From a corporate governance perspective the Perm Sec Guvamatanga should refuse the gift from Tagwirei. From a public finance perspective, it spells disaster when the main beneficiary of the condonation bill (parliament pardon for over expenditure) is gifting country's treasurer
From a moral perspective, it reeks & stinks to high heavens when street traders are arrested for illegal currency trades when Sakunda and others at the party are beneficiaries of the ZWL in the market causing rates to spike.
Lets not attack the man. But the Perm Sec must understand that his friendship & expensive gifting with Tagwirei goes against ALL governance rules especially in public service.
In the absence of strong institutions , the country can only rely on Leadership capacity that is moral and can understand the relatedness of things. Many will take Tagwirei's gesture as a signal. Especially many that have not been paid by government. Farmers are owed $2bn.
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It is patently obvious that the president & possibly his Vice have acted on false information. Their actions make the situation worse.
Everyone has been afraid to tell the truth about the auction & it’s core problem
2/24
When the auction was introduced it was done so based on borrowed money from Afreximbank. Which money added to the Afreximbank loan of US$1.5bn. We haven’t been able to pay back & the loans accrue an interest rate of over 10% p.a
3/24
Business was naive in accepting the auction system based on false & faulty premise. (1) RBZ is a regulator & holds monopoly of printing ZWL. There is an obvious moral hazard if it has the mandate to ration currency.
Zimbabwe has in the last five years all but given up on FDI. Instead, in an unprecedented manner taken more offshore debt than in the last forty years.
China must pay Zim cash for its exports & not offset with onerous debt under the guise of infrastructure & donations.
GOZ is awfully inadequate in understanding geopolitics & economics. For example, China grew on savings & FDI. Not debt.
FDI is important for;
(i) Technology transfer
(ii) It’s equity at risk& is more patient.
(iii) Loss is not a burden on greater society
(iv)Global supply chains
All these are ideological questions. Socialism quickly runs out of money. Leaves debt & malinvestments. Losses & Debt become a collective responsibility. A child born today is saddled or as the saying goes indentured. All they’ll produce will go to paying off their father’s debt!
Commenting on abandoning the 1:1 gedye, Eddie Cross believes it was an act of bravery. He goes on to say ED economic management is didn't from Mugabeconomics. Notice how Eddie Cross doesn't use facts &numbers? But superlatives?
Under ED the economy contracted for two years by 8%pa according to WB. The condonation bill, saw unprecedented snbudgetted expenditure under ED. Even the WB noted the ridiculous world beating expenditures.
Under Chinamasa external debt was US$9bn& he had a plan to address it under the LIMA negotiations. Now it's double. Chinamasa reigned in expenditure, cutting GMB subsidies.ED brought Zupco subsidies.Under ED the truth is a punishable offence. They even banned OMIR.Mugabe didn't!
The post covid world presents a serious challenge ahead for emerging markets & ever so for small countries like Zim. The trigger will be the rise in interest rates by the FED.
Another global headwind is China. Bail outs & rise in debt levels.
An interesting debate is on how rises in commodity prices don’t translate to extra income for commodity exporting countries in the LR. Imports increase & other industries suffer.
Small countries unfortunately can’t have diversified economies in a globalising economy. They’re simply not competitive enough.
A small nation with its own currency is a disaster when the number 1 risk in AFRICA is currency risk.
Frederic Bastiat came up with the idea of the broken window fallacy.
In simple terms, a boy breaks a shop keepers window. The distraught shopkeeper is told not to be sad, for it is good for the economy. The glazier finally has a job.