'Zimbabwe's feja-feja economics not working'

Major retail shops in Zimbabwe adjusted their exchange rates to ZiG30 per dollar yesterday as the local currency continued to falter, a day after President Emmerson Mnangagwa accused economic "saboteurs" of undermining its value. Some retailers claimed their point-of-sale machines were malfunctioning, forcing customers to pay in United States dollars.

NewsDay reported that several shops delayed opening to the public as they recalibrated prices to align with parallel market rates, which range from ZiG35 to ZiG40. One leading supermarket set its rate at US$1, while the parallel market rate hovered around US$1.

Retailers expressed concerns on Monday, warning that the government's "command" exchange rate was unsustainable, which could lead to a scarcity of basic goods on shop shelves.

In response to the economic instability, manufacturers and the Confederation of Zimbabwe Industries convened an emergency meeting in Harare to discuss the state of the economy. The local currency, introduced with much fanfare in April at a rate of US$1
.50, has dramatically collapsed despite the official exchange rate remaining relatively unchanged.

The unprecedented decline of the ZiG, which was purportedly backed by gold and foreign currency reserves, has intensified pressure on the government to rectify the situation. During a Zanu-PF politburo meeting on Wednesday, President Mnangagwa attributed the currency's woes to economic sabotage and declared, "Acts of economic sabotage, speculative and counter-productive tendencies by those who thrive on greed and profiteering have no place in our country."

The Reserve Bank of Zimbabwe (RBZ) and Treasury officials maintain that the local currency is being negatively affected by speculative activities. The central bank claims to have injected over US$100 million into the market over the past two months in an effort to stabilize the currency, marking the sixth attempt to establish a stable currency in Zimbabwe over the last decade.

Critics, including former Zanu-PF activists, argue that the RBZ is responsible for repeating past failures with the introduction of the ZiG. In 2019, Mnangagwa reintroduced the local currency following a decade of dollarization, only for it to be ravaged by inflation and subsequently scrapped early this year in favor of the ZiG.

Kudzai Mutisi, a Zanu-PF supporter, remarked on X (formerly Twitter) that the government's failures stem from mismanagement rather than external attacks. "President Mnangagwa said the ‘economy is under attack'... No, not at all. The economy is deliberately mismanaged by RBZ and Zimbabwe treasury honchos... probably because they benefit from the chaos and suffering they are creating," Mutisi stated.

Economist Gift Mugano asserted that the current currency chaos was inevitable, as the government ignored fundamental economic issues before launching the new currency. He remarked, "Unfortunately, the government can't be as strong in the economic market as it is in the political market because the economy can't be rigged, manipulated, or oppressed."

Exiled former Cabinet minister Walter Mzembi emphasized that imposing a currency on the public would ultimately fail without proper political alignment. "Mono-currency or multi-currency, nothing works if the politics is not right," Mzembi said.

Political commentator Pedzisayi Ruhanya echoed similar sentiments, stating that the politicization of the economy would not yield results. He urged the government to conduct comprehensive research to understand why local currencies are failing and what corrective measures are necessary to restore economic stability.