG through local production.

Those with billion-dollar empires outside and millions in tax havens must account for how they took that money out of the country and where they can’t justify, their licenses should be revoked and given to more loyal Zimbabweans.

Our own government must build enough confidence in the local currency by demanding and accepting the ZIG for all their services. They must also stop the illogical multi-currency system and simply stick to using the gold backed ZIG for all internal transactions to avoid unnecessary arbitrage.

Meanwhile banks must offer deposit protection insurance that enables people to bank their dollars in local commercial banks so that they are available for foreign exchange to government, importers and travelers, to kill the black market.

We have to wean ourselves from our old selfish habits if we are going to strengthen our ZIG.

Written by Rutendo Matinyarare, Chairman of ZASM.


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