… as civil servants reject salary in ZiG
…public displays no confident in new currency
By Beverly Bizeki/Perpetua Murungweni
As the country braces for the new currency (ZiG) which is expected to start circulating on April 30, civil servants and the general public have received it with pessimism despite the government showing much confidence in it.
Civil servants have widely rejected salaries in ZiG, arguing that it should at least be convertible across the region, saying the new currency was only new in name but is doomed to fail.
Progressive Teachers Union of Zimbabwe (PTUZ) president Dr Takavafira Zhou said civil servants were not prepared for salaries in local currency unless if it was convertible to other currencies across the region and it was only a matter of time before the currency crumbles.
“We are not comfortable with salary payable in local currency unless it is acceptable in the region and at border posts as well as payable across other sectors in the government. If that is the case then it could be permissible to pay civil servants’ salaries’ in local currency. Our perception and conviction is that Zimbabwe is not ready for a local currency and trying to pay civil servants in local currency would be tragic because very soon the local currency would show beyond any reasonable doubt that it is not applicable and is of limited longevity and applicability.
“The long term aspect is that we must continue to pay salaries in USD. The whole basis of paying in local currency is based on industrial recovery and balance between export and imports, all other political rhetoric claims of a viable local currency have limited longevity and applicability and very soon indicators will show that the local currency is not viable,” said Dr Zhou.
Dr Zhou however said despite rejecting the local currency salaries government should regularize payments for taxes and other government services in the ZiG currency.
“If the new ZiG currency is of value we must see government regularizing payment of taxes and other government services in new currency but sadly the government has continued to demand the payment of lots of these services in USD. It is also doubtful the new currency will be used in the SADC region. Our economy has become an enlarged supermarkets for products from China, Botswana and South Africa. As long as the new currency cannot be used by traders to buy commodities from these other countries it will be of limited validity and applicability.
“Government is not consistent in terms of policy formulation and application. This is an indicator of an oxymoron, if the government has confidence as they articulating that the new currency is stronger, they should then be systematizing and ensuring that taxes and other government services are done using the local currency .
Unless and until we produce, re kit our industry and balance exports and imports it is doubtful that the new currency will stabilize or would be applicable because currency can only be backed by these factors.
“It is doubtful that the new ZiG currency will spearhead any production within Zimbabwe so that we can export and these contradictions of a non-sessional policy and what is happening in practice are indicators that the new currency is not of any a value, it is only a matter of time for us to realize that we simply have changed the name but our economic challenges remain inherent,” said Dr Zhou.
Zimbabwe Confederation of Public Sector Trade Unions’ (ZCPTSU) Secretary General David Dzatsunga said the government needs to build confidence amongst the citizens, especially on how the new currency is going to impact the payment of government services.
“From the ZCPTSU perspective, the initiative to carry out currency reform was vitally necessary given the free fall of the ZWL. As for the ZiG, the jury is still out as to how it is going to impact the welfare of workers. Having been introduced without much prior consultation, the authorities have to educate us on its implications on taxes, duty, fuel, education, and health care among others. While we have no choice but to embrace it and strive to make it a success as workers and citizens alike, there is still a ton of confidence-building to be done so that citizens can truly believe we have found a panacea to our perennial currency problem,” said Dzatsunga.
Dzatsunga also said workers prefer the USD as acceptance of the ZiG would be based on its performance.
“As long as we have a basket of currencies workers still prefer the strongest of them. Much will depend on the performance of the ZiG and on whether we will not have to go to the parallel market to get value,” he said.
Development economist Dr Prosper Chitambara said the government was supposed to set a time frame on when the citizenry can be able to pay for other government services including fuel payments in the new currency. He said the locals’ double standards of wanting to pay for government services but not wanting salaries or payments in local currency was caused by the differences in the exchange rate at the formal market and the black market.
“Fifty percent of the taxes are going to be paid using ZiG but with time there is need to put a clear benchmark on when we will expect to pay for other government services in local currency and also including the payment of fuel but is something that must be done in a planned and systematic way but also in a gradual way within the framework of the country’s de-dollarization wherein we are expecting that by 2030 we should have reverted to the local currency.
“It is important as it helps in terms of increasing the demand for the Zimbabwe Gold which will help the ZiG to stabilize and increase the value as demand increases. There are arbitrage opportunities that have been caused by the differences in the exchange rate between the official and the black market rate.
“If we can address that as I am hoping that we have liberalized that will help. The fact that the demand for USD remains very high and formal market may not probably be able to satisfy that demand and the black market will remain. The challenge that we have is that even individuals who are renting out properties would not accept ZiG so there is a double standard; when they are paying for services whether it is local council rates they would want to pay in local currency because of the arbitrage opportunities as a result of the black market premium,” said Dr Chitambara.
In a statement, the Reserve Bank of Zimbabwe, responding to whether or not the ZiG will be recognized internationally said it was yet to work on getting the currency convertible across the region.
“ZiG is a local currency that has just been launched and has not yet achieved convertibility. The Bank will work to strengthen the currency to attain full convertibility, consistent with the regional for macroeconomic convergence under the SADC Protocol on Finance and Investment.
“The current pricing mechanism in the fuel sector will remain in place until otherwise reviewed. As Reserve Bank and Government work towards the wider use of ZiG, the fuel sector will be encouraged to accept ZiG for fuel purchases,” reads part of the statement.
