HARARE (Bloomberg) — Zimbabwe’s President Emmerson Mnangagwa vowed to take action against private business, which he blames for fueling the latest crash in the economy.
The relationship between his administration and businesses can be described as one of “trust betrayed,” he said Sunday. The government has given many concessions to the business sector in good faith, but these haven’t been met with sincerity, Mnangagwa wrote in his weekly column in the state-controlled Sunday Mail newspaper.
This includes allowing businesses, which earn 80% of their income in US dollars, to keep foreign-exchange earnings; providing over $4 billion through a weekly foreign exchange auction run since 2020 by the central bank; and also allowing a multi-currency system to operate. The economy now transacts mostly in US dollars, as the greenback dominates over the local currency for the first time in almost four years.
In turn, business has undermined the government’s efforts at economic recovery, Mnangagwa said, including by abusing the foreign-exchange alloted from the weekly auction and also diverting basic goods onto the informal market to evade taxes. They are also suppressing local currency sales by “deliberately” disabling point-of-sale gadgets in order to force the consumer to buy key goods in one currency, he wrote.
“We even wonder if at all we are dealing with business anymore, or with politicians disguised as company executives, seeking a political upset,” said Mnangagwa. “Privileges can be withdrawn; the same way they are granted.”
The Zimbabwe dollar has lost more than half its value so far this year. Finance Minister Mthuli Ncube recently described the local currency, which made a return in 2019, as under “enormous pressure.”
Earlier this month, Zimbabwe’s cabinet said it will set up a team to investigate the wave of price hikes on basic goods and services. The results of the probe are yet to be made public.
“No one in business should doubt my government’s resolve to correct blatant market failures, and to counteract and foil sinister moves to destabilize our economy,” said Mnangagwa. “We will take all measures necessary to ensure there is stability, including painful ones should that ever become necessary.”