Godfrey Mutimba, Ndamu Sandu, Vusumuzi Sifile and Nkululeko Sibanda
10 January 2009
WHEN Masvingo mayor Alderman Femias Chakabuda called for a public meeting to explain the municipality's proposals to charge for services in foreign currency, he expected little resistance as everyone seemed to have abandoned the Zimbabwe dollar.
But Chakabuda and his councillors left the meeting in a hurry after angry residents heckled them, with some even throwing missiles at the City Fathers.
Residents of the country's oldest town lashed out at the councillors, saying the proposed changes would drive them into more misery.
Masvingo Residents' and Ratepayers Association spokesperson, Lydia Mutungira said: "The move by council is the highest stage of insensitivity to the plight of the already hard-pressed common man."
The residents' frustration is shared by millions of Zimbabweans left helpless in the face of the seemingly unstoppable dollarisation of the economy.
Government institutions whose services had remained relatively affordable in the face of Zimbabwe's world record-breaking inflation levels are charging in foreign currency, leaving the majority of consumers in a dilemma.
Although the Reserve Bank of Zimbabwe (RBZ) still maintains the economy has not been dollarised, all essential goods and services -- food, transport, accommodation, healthcare -- are priced in either the greenback or the rand.
In urban areas such as Bulawayo, Beitbridge and Plumtree illegal foreign currency dealers are fast disappearing as interest in the Zimbabwe dollar wanes.
Last week, the Goodwills Masimirembwa-led National Incomes and Pricing Commission (NIPC) embarked on what analysts said was a futile exercise to arrest businesses and vendors charging in foreign currency.
Independent economist John Robertson said the dollarisation of the economy was unstoppable because of the damage wrought by the Zimbabwe government on the economy.
"They (government) have destroyed the value of the Zimbabwean dollar," said Robertson. "They now have no choice but to use another currency.
"If they do not want to use another currency, like the United States dollar, the only other option would be to restore the value of the local currency.
"This is not possible at the moment because the means of production have collapsed. They don't have a choice but to use another currency."
A country is said to have dollarised its economy when universally all goods and services are payable in another country's legal tender.
The practice has spread to rural areas where villagers not well versed in currencies of other countries are at risk of losing their property to cunning dealers.
Introducing the Foreign Exchange Licensed Wholesalers and Retail Shops, Foreign Exchange Licence for Oil Companies and Foreign Licensed Outlet for Petrol and Diesel in September, RBZ governor Gideon Gono said some basic commodities would not be sold in foreign currency to cushion vulnerable groups.
However, since the introduction of the scheme, virtually all goods and services are now being priced in foreign currency.
In most cases, the prices are far above the average amount pegged for similar products in neighbouring countries. While this has been a slap in the face for Gono, the latest developments have compounded the suffering of ordinary low-income earners and the rural folk who are struggling to access foreign currency.
Even state institutions like universities and hospitals are demanding fees in foreign currency. Mobile phone tariffs, rentals, and bus fares are now pegged in foreign currency.
Labour unions have been lobbying for the payment of salaries in foreign currency, a call that has been rejected by the government and some employers.
The Zimbabwe Congress of Trade Unions (ZCTU) will next week hold a special general council meeting where the issue is expected to dominate discussions.
The labour body's acting Secretary-General, Gideon Shoko, said the only way to cushion workers was to have salaries pegged in foreign currency.
"The General Council of the ZCTU is meeting on 17 January to make a decision on the way forward concerning the issue of payment in foreign currency," he said, "although some affiliates have already approached employers to be paid in foreign currency."
On Thursday, Zimbabwe Teachers' Association (ZIMTA) president Tendai Chikowore said teachers would only report for duty if their salaries were pegged in foreign currency.
A ZCTU resolution to push for salaries in foreign currency could spark a showdown with the Employers' Confederation of Zimbabwe (Emcoz), which is against the move.
"Our members cannot pay in foreign currency at this moment because that would be illegal," said Emcoz President David Govere.
"They do realise, however, that the current remuneration practice is unworkable because they are obliged to pay salaries and wages in Zimbabwe dollars into bank accounts and are not always able to get the money, and when they do get it they find that it had largely ceased to be commercial tender."
Govere said they were currently consulting with the RBZ, Ministry of Public Service, Labour and Social Welfare and the Ministry of Finance over the issue.
Acting Minister of Finance, Patrick Chinamasa refused to comment on what government was doing to cushion ordinary people amid the fresh challenges brought about by dollarisation.
Last week, Health and Child Welfare Minister, David Parirenyatwa announced that government hospitals would now accept forex payments from patients. State universities also joined the bandwagon, pegging tuition fees in forex. Student activists have already denounced the latest move, saying it would force hundreds of students to drop out of their studies.
A notice published at the Midlands State University (MSU) last week indicates that students will now be required to pay between US$500 and $710 for undergraduate programmes, while postgraduate programmes cost up to US$824.
Zimbabwe National Students' Union (Zinasu) president Clever Bere said this could only be a stopgap measure that would not solve the real problems facing the education sector.
Daniel Ndlela, an independent economist, said the tendency to increase prices pegged in foreign currency could be psychological as Zimbabweans were living in a hyperinflationary environment.
"People believe that since we are under hyperinflation the US dollar prices must also increase," said Ndlela, adding that dollarised economies enjoy stable prices as they only import inflation from the country that uses the currency they adopt.
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