BY Kudzai Rangarirai
There are a lot of stories coming out of Zimbabwe regarding the scarce availability of the US dollars and other currencies which are currently trading in Zimbabwe.
Individuals, industry and the government seem to all agree that indeed there is a liquidity crunch in Zimbabwe.
When people talk about liquidity crunch, they do not mean the complete absence of the dollar but they mean that the amount which is in circulation is not enough according to the Zimbabwean standards.
It seems the generality of Zimbabweans, companies and the government itself seem not to have adjusted well to the dollarisation era. They are still used to dealing with large quantities of money.
In the UK, for example, the most dedicated drinker will probably go to the pub with £100 maximum. In Zimbabwe people carry thousands to go out!
The first issue to be addressed are the salaries of top management. It is noted the salaries of most top executives are pegged far too high that it is practically impossible for a company in Zimbabwe to sustain such high salaries.
The argument which is always advanced by these executives is that those are the prevailing salaries in the region. They however fail to factor in the important issue of the revenue coming into the company. This arbitrary setting of salary scales without due consideration to the revenue streams of the company has seen most companies failing to pay their workers as all the money generated by the company is gobbled up by the management salaries.
It is further noted that house prices, rentals and residential stands are absurdly high. It is clear from the pricing pattern that people are still suffering from the hyperinflation hangover. These prices need to be drastically reduced to reflect the size of our economy.
The legal fees are also too high that they even surpass those charged in the UK, US and Australia. Our courts have recently been inundated with defamation claims whereby some claimants are claiming up to US$10 million and the lawyers do not advise about the absurdity of such claims as they are also in the habit of over-charging.
Furniture shops, car rentals companies and hotels all have inflated prices which, if they are not careful, will put them out of business as no one has such type of money in the dollarised economy. They need to review their prices downwards.
The banks are also complicity in this. The maximum a person can withdraw from an ATM at some banks is US$2 000 and £10 000 if you go inside. What do you need that money for in a day? In the UK, the maximum cash withdrawal from an ATM is £300 and £500 if you go inside. Why are people not using debit cards for transactions?
It is clear from the above few examples that our economy is distorted and everything is inflated. We need to remove this artificiality from our economy and get back to reality.
Those who have lived in the Diaspora will probably be surprised by the talk of liquidity crunch. They will tell you that there is no liquidity crunch, it is actually the norm and Zimbabweans should understand that the US dollar was never meant to be readily available and the brutal truth is that it will always be scarce.
The situation obtaining in Zimbabwe at the moment is the normal situation in a dollarised economy, not the artificial bubble we saw in the earlier days of dollarisation and people must get used to it and move on with their lives.
It is hoped that everybody from government, councils, companies, individuals will understand that our economy is very small and the prices, salaries, service charge etc. must reflect the same.
Everybody just needs to review downwards be it salaries or prices.