Sunday, 7 October 2018

Panic Grips Zimbabwe

Fuel shortages intensified across the country as long queues formed at service stations that were selling the commodity amid widespread panic-buying of basic goods blamed on government’s new austerity measures.


Civil society organisations (CSOs) demanded the resignation of Reserve Bank of Zimbabwe (RBZ) governor John Mangudya (pictured below), saying the monetary measures announced by the government last week were wreaking havoc among the poor.

“The impact of the announcement of the monetary policy hits harder ordinary citizens as it immediately led to an increase in pricing of basic commodities,” the organisations said in a statement after meeting to deliberate on the crisis yesterday.

“CSOs demand that the governor should abide by the commitment he said that if the bond note does not work, he is going to resign. He also said that there was no need of having a separate account and he is now going back on his word.

“For economic transformation to happen, we need an environment that is predictable.”
Panic Grips Zimbabwe
Energy and Power Development minister Joram Gumbo had on Friday told The Standard the new tax introduced by Finance minister Mthuli Ncube on electronic transactions was likely to push the price of fuel up.

“That two cents [per dollar money transfer] that was put by the Finance minister from what I read in the economy, fuel prices are going to go up and what is happening is that if fuel goes up, then downstream everything else goes up,” he said.

Gumbo insisted there was enough fuel in the country, but dealers could be facing challenges in securing foreign currency to pay for it.

“I can tell you that there is already enough fuel in the country, in Masasa and in bond [inland-bonded storage warehouses where fuel is pumped in from Beira, Mozambique] and that fuel is being pumped from Beira,” he said.

“Regarding access to that fuel, you are very much aware that you can only access it by providing the required forex and that is a different ministry altogether.

“To access it and the effect of the 2 cents or whatever, you now have to contact the minister of Finance to find out what effect that has.

“There is fuel at Msasa, but to take it involves another ministry and money from the Reserve Bank of Zimbabwe.

“Mine is to provide fuel and it is coming into the country, but what is happening as far as I am concerned is that [fuel operators] cannot take it unless they have paid for it.”

Mandudya sought to reassure the public yesterday as people again formed long queues to fill up their cars in the capital, with others panic-buying basic goods like cooking oil and sugar.

The RBZ boss told Reuters that people should not be worried and that he expected an improvement in the next 48 hours.

“The problem is that we did not explain things. This economy is a sentiment-driven economy, so we need to communicate more with the society,” he said.

Zimbabwe dumped its hyperinflation-wrecked currency in favour of the US dollar in 2009, but a shortage of cash dollars has worsened following a disputed election won by President Emmerson Mnangagwa in July.

Fuel queues started building up last week and yesterday outlets in Harare and Bulawayo had either run out or had long queues as motorists patiently waited for their turn to fill up their tanks.

“I have been here for an hour because the queue is moving slowly. I have no choice because I need the petrol,” said one motorist, who identified himself as Pascal, at a service station in the Avondale suburb of Harare.

At some outlets owned by Total, attendants only served motorists with pre-paid cards. Other outlets refused mobile payments, preferring bank cards and cash.

Zimbabwe spends $80 million on fuel imports every month.

Mangudya told Reuters the fuel shortages had been caused by the introduction of a 2% tax on electronic payments last Monday, which meant oil firms would incur weekly bank charges of $400 000 for fuel imports but were not allowed to pass the cost to consumers.

The companies had stopped supplying fuel as a result, Mangudya said, but he added the situation would improve in the next 48 hours because the government on Friday night scrapped the tax on foreign payments.

People were also stocking up on basic goods like rice, cooking oil, sugar and fruit juice.

At some branches owned by the country’s biggest grocery chain OK Zimbabwe, management limited sales of sugar, cooking oil and a popular local fruit juice.

“Management reserves the right to limit quantities,” read a notice to customers.

A shortage of US dollars in banks has forced importers to purchase them on the black market, which has pushed up premiums and the price of imports.

On the black market, the premium for the US dollar spiked to a new record yesterday, reaching 165% from 120% last Monday, traders said.

That means buying $100 in cash via a bank transfer cost $265, up from $220 earlier this week.

The situation has not been helped by Mangudya’s decision early this week to order banks to open accounts for clients who earn foreign currency and separate their money from dollars in the local banking system, known as “Zollars”.

Analysts said the move effectively makes the dollar surrogate to Zimbabwe’s de-facto local currency.

There are $9,3 billion of Zollars in banks compared to $200 million in reserves, official data showed, a mismatch that creates a premium for the US dollar and fans the black market.

Additional reporting by Reuters
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