LEADING economists on Monday quashed claims by Vice-President Constantino Chiwenga that the country’s economy had come off the rails due to black market activities.
Chiwenga made the claims at a Zanu PF weekend rally in Marondera, where he told party members that black market money traders were fuelling price hikes.
But economist Gift Mugano told NewsDay that the presence of black market money traders was a result of lack of production and high unemployment, which have created distortions in the economy.
“Money changers are like flies. You cannot blame flies for gathering around your area if you are not removing the stench. Money changers are symptoms of a root cause of structural problems in this country which is lack of production and unemployment. So people have to resort to money laundering,” Mugano said.
“They (government) are creat. Look at the black market rate and the official rate; there is a 100% difference. Money launderers are people that are just capitalising on distortions created by the government,” he said.
Mugano said the Reserve Bank of Zimbabwe auction system was also not functioning well.
“It lacks three things; that is, they are not using the highest bid to award bidders. Instead, they are using the word average, and this in turn is encouraging low bids.”
He added that government was warned before that it should stop subsidising the agricultural sector through excessively funding it.
“We have been warning them even at a parliamentary level saying that they must stop subsidising the agricultural sector because they are spending money by doing that. Let the commodity exchange play the critical role of funding and marketing agriculture,” he said.
Economist Godfrey Kanyenze said the problem was not the black market money changers, but the dysfunctional economy.
“The parallel market is not the reason for the economic issues confronting the country, but it is only a symptom of dysfunctional formal economies. It reflects failure to properly price foreign currency on the Dutch auction and hence sellers would rather sell on the parallel market where the price of foreign currency reflects its opportunity costs,” Kanyenze said.