Transaction tax

“Corporate wrongdoing prompts tough policy action”

the herald

Herald Reporters

The recent adoption by the GOVERNMENT of harsh economic measures is a response to the malicious behavior of some economic actors and trade unions who are determined to sabotage the economic transformation achieved so far under the Second Republic, President Mnangagwa said yesterday.

In the face of such harmful behaviors, which have a crippling impact on the lives of ordinary people, as in the case of gratuitous price hikes and unwarranted exchange rate volatility, which defy sound economic fundamentals, the government has the mandate to take corrective action to protect its citizens, he added.

Since May this year, the government has taken strict policy measures aimed at consolidating the general stability of the fiscal and monetary environment by curbing speculative market behavior, reducing the growth of the money supply to preserve the value of the local dollar and exposing the culprits behind the rot.

This has seen the Reserve Bank of Zimbabwe order banks to temporarily stop lending in May, introduce a currency transaction tax, recently raise interest rates to 200% to curb speculative borrowing and introduce gold coins to mitigate the demand for US dollars, among other measures.

Addressing the business community at a meeting in Kwekwe, President Mnangagwa said speculators, working in cahoots with some big financial services players, had stoked inflationary pressures by borrowing Zimbabwean dollars at rates of below inflation and using the money to generate foreign currency earnings, primarily through parallel market platforms.

After eight days of temporary lending ban, President Mnangagwa said the government observed that out of 16 banks, only four were operating within the bounds of the law and the rest were involved in illicit and malicious transactions related to the spiral. inflationary.

Responding to a contribution from Dendairy’s Managing Director, Mr. Darren Coetzee, who had complained about the RBZ raising its main policy rate to 200%, President Mnangagwa said: “You complained about a 200% interest rate. It is intended to address misconduct in the financial sector. Banks were created to lend to people, but they indulged in mischief that affected the economy.

“We closed loans for eight days and during those days we discovered the rot of the banks. Of the 16 banks, only four passed the test. Others were in deep corruption.

After the briefing, the president said the government faced a dilemma on what to do with the corrupt banks lest they fold.

“After finding the rot in the banking sector, there were two possibilities, one to expose them and the other to punish them,” he said. “We couldn’t punish them because you (the customers) were going to take all your money out of these banks and they would fold.

“So the banks begged us to punish them out of the public eye and we are doing that to them.”

Likening the misdeeds and speculative aims of these economic saboteurs to a “disease”, the president said such behavior required some form of “medicine” to be cured.

“We should focus on the good things we achieved as the Second Republic rather than just crying over the problems,” he said. “You will find that some policies that we are implementing as a government are aimed at curing a disease that will affect the economy.

“Some of the policies seek to protect members of the public from malicious individuals and unions that sabotage people’s way of life.

“When we said ‘Zimbabwe is open for business’, we didn’t say it was open for mischief or corruption. But there are people, a significant number of people in the economy who are mischievous and we are putting measures in place to stop them.

President Mnangagwa said the business sector must also understand that the country is under illegal sanctions imposed by Britain and its allies and that some of the current challenges are inflicted by unforeseen global geopolitical dynamics such as the conflict. Russian-Ukrainian.

However, he was quick to say that the Second Republic advocates local solutions by Zimbabweans for the country’s prosperity instead of crying foul over sanctions.

“After the advent of the Second Republic, we brought this new philosophy ‘Nyika inovakwa nevene vayo/Ilizwe lakhiwa ngabaninilo’. So we just can’t just sit there and cry,” he said.

“Even the Bible says that by the sweat of your brow you will eat your food until you return to the ground. So, we found it necessary to mobilize our people to eat.

“Whatever we eat or produce, we have to produce it ourselves. If it’s comfort we want, we have to do it. With this philosophy, we must say that we must be patriots. Nobody has the duty to develop, modernize and industrialize our country, but ourselves.

“To do this, the government is creating an enabling environment for businesses to thrive.”

President Mnangagwa said that overall the economy was poised to grow, as evidenced by the sharp increase in revenues from the mining sector since the advent of the Second Republic.

“The mining sector was worth $2.8 billion a year and when we came in, we started supporting our people through modernization to reach the set target of $12 billion by 2023,” did he declare. “We are now at around US$6 billion and by the end of the year we will be at US$7 billion.

“We have three big lithium mines and we’re going to grow to $12 billion by the middle of next year. In four years we would have gone from $2.8 billion to $12 billion and that’s is a huge achievement that we should celebrate.

President Mnangagwa said industry capacity utilization was now at 68% from around 30%, adding that on-shelf product content in stores was now at 70% for domestic products from around 40% .

Milestones are also recorded in power generation with an additional 300MW expected to be added from the first phase of the Hwange Unit 7 & 8 expansion and another 300MW early next year.

“All of this is progress and it means the measures we are putting in place are working,” he said. “However, the time is coming when we will pronounce political measures concerning our own currency. Some will go to bed with their shoes on, but it will be for the greater good of the economy.

President Mnangagwa said the role of government is to support local talent in all sectors, be it agriculture, mining or tourism.

“Our goal as government is not to suppress the talent in you,” he said. “We want the government to provide an enabling environment for talented people in all fields to earn money. Those who don’t have money-making talents can work for those who can make money.

“The government is not there to do business, but it is there to facilitate those who want to do business. My job is to open an environment to open up business and opportunities for you.