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RTGS dollars and production

24 Feb 2019 at 10:41hrs | Views
Pursuant to the introduction of the so-called RTGS dollars (not to be confused with the US dollars), the question which arises is: will production be triggered by the introduction of the so-called RTGS dollars? Are we going to see companies pushing for optimal production levels riding high on the back of the RTGS dollars? The answer to the question of production is that production is a function of a credible, trustworthy and reliable currency.  So the credibility and the reasonably sound footing of the RTGS dollars as currency are the  key factors that will determine whether production is triggered or not.

There is this fallacy in Zimbabwe and among Zimbabweans that production is a pre-conditionality for economic revival. This view  unfortunately misses the point altogether. Zimbabweans do not seem to understand that production is a function of a stable and credible currency. So long as there is no stable and credible currency that is trusted by the market (consumers, buyers and sellers), there just won't be any production. It needs to be repeated for the umpteenth time that production is a function of a steady, stable and credible currency. Whether the RTGS dollars will be a steady, stable and trustworth currency remains to be seem. It is a futuristic event which is unkown and unknowable (unless one has the capabilities of a tsikamutanda).

In other words you need to have a stable currency like the US$  or Rand in place before day-dreaming  about production. Hitherto, the bond note tended to distort currency valuations thus causing people to shun formal banking.   Given the fact that the RTGS dollars are an electronic version of the bond note, it is obvious that the market (buyers, sellers and consumers) will be very cautious and lukewarm in receiving and accepting RTGS as a credible, trustworthy and valuable currency

Previously, the situation was not working and there was near-zero production simply because of the presence of an illusory and whimsical currency called the Bond note which has now mutated into RTGS dollars and camouflaged itself as a new currency.

For production to occur at optimal levels, the RTGS dollars need to be strong, credible, and trustworthy in the eyes of the markets. The  Zim economy needs a robust, convertible and trustworthy currency in order to resurrect  from  its self-inflicted financial suicide.

 By way of an example, teachers and doctors won't be productive (produce quality students and cured patients, respectively) so long as they are not paid in a stable, credible and trusted currency . The same applies to Delta. It won't produce quality products at optimal levels so long as it's products are not bought by consumers using a credible and trustworthy currency.

Colls Ndlovu, an award winning economist, can be contacted on collsndlovu@gmail.com.


Source - Colls Ndlovu
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