THE National Tripartite Negotiating Forum (TNF) has given government up to Tuesday next week to withdraw Statutory Instrument 142/2019, which banned the use of multi-currency and reintroduced the Zimbabwe dollar, or face mass action.
This comes amid continued chaos over the new currency measures, with some people rushing to withdraw their money from foreign currency accounts (FCAs) and some banks reportedly turning away clients citing a central bank directive.
Addressing a Press conference after the inaugural TNF meeting yesterday, Public Service Labour, Public Service and Social Welfare minister Sekai Nzenza said social partners had demanded the removal of the law that banned the use of multi-currency or they would go on strike.
“Concern was raised on the consultative process leading to the promulgation of SI 142 of 2019. It was resolved that a proposal be made to Cabinet to consider withdrawal or review of the statutory instrument, with inputs from social partners. Going forward, it was agreed that social and economic policy be discussed at TNF before pronunciation,” she said.
On Monday, government re-introduced the Zimdollar, a decade after it was rendered worthless by hyperinflation, and outlawed the multi-currency system, but workers say the move would destroy salaries and savings.
Zimbabwe Congress of Trade Unions (ZCTU) president Peter Mutasa told the same briefing that if government does not revoke the ban on the use of multi-currency, workers would be left with no option, but to strike.
“If, by Tuesday, the government does not give us a favourable answer, we will mobilise for mass action. This we have made it clear. People are dying and it is not about us as union leaders, but the generality of Zimbabweans who are affected by this move,” Mutasa said, forcing Nzenza to react angrily.
“Let us not rush to declare general strikes when negotiations are still on-going. It does not work. We gain nothing from a general strike. Anyway, let me call this meeting off immediately,” an emotional Nzenza said.
The meeting also agreed that while the TNF would be used as a platform for social engagement, all parties reserve their rights when they feel aggrieved.
Meanwhile, there was confusion yesterday, with some banks refusing withdrawals from FCAs, while the Reserve Bank of Zimbabwe insisted its measures only affected corporations and not individuals.
The confusion came after the RBZ issued Exchange Control Directive RU102/2019 in terms of the Exchange Control Regulation Statutory Instrument 109 of 1996, where it gave banks directives on how to handle nostro FCA accounts.
Under the new measures, banks were ordered to stop nostro withdrawals except towards settlement of international transactions only.
“In cases where the holder of such an account intends to settle domestic transactions, they shall be required to liquidate their foreign currency account balances to the interbank on a willing-seller willing-buyer basis,” part of the directive read.
The order triggered an outcry on Tuesday evening, with most people accusing government of raiding their foreign currency accounts and yesterday morning, panicky account holders flooded banks to withdraw their money as uncertainty and confusion raged on.
NedBank told account holders that they were waiting to be cleared by their bosses, who had instructed them to stop withdrawals, while BancABC also turned people away in the morning, but later allowed withdrawals.
“We want out money, we no longer trust our government. They just wake up with new orders every day and who knows, we may lose all our monies the same way we did in 2008,” one account holder at a CBZ Harare branch said.
In Gweru, individuals with FCAs caused mayhem at Stanbic Bank as they rushed to withdraw their money.
The situation, however, normalised later in the day, with all people managing to withdraw their money.
“Following the ban on the local use of foreign currency, I am no longer sure if my deposits are safe in the bank,” one depositor, who only identified herself as Mavis, said.
“It is better to keep my money under the pillow because you can wake up and be told that all your foreign currency deposits are now in RTGS dollar [Real Time Gross Settlement dollar].”
Gweru Stanbic branch manager Nobert Mahwaya said he was not authorised to give a comment to the media before referring all questions to the marketing and brand office in Harare.
Monday’s currency reforms have already caused panic among people, with some in the business community closing shop for the better part of Tuesday, while prices of some basic commodities have been increased.
Meanwhile, Cabinet on Tuesday stated that it was satisfied with the decision taken by the monetary authorities to abolish the multi-currency system and replace it with a local currency.
Briefing the media at a post-Cabinet meeting on Wednesday, Information minister Monica Mutsvangwa said the measure was critical and would help in fully restoring a “Zimbabwe sovereign currency as envisaged under the Transitional Stabilisation Programme”.
“Cabinet calls on all citizens and stakeholders to close ranks and give maximum support to these measures, which are designed to ease the plight of all our people and to place our country’s economy on a firm growth trajectory. As Zimbabweans, let us be driven by the sense of national pride, self-belief and the commitment to guaranteeing the integrity of our financial system,” Mutsvangwa said.
However, the Zimbabwe Coalition on Debt and Development (Zimcodd) said in the absence of key fundamentals such as productivity, high levels of capacity utilisation, healthy capital account, addressing confidence deficit and trade surplus, the new measure has severe implications.
“The sudden policy pronouncement is likely to affect companies, including retailers of basic commodities, whose current inventory was acquired in US$ currency. The ripple effect of this implication might lead to empty shelves, pushing prices upwards and massive job cuts, as companies try to manage their operating costs,” Zimcodd said.
The organisation added that the intended sterilisation of $1,2 billion in RTGS funds would result in additional debt for the country and, worse still, in foreign currency.
“The RTGS$ debt to GDP [gross domestic product] ratio will thus go above 100%, which means our capacity to service the debt will be significantly low,” the coalition said.
“Given the high leverage, the ability to attract lines of credit will equally be low. This is the second time government assumed private sector debt under 10 years. Payable interest on the due amounts will further burden the fiscus and, if fundamentals do not improve at a quicker rate, may result in further fiscal misalignment.”
Zimcodd said banning of foreign currencies would further push back the trade in foreign currencies into the black market.