OPPOSITION political parties have demanded that Finance minister Mthuli Ncube and Reserve Bank of Zimbabwe (RBZ) governor John Mangudya resign, accusing them of crafting anti-poor policies that are worsening the plight of the majority in the country.
Economists yesterday took a dig on government’s 200% interest rate hike on bank loans, saying the development would worsen the plight of ordinary citizens and give rise to loan sharks and backyard lending schemes.
Zimbabweans, especially civil servants, have been relying on personal loans for their upkeep following erosion of their salaries by inflation, which is currently at 191,7%, the highest in years while the local currency has weakened to $720 against the greenback on the black market.
The central bank on Monday announced that bank interest rates would be raised to 200% from the current 80% in an effort to mop excess liquidity in the market and curb speculative borrowing.
Finance ministry secretary George Guvamatanga said the high interest rates were targetted at companies.
“We need a complete rethink of the Zimbabwean business model. We cannot have corporates in this country that are based on monopoly pricing, but are accessing cheap power and cheap credit. The new interest rates are targeting such entities,” he said.
Following the RBZ announcement, President Emmerson Mnangagwa then used his Presidential Powers to promulgate Statutory Instrument (SI) 118A of 2022 stipulating that if a bank loans out foreign currency to a lender, the loan must be paid back in foreign currency.
“Being an authorised dealer or any other banking or financial institution registered or required to be registered under the Banking Act or the Microfinance Act [Chapter 24:30], lends foreign currency or advances credit denominated in any foreign currency to any other natural or legal person, must, notwithstanding the terms under which the loan or credit is advanced, receive repayment of the loan or credit in that foreign currency; and any failure to do so shall render the natural or legal person concerned guilty of a civil infringement,” the SI read.
However, economists and labour unions told NewsDay that government was being insincere because the majority of workers in the country rely on personal loans to pay for their day to day upkeep.
Confederation of Zimbabwe Industries president Kurai Matsheza said the effects of the 200% interest hike would be passed on to ordinary consumers.
“Businesses are there to make profits and whatever cost they will incur, this will be passed onto the consumer. In this case, it is the consumer that will bear the brunt of these measures. We are still consulting with our broad membership to establish the effects of this new pronouncement,” Matsheza said.
Educators Union of Zimbabwe president Tafadzwa Munodawafa added: “It is very rare to see a clean pay slip for civil servants. Most of them have three loan deductions and it shows that most of them are surviving on borrowing. What the government has done is milking the little the workers are getting.”
Leaders of opposition political parties have also roundly condemned the measures announced by Ncube and the hiking of interest rates, saying the policies were anti-poor.
In a statement, opposition Citizens Coalition for Change said: “The main policy interventions announced by Ncube are a reiteration of policies that already exist and have failed to curb hyperinflation and stabilise prices. Unfortunately, the measures announced today have no capacity to transform the ailing fortunes of the Zimbabwean economy. The purported entrenchment of the multi-currency system and interbank market in law is not new.”
People’s Unity Party leader Herbert Chamuka said Ncube and Mangudya should resign because they had failed.
“They are only good at burdening the ordinary citizens. People are suffocating because of their policies,” Chamuka said.
In a statement, The Fight Inequality Alliance Zimbabwe said: “History tells us that there has always been the selective application of monetary-related law in Zimbabwe, with big and politically-connected businesses who would have breached these being immune to law enforcement.” Newsday