However, the opposition has sometimes been said to be weak in comparison to Zambia’s leadership Hakainde Hilchilema. He has come under criticism for not doing much to be considered a worthy opponent.

Nelson Chamisa has thus far addressed the nation virtually stating the party’s agenda. More recently he called upon the nation’s youths to behave in a similar fashion to those that we instrumental in the Zambian opposition party’s victory.

Nonetheless, Eddie Cross has stated that Chamisa is still a kid. Eddie Cross is a founding member of MDC-T who later became a supporter of the Mnangagwa’s regime following the 2017 coup.

Watch the interview below:

Eddie Cross is also an economist who has positively stated that the Zimbabwean economy is on the rapid rise.

The post Watch: “Chamisa is still a kid” – says Eddie Cross, founding member of MDC appeared first on Provoker Magazine.

By Eddie Cross

We waste billions on investigating space, when we know that man could never live outside the thin layer of atmosphere which embraces the world. We try to find life, in any form ‘out there’ and claim that this might be proof that we are not alone. We justify senseless expeditions to dead planets and pretend that one day we might colonize these inhospitable places.

We find fossils – no matter how bizarre and call them relatives and we create images showing the evolution of man from something in our ancient past and then slowly evolving into what we are today. In doing so we deny the mathematics that tell us that there simply has not been enough time for this to happen, no matter how many billions of years we ascribe to the process. It is mathematically impossible.

The more we learn about the world and all the life forms that surround us and even our own bodies, the more we appreciate that we are simply scratching the surface. We lie on our backs in the garden and stare up into the skies above us at night and try to imagine that it goes on forever. Somehow a curtain descends in our minds and halts the imagination as if a silent hand drew it across the stage behind which, it all exists.

We develop technologies and find uses for stuff that has lain dormant in the ground for tens of thousands of years and then treat it as if it was going to last forever. We learn how to live in cities and in crowded places and if we have the money, live as if there are no limits to our consumption. We pollute our tiny fragile planet and then express outrage at how it responds – 50 degrees Celsius in Vancouver, wild fires in Denver, floods in other places, all symptoms, if only we could read them, of a struggling global system that is so finely balanced that even a tiny shift could destroy all life.

Instead of finding ways in which to work together to solve our problems and to manage our globe in a sustainable way, we fight each other. At any one point in all our history there has always been wars and armed conflict. We fight over language, real estate, culture, ideology, space and anything else that might justify going to war or localized conflict. It is absurd.

I watched a film the other night based on a story about conflict between the super powers. New technologies, submarines as large as battleships, weapons so accurate that they can target a minivan 15 000 miles away with pin point accuracy. Missiles so fast that they cannot be tracked and destroyed. Symbols of might and power accumulated beyond all rational limits. We saw two World Wars last century – the next will make those conflicts look like a Sunday school picnic.

Given our genius and capacities, it is extraordinary that despite our ability to generate value on a scale never seen or imagined, we still have a quarter of the world’s population living on the edge of starvation and complete deprivation. Despite our population densities and education and our ability to meet everyone’s physical needs, we are lonelier and have a higher number of suicides than ever before. We have social problems such as drug addiction, alcohol abuse and mental illness on a scale that, from the outside, would make any space based observer think this was a nut house with the crazies in charge.

And yet! What a wonderful world we live in and what a great time to be alive. We have everything we need to make life here, on earth, a living delight. All it takes is living by the rules.

Whose rules? That is the next question and this is where the difficulties arise. If you are an agnostic or atheist your problem is that there are no rules, you have to make them up as you go. If you know anything about Mankind, then you will appreciate how chaotic such a process would be. Most people would immediately craft a set of rules that suited them, their needs and life styles.

If you are an avid democrat then you blithely go into the sunset using a set of rules established by an elected minority, who once they get into power decide that they know best, or worse, take the common denominator on everything, usually the lowest point in the equilibrium. Should the moral consensus in a democracy slip (as it is doing in most Western countries) then the rules will adjust to accommodate the new consensus no matter what that might be.

If you are a convinced Communist, then the Party rules – OK? No debate, your leadership comes out of an incestuous structure that is the Party, has grown up in the Party and accepts that the Party is all powerful and all knowing. Fine for a bunch of lemmings, but also suicidal in many cases. Mankind has to give up so much in those societies – just look at the slavish, flag waving in North Korea or Tiananmen Square in Beijing. The nightmare spectacle of 5 000 men in uniforms or identical suits, all clapping hysterically at every word that emanates from the Party platform. It works, but often hides another nightmare.

Then you might live under a Dictatorship – seen a few of those this past century, but nothing like history with the Pharaohs and the great Emperors and conquistadors. So we might have a Hitler or the King of Swaziland, whose word is law and who claim the sovereign right of rulemaking as if they were mandated by God. Sometimes it works – the benevolent dictatorship, but most times it takes mankind down an alley with a precipice at the end of the road.

Rules? If any, where could they come from? I once went to hear a talk by Aleksandr Solzhenitsyn, a Russian Christian Dissident in Geneva. He stated in his talk that in the Soviet Union they had to lock up their best physical scientists because when they examined the physical world in which they operated, they saw only order and design and asked the impossible question of where it came from? Belief in God was outlawed and intellectual honesty with it. The Soviet State was officially Atheist. But they could not supress the belief in God and when the Soviet Union collapsed, the Russians reverted to belief in God and the Orthodox Church and a rules based society based on Christianity. At the same time, they eventually restored the Tsar in the form of Putin, but that is another story.

So where does the truth lie, who makes the rules by which Mankind might live and find his real self and worth.

I am afraid here I am an old style fundamentalist. I really do believe that the Bible holds the key to this ancient dilemma. It alone, in all the writings in the world, tells a story that somehow makes sense. God does exist, He is real and works in the world in which we live and die. He created the world and gives all of life meaning and significance. He sets the rules.

It is no coincidence that our modern judicial system is very much based on the ten Commandments. That the American Constitution, which was crafted by men whose lives were soaked in the Scriptures, takes a biblical view of the true nature of man as a fallen creature. Which recognises the need to limit State power and decision making and to splits the responsibilities of Government between the three arms of the State, each of whom supervises the other. This is a biblical rules based system, in my own view, the only one that makes sense.

The post The Bible is our only hope in fixing the world: Eddie Cross appeared first on Provoker Magazine.

By Eddie Cross

When I was just 17 years old and was starting my first real job, my father took me to his insurance broker and made me take out a retirement annuity with the Old Mutual. Every person needed this, he said, to ensure that they had something to live on when finally, they left active employment. Over the next 50 years I faithfully maintained a stop order on my Bank account in favour of the Old Mutual – with another 4 policies taken out as I got older on the advice of my personal broker.

As my career developed, I was appointed to a position with a major corporate entity and when I signed up, the Company Secretary informed me that they had a pension scheme for their staff and whatever I contributed they would match. In addition, they informed me that my contributions were tax deductible. As I rose through the ranks until I became CEO, my contributions grew, taken off at source, we never took it into account – it was just my pension.

Over my entire working life, I paid into the Old Mutual about US$1,4 million dollars – today my pension from the Old Mutual is worth about US$20 a month. In the past 20 years’ hyperinflation has wiped out the entire savings of my generation.

Back to NSSA. I have calculated that over the past 25 years’ workers and their employers have paid perhaps US$12 billion into this organisation. Of this sum only US$2 billion remains as assets and it is not because they have paid out pensions in one form or another. The country is littered with NSSA funded projects that are not performing and in many cases, are totally unproductive. It is a testimony to failed investments and corruption with massive overheads. The welfare of its subscribers is the last thing on their mind.

We have got the whole issue wrong, both in the private and public sector. The question is what to do. We are a poor developing country and cannot afford the luxury now taken for granted in the wealthier countries, of social security for life, unemployment benefits and other forms of assistance. Whatever we do has to be paid for from our meagre national resources and we have to make sure that every dollar counts. So where do we go from here?

First let’s all agree that the status quo is simply unacceptable. Most employees regard NSSA contributions as just another tax. To employers it is a pain in the butt involving more complex payroll computations and yet another unproductive expense. If it was made voluntary, no-one would subscribe. Had I invested my pension contributions on the stock market or bought property with my savings, I would be quite well off, instead we cannot even pay for a basket of groceries with my entire Old Mutual pension.

Looking around the world I see a thousand permutations of arrangements to try and give working people a decent pension and dignity in their old age. We cannot emulate the great majority because we simply do not have the resources. The fact is that one workable solution is right under our noses – the way in which the State pays out pensions to the Civil Service. We have over 300 000 pensioners retired from the Civil Service – more than I think are actually there because our life expectancy is so low, but that is another issue. We should be carrying out proof of life tests on a regular basis.

I think that for the private sector we should be looking at the German model. In Germany pensions for private sector workers and management are paid by sinking funds established for each sector of the economy. These funds are financed by joint contributions by both workers and employers. The funds are not allowed to invest any surpluses but instead maintain three months cover for all expenses in the form of social support.

Zimbabwe, with its established system of National Employment Councils for each sector of the economy, could use these to administer similar arrangements but also by working the NEC system into NSSA. Each industrial sector would have an Employment Council to negotiate working conditions with their employees. These Councils would be financed (as at present) by a small levy on salaries but in addition each NEC would create a fund to be lodged and administered by NSSA. Each NEC would negotiate social support in the form of medical assistance, pension rights and unemployment or retraining grants. These payments would be paid out by NSSA using the funds collected by each NEC. All NEC’s would be members of NSSA and would have elected representatives sitting on employers and employee councils with a summit body representing the two subsidiary bodies.

NSSA would not be allowed to invest surplus funds in anything except short term financial assets that are interest bearing. The funds held by each NEC being purely for the purpose of social support. Target pension rights should be about 60 per cent of the salary of the last post the person had held prior to retirement. Should any NEC move either into deficit or surplus – the NEC Council would adjust the levy.

To help support such a system, the assets accumulated by NSSA in the past 25 years should be managed to support the new system of social support. In addition, all Pension Funds presently run by individual sectors such as the Mining Industry Pension Fund for example, would also be managed by the NEC Council and revenues used to support the new system. Some form of accommodation for workers who do not have NEC cover, would have to be organised and managed by NSSA.

I am aware that the Ministry of Finance wants to move ultimately to a system supported by savings. South Africa has such a system and the PIC there is the largest wealth fund in the country. Singapore is generally regarded as the best example of such a fund and it has played a key role in financing the development of the local economy. However, such a system (as we have learned) requires low inflation and long term stability and I am not sure we can offer either. Under such conditions I would stay with what we have got in the public sector. Certainly, if I was a Civil Servant I would not want any changes.

The post Exposing the problem with Zimbabwe’s retirement security: Eddie Cross appeared first on Provoker Magazine.

By Eddie Cross

In 1989 I travelled to Germany with our Minister of Home Affairs, Dumiso Dabengwa; Germany, just recently united after decades under the divided state administration that the Second World War left behind. The highlights of that trip for me was meeting a young Christian Democrat in the East called Angela Merkel and buying a hot dog from the former East German Ambassador to Zimbabwe, who was now working in a fast food outlet in Berlin. The other Memory which will stay with me until I die, was a plain white marble Memorial to the German Soldiers who fought in the Second World War in what had been East Berlin.

This Memorial is virtually unknown outside of Germany, but there can be no doubt, that whatever you think of the Nazi Party and its leadership and the way Hitler dominated Germany and led the country into suicidal conflict on the basis of racial supremacy, the one outstanding feature of the War, was the German Soldier. All those young Germans who carried out amazing military feats in obedience to their leadership. Every day, a large truck had to be brought to this Memorial to take away the flowers and memorabilia that visitors left behind.

I lived through the Vietnam War when America tried to halt the tide of Communist expansion in the Far East. It divided the US like no other war after the Civil War. Veterans came home in coffins and in wheel chairs many deeply troubled by the horrors they had experienced and found that they were not regarded as heroes. Despite this, the US leadership decided that a Memorial should be created in Washington in the memory of the more than 50 000 men and women who died in this failed war.

An Architect was appointed and the result, when it was unveiled, was very controversial – just a deep trench in the ground lined by black stone, on which every name of those who died was inscribed. At one end a simple statue of ordinary GI’s in a fight. As I walked through that trench I was struck by how real the sacrifice of every name was made clear. In the same place were dozens of families, parents with small children, looking for the names of a relative who was there. Toys, flowers and tears were all over the place. It felt like sacred ground, no different to the German Memorial to the millions of young Germans who died in the Second World War.

Here in Zimbabwe, just two weeks ago, our President unveiled a Memorial to a Nanga who had been executed in 1896 by my forefathers for her role as one of the leaders of the first revolt against white, colonial settlement. Known here as Mbuya (Grandmother) Nehanda. This was very controversial in what is a predominately a Christian country today and many criticized the action because Nehanda had been a Nanga or Witchdoctor. I watched the ceremony carefully and noted that the President had asked a Christian Pastor to open with a prayer and then a selection of Chiefs from the Provinces pariticipated. In his speech he highlighted that they were celebrating those who had fought and died in what has become known as the first Chimurenga (or Peoples struggle or war).

What many may not know, the Presidents own family was affected by this early struggle against colonial occupation in that his Great Grandfather had led a military unit against the settlers and was killed in the attack. I just hope it does not become a shrine to Animistic Religion.

That brings us back to the need for Memorials to the men and women who died in our own internal struggle for Independence, democracy and freedom. In South Africa, the Afrikaner people built a Memorial to those who died in their own history in Pretoria in the form of the Voortrekker Memorial. I have visited this and seen for myself how Afrikaner families bring their children to the Monument and show them the murals depicting their history.

In Zimbabwe we have War Memorials to those who died in the two World Wars and their graves are looked after by a Trust. We also have a Memorial in the Matobo Hills to Rhodes as well as the men who died in the attempt to capture Lobengula during the occupation. There is no memorial to the men who died in that same battle protecting their King. The Rhodesian Memorials are protected and respected as is the Voortrekker Memorial in South Africa.

But, 41 years after the end of the Second Chimurenga or Liberation War, there are no memorials to the men and women who died in what had really been a civil war. I think this is a serious oversight.

What I would like to see is a Commission to oversee this process and to undertake the creation of memorials to the Zipra, Zanla and Rhodesian Army soldiers who lost their lives in the struggle. Such a Commission should run a competition to select a suitable design for each Memorial. Then to raise the funds for construction from the public and oversee construction at selected sites. Families should be invited to submit the names of those whom they want remembered.

These sites should be open to the public and to the families of these men and women and be open to each, to visit and remember. It gives us as a people and a country a place where we can remember the people who made what is the ultimate sacrifice which is to ‘give up his life for others’. Young Zimbabweans need to know and understand that what they enjoy today in terms of freedom, democracy and dignity with opportunity was won by sacrifice.

That is exactly what the British are doing today at Normandy, overlooking the beaches where thousands died for the freedom of Europe. As the Germans and the Americans have shown it does not need to recognise or even celebrate victory – just courage and sacrifice. Whatever cause is involved it is cathartic and healing and allows us all to remember the sacrifice of others who did not come home.

The post Eddie Cross: Not erecting the statue of the n’anga Mbuya Nehanda would have been a serious oversight appeared first on Provoker Magazine.

By Eddie Cross

When I first started work in 1957, the rate of exchange for the Rhodesian Pound against the British Pound was 1 to 2.5. My salary as a farm Assistant was small, but I could buy quite a lot, even a small car after 6 months. At Independence in 1980 the local dollar was worth 2 to 1 against the United States dollar and again I could live very well on my salary in local currency which had real value. It was taken for granted that our currency was stronger than the international currencies in which we traded. In fact, we were proud of the fact although I thought as an economist and businessman, that we should rather have a weak currency and build up our reserves of hard currency for a rainy day and to encourage exports.

After Independence we maintained a strong local currency for a long time but gradually the foundations of fiscal prudency and sound State management of our affairs began to undermine the local currency. The crunch came in 1997 when the State paid out Z$3,6 billion to war Veterans and entered the war in the Congo to remove Mabuto and replace him with Kabila. The combined cost to our economy led to an immediate and catastrophic collapse of our exchange rate to 12 to 1. In the following decade we were to see our currency simply go down the tube and by 2008, a billion local dollars could not buy a loaf of bread.

Even today, I do not know how we survived – many did not of course, many famous firms that had operated here for a century, vanished. To survive we had to break the law and trade in hard currency. But the overall effect of that period was that we wiped out over 100 years of savings and value. In 2008 the total value of all the local currency in circulation was a few cents in real money per capita.

On the 17th February 2009, I sat in Parliament as a new Member just elected, and listened to the Minister of Finance dismantle the economy of the past and usher in a new dispensation that was to transform Zimbabwe in the next 4 years. The speech was short – 15 minutes, but its impact was enormous. He allowed us to trade in the currency of our choice, lifted all controls on the exchange rate and on prices and liberalised the marketing of gold. Inflation collapsed.

In the next four years the revenues to the State grew exponentially – US$280 million in 2009, US$900 million in 2010, US$1,7 billion in 2011, US$2,8 billion in 2012 and our budget for 2013 was US$4,3 billion. In 2012 we liquidated all local currency bank balances for the paltry sum of US$19 million.

The problem then was that we were starting to trade very substantially on electronic platforms. The traditional role of the Banks and currency was changing very rapidly. Cheque books vanished, cash transactions declined to a small fraction of the local market. The Reserve Bank printing machines resumed activity after four years of inactivity – not to produce paper money, but electronic money. Suddenly we were wealthy again – Zimbabweans had bank balances worth US$23 billion. Compare that with the paltry US$19 million in January 2009.

But it was not real money, it was mainly air. When Mthuli Ncube took over the chair of Minister of Finance in 2018, he quickly stated the obvious – our RTGS balances were not real money, it was something else and did not, in any way represent the real value of our currency holdings. I said at the time that if you wanted to know whether our currency was worth US dollars at 1 to 1, just take $1000 bond notes to the Reserve Bank and ask for real USD. If you were paid, then in about 5 minutes the queue outside the Bank would stretch to Mbare.

He set the local dollar lose, called it the RTGS Dollar (electronic dollar) and allowed it to float. In June 2020, just two years later, the local currency was trading at 135 to 1. Inflation in local currency, tied almost directly to the exchange rate went to 850 per cent in mid-year. Suddenly we were poor again.

The common expectation at that point was that it was ‘business as usual’ and that the local currency would be at 200 to 1 by the end of the year. However, we had not read the game plan, it was called the Transitional Stabilisation Programme or the TSP. This had been published in August 2018 by the new Government and most of us had dismissed its contents as just another State false vision of where we were going. The reality was very different.

But we were wrong, the new Government implemented the TPS! They balanced the budget, reduced recurrent expenditure and raised taxes. They allowed inflation to devalue our stock of electronic US dollars to more realistic levels and they curbed the printing of money. Someone said they threw away the printing press. Slowly the fundamentals started to assert themselves.

In June 2020, the decision was taken to start a formal market for foreign exchange. The reason for this was the failure of the Banks themselves to do this, the appreciation that, at 135 to 1 the local currency was seriously undervalued and the direct correlation between the exchange rate and inflation. Money supply was no longer the cause of our inflation.

The auction had an immediate impact – at the first auction we sold US$15 million with a wide spread of bids, rapidly the market settled at 82 to 1, we were right the local currency was worth much more than 135 to 1. Over the next year the turnover on the auction rose to nearly US$2 billion per annum, sales on the interbank market to about US$800 million and transactions for local US dollar bank accounts to US$2,8 billion – all at the indicative rate of 85 to 1. This means that the parallel market had shrunk from almost 100 per cent of trades in the early part of 2020 to perhaps 20 per cent today. Even on that market the rates strengthened and then declined to where they are today at about 125 to 1.

Debate rages as to what the correct exchange rate is – many arguing that the only real market is the street where you can change money day and night. They claim the auction rate is somehow manipulated. To the extent that the auction rate is determined by the weekly bids by about 600 companies, they are right. What is now required is for the people holding USD balances to offer them on the auction at a rate they demand. This has happened only three times – right at the start two NGO’s sold US$550 000 on the market at 90 to 1. Just recently a major mining company put US$15 million on the market and accepted the weighted average exchange rate. If this happened, then we could gradually move to a more normal system, where the Banks fix the rate every day on the basis of supply and demand.

Given that we have a small surplus of hard currency on the formal market and maybe a significant surplus when the informal market is included, it is my view that under such conditions the local currency would quickly become overvalued. At that stage I would argue that the Reserve Bank should intervene as a buyer and build up our hard currency reserves. That is exactly what the Asian Tiger economies have done with great success.

But there is no doubt in my mind that we Zimbabweans are now much better off than we were, that what we earn, even though it is less than we want, has real buying power. But even better than that, our economy is now on a sound footing and starting to grow rapidly in real terms. If we stay on course into the future, it is just possible, that we could join that small group of national economies that are now delivering a higher standard of living to their people.

The post Zimbabwean economy is finally on a solid foundation: Eddie Cross appeared first on Provoker Magazine.

By Eddie Cross

With four children to raise there was never any spare cash and I was lucky to be born a white Rhodesian with all the privileges that went with that status. When I went to school, I cycled and on arrival found myself in a school where the teachers were well paid and nearly all were University educated. Being a white African there was no class distinction – we all wore uniforms, we all looked the same, we played games and wrote exams. The State funded school system for white kids in those days was on a par with the private schools in the West.

In the holidays I nearly always went out to the Esigodini Valley where my godfather owned two ranches and a small irrigation farm. There I worked on the farms, cutting hay, herding cattle, building small earth dams to conserve water and roaming in the hills that were all around us. We visited the Ndebele Kraals nearby, sat with the older men who reminisced about the days when they fought the white settlers and other tribal groups for dominance. My godfather attached a member of staff to us to make sure we were safe and did not do anything stupid. This man, taught us bush craft and we hunted baboons that were raiding the maize fields for food.

Going back to school was never easy, we had to wear shoes, be on time and help maintain and develop the school grounds. Sport was almost as important as academic studies; we played Rugby, Cricket, Hockey, Athletics and Swimming. We were required to belong to a club of some sort – Theatre, Christian Union, Debating Society. Life was hectic and every day was fully occupied. When we wrote exams they were set in Europe and graduation meant that you could get into University pretty much anywhere in the world. I also became a Boy Scout and spent most weekends in the Matopo Hills, eventually becoming Troop Leader and taking on responsibility.

I did not know it then, but it was a deeply privileged upbringing in every way. We came out of that period, well educated, physically fit with a broad knowledge of most sports and a keen sense of Nationalism. We also knew and loved the bushveld that was all around us, the wide open spaces, dry, chilly mornings in the winter months, the early rains with that unmistakable scent of the earth and water. We knew how to handle ourselves and when called upon we knew how to lead. It is no wonder that the men and women that grew up in that environment never forget and will always be homesick for Africa, no matter where they go.

Only now, as I look back do I appreciate the many other things that worked together to make us what we were, and in many cases, still are. As individuals our background taught us to be self-sufficient, enterprising and willing to take the lead. All Africans have a clear set of values – family comes first, God exists and is important in our lives in a real way, men are men and women are women. Raised in a largely patrilineal society we were proud of our masculinity and could not really understand or accept variations from the norm. Going from here into other Western nations and cultures we often feel a bit Neanderthal. Certainly very different and even the object of amusement by others.

Our Nationalism was a bit misplaced, but very real. We were proud to be Rhodesians, to be rebels in a world of conformity to societal values and norms that to us were often depraved and unhelpful. We paid little attention to the changes taking place around us and when finally, our world disintegrated in 1980 and we came to Independence with a majority government, most of us left the country of our birth, to which we had been so attached and had defended and found ourselves in foreign lands where we seldom felt at home.

For me, I took my young family to Europe on a journey of discovery in 1976. We had never travelled outside Africa and we spent 6 weeks travelling through Europe and the United Kingdom. On return, we held a family Dare and decided that we were no longer Europeans, we were Africans and that Rhodesia, soon to be Zimbabwe, was our home. We have stuck to that view and we all live, work and play here, except for two grandchildren who are studying abroad. I was very proud of my eldest granddaughter at Christmas when she told me that after graduation she was coming home from America. She will come back with a first class degree in mathematics and data management and will be able to make a contribution to building up this small African State.

What excites me about the present situation in this country is what I am calling the ‘Third Generation Revolution’. This is a generation of young people who are the grandchildren of the first generation of Zimbabweans who formed the foundation of the country before and after Independence. Their grandparents left the country after Independence and moved to other parts of the world where they settled. Then there are the generation who benefitted from the surge in educational opportunity after Independence and who left the country for further education or opportunity. They are both now coming home and are starting to make a huge impact on the country.

These are young Zimbabweans who have woken up to the fact that abroad they are ‘strangers’. They speak with an accent others do not recognise, they long for the blue skies, rolling bushveld and wild places that is Zimbabwe. They have skills and resources of all kind plus valuable experience. Coming back to Zimbabwe they have gone into farming, mining, industry and commerce. I can take you to any part of the country and you are starting to see the results of their energy and enterprise. One young couple I spoke to after they arrived from Australia, said that they had come back to give their children a chance to receive the sort of education they had received when they were growing up here.

My son is in the USA today to attend his daughter’s graduation in Michigan. During the four years she has been there studying, he has tried to get over once a year to see her and meet friends and attend conferences. One year he came back and said ‘Dad, these Americans are so patriotic, they fly flags, sing the national anthem and are so proud to be Americans. Why cannot we be like that.’ All this third generation needs, is to feel accepted and recognised for who they are, Africans who want to make a contribution. We have a way to go, but a start has been made.

America is populated by migrants who have made the USA their home, speak its language and salute its flag. In return the USA has given them dignity, opportunity and participation. It’s not magic, it’s not contrived and it has created a country that still leads the world in productivity, enterprise, science and education. If we can provide our children and their children with such a platform there is no reason why Africa cannot be the continent of the future.

The post Africans don’t realize how tremendously privileged they are: Eddie Cross appeared first on Provoker Magazine.

by Eddie Cross

Such a computation today would be ridiculous. The time is fast approaching when conventional armed forces will have little real function except to maintain law and order on a limited scale in specific localities. Interstate armed conflict, especially involving the major powers is most likely to be so overwhelmingly destructive, that it has become almost impossible. Dirty wars at a local level are the game today – ISIS, Myanmar, Kashmir, Mali – the list is very long and growing by the day, but the idea of a global conflagration such as the two World Wars of the last century is now unthinkable.

Even 20 years ago, Governments believed they could control what their people read and believed. The generation of leaders who grew up in Communist States or in Islamic countries, thought they could dictate what their people thought. Control of the newspapers, the media and physical movement would be enough, they imagined, and then the cell phone arrived and the ubiquitous internet.

Every Dictators nightmare.

Today the era of the powerful editors of great newspapers, the giant presses that poured out the news for sale on the streets, all gone. There was a time, not long ago when an editorial in a great newspaper could influence the world. Now no one even knows their names. Newspapers will soon be a thing of the past.

The acceleration of change seems to know no boundaries. I cannot remember when I last had to go and see my bank manager. I cannot remember making out my last cheque. We never bank any money in cash anymore. What about the telex or the typewriter, even the ultimate – the Fax Machine with its rolls of paper. My Grandson does not even know the name of some of these agents of change in the last century.

Yet, the challenges remain.

I want to list just four: Education, health, poverty and security.

Why these four in particular? It is because these are the four elements that really determine the quality of life for all of us. Education because it has always been the main driver and manager of change in society. Do you want to liberate women in a harsh patrilineal society, educate the girls! Do you want to liberate your children from the crushing poverty and insecurity that surrounds your family, educate your children! Are your afraid your children will not cope with the new world order that will confront them when they leave home, give them the one thing that will pay dividends all their lives – a decent education.

I was raised by a woman who had just two years in a primary school and who thereafter taught herself secretarial skills that made her a sought after employee. She raised 4 children, almost on her own, when my father became an alcoholic and lost everything. We got the best education she could afford, assisted by a State that gave us as whites, preference when it came to services like schooling. I was the very first in my family to get a University education.

I have a vision of a new world order, where in every country of the world, rich and poor, when a child leaves home to walk to school, they cross the threshold into a secure, safe environment where if they did not get breakfast they will get something to eat and when they enter the classroom, there is electricity, clean water, with dedicated teachers who are well paid and motivated and every child has access to a computer and the internet. Is such a thing possible? Yes, it is because never in world history has the world economy generated such surpluses! It is simply a question of re-ordering our priorities.

In our Men’s Fellowship at Church, we invited a business person to talk to us about long term security. He was a person who had made and lost several fortunes and was a wealthy man in his own right. He began his talk by saying that the most important aspect of securing our individual futures was not the latest pension plan or savings and investments, it was ensuring that we were healthy. Simple, it hit me like a blow in the face, the truth of that statement has remained with me since then.

If you do not have your health, everything else fades into insignificance. So access to health services must be one of the great challenges of our time and maybe the Covid pandemic is a timely reminder. Those burning pyres in India will remain in our minds for ever. And do not think that the developed world has found the answer – the NHS in the UK and the Health Insurance industry in the USA are in fact examples of costly health systems built by societies that have the resources, but even so they do not meet the basic needs of everyone and the services they supply are often snarled in red tape and available only to the better off after lengthy delays.

I think the world can do better, we need more competition, we need to use new technologies and we need to ensure that basic health services – diagnosis and treatment, are available to everyone. We may not be able to give heart transplants to everyone who needs it, but we can treat 85 per cent of the problems that everyone faces every day. Covid, as Obama said during his Presidency, would be a wakeup call to the world where you have to treat everyone in order for everyone to be safe.

Then we need to tackle poverty. Have you ever walked into a village where everyone was starving and near death? I have, and it is not pleasant. I remember a Sunday Service in our Church when two girls who had volunteered to work in a refugee camp in Somalia came home and testified to what they had seen. They started to talk and then broke down, unable to describe what they had seen in the camps. Jesus said you will always have the poor among you, but he also said that if you have two coats, and your brother none, you should give him one. He also said that the greatest law in all of creation was that we should serve one another.

We live in an unequal world made more unequal by the new economy and the new world order. Billionaires abound. We need men like David Bussau who, when he reached the ripe old age of 40, sold almost everything he owned and put it into a Trust and has spent the rest of his life investing in people. I visited a project in India where a simple investment of US$500 per family and title rights to 50 square metres of land had transformed the lives of thousands.

Then the issue of personal security. It is astonishing to me that so little change and progress is seen in this sector and to me this is one of the great challenges of our time. Corruption and crime is bigger than ever, terrorism, using simple technologies and equipment is becoming universal. Even low levels of terrorist activity can dislocate a whole community and have devastating impact on economies in an age where news is instantly available across the world.

Anybody who is involved will tell you that this is the toughest assignment and as the UA and the Russians have discovered, even the best armies cannot cope.

If we can address these four challenges, we can be assured that our children will be able to make their way in what has become a computer driven jungle.

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By Eddie Cross

Because these deliberations were always on a strictly private basis and none of us talked about these encounters or their outcome, I will not talk about this process here, except to give tribute to two incidents which highlight my topic today – that of the role the private sector can play in Zimbabwe, if it is allowed to do so.

A year ago we were plagued by shortages and queues for basic necessities – fuel, cooking oil, maize meal and other items. In addition, our money markets were chaotic, the ‘market rates’ set by our shadowy world of informal sector traders, were going through the roof, 135 to 1 and rising. Business was talking about 200 to 1 by Christmas and all the consequences. Inflation peaked at over 800 per cent, driven mainly by the collapse of the local currency.

Our informal group was invited to attend a Cabinet Committee led by the then Minister of Foreign Affairs, General S B Moyo (now late) and comprising of a number of senior Ministers and Civil Servants. We arrived at the venue at 14.30 hrs, not knowing what to expect and were told to wait until we were called. When we finally went into the meeting we were told where to sit and then the Chairman asked us for our ideas on how to resolve the market problems we were experiencing.

We then simply stated that in our view, the problems with supplies could only be solved by handing over responsibility to the private sector. He was most surprised and asked us if we had the capacity in terms of both financial and physical capacity? We responded in the affirmative and to bolster our position we had representatives of very large corporates in our team. S B Moyo was a very effective Minister and with his military background, used to decision making. He stated that he supported our point of view and thanked us for our contribution. We left the meeting.

I am not sure of what transpired afterwards, but in a series of decisions and actions, the supply of five critical basic commodities was transferred to the private sector and liberalised using market principles. Fuel, maize, soyabeans, wheat and crude vegetable oil were involved. The market problems vanished.

Some months later, one of our group in a meeting with Mr. Moyo reminded him of that crucial meeting and the decisions made and said ‘Minister, I hope you understand just how much you helped the country by those decisions.’ We are going to miss him very much going forward.

The chaos in the money market remained. We did a mathematical analysis of the problem and concluded that the main driver of inflation was the depreciation in the exchange rate. We were not satisfied it was justified. We knew that the bubble created by artificial exchange rates in 2014/17 had to be burst and the local currency devalued, but we also felt that the extent of the depreciation we were experiencing, was no longer justified by the fundamentals. We had stopped printing money, in fact there was a shortage of the local currency, we had a fiscal surplus and a cash budget process and a balance of payments surplus. We had authorised a return to the multi-currency system used when we dollarised in 2009 while retaining our own currency as the main means of exchange.

In early June 2020, the President called us in for a light supper at State House with the Minister of Finance who had suggested the meeting. The President went around the room asking each of us what we thought should be done to bring a halt to the chaos in money markets. We gave our views and were thanked and went home. He sat on this issue for two weeks and then gave an instruction that the Reserve Bank should initiate a formal auction for foreign exchange at the Bank. The Governor advised on the technicalities and the auction was launched on the 23rd of June.

The rest, as they say in the classics, is history. In the first few auctions we were able to put US$15 million a week on the auction and with several hundred companies participating, the rate quickly settled down at about 82/83 to 1. Over the next 6 months we were able to increase the weekly volume of hard currency to over US$35 million a week and with the currency stabilised, the inflation rate began to fall, declining from a high of over 800 per cent to 350 per cent by the year end and just over 4 per cent per month. The rate of exchange had devalued slightly to just under 84 to 1. The month on month inflation rate today is 2,19 per cent.

The private sector was taken by surprise, ‘was this sustainable’ they asked, we responded that in our view it was. It was being funded by our own cash flow from exports and other sources. It was exciting to see, week after week, hundreds of companies, small and large, buying hard currency on the market at rates they set themselves and funding the real heart of this economy with raw materials, machinery, spares and equipment. This process established a new sense of stability in all markets although the informal sector continued to report transactions at 100 or 110 to 1.

I am not concerned about this wide gap between the formal market rates and the informal rate for two main reasons:

Firstly, the majority of funds being used by the private sector to support imports of all kinds, are now taking place at the auction, or formal sector rate. Right now at the level of about US$5,4 billion a year or 96 per cent of all formal sector imports;

Secondly, those individuals and companies who are using the informal sector to secure hard currency and doing so either to protect value in the mistaken belief that the authorities are going to allow another bout of money driven inflation or they need money to fund smuggling in one way or another.

As far as I am concerned the much higher rates paid for currency being traded outside the formal system is essentially a tax on these activities. It gives a much higher return on remittances from abroad and this in turn is fed into the economy to buy food, pay for education and health services and to build homes. All positive and contributing massively to the welfare of our people and to the economy at large. The good thing about the stability created by the auction is that it has also stabilised the informal market rates which have changed very little in the past 8 months – in fact they have strengthened when compared to the rates that were running when the auction was started.

Listening to the voice of the private sector. Taking key decisions to unlock its potential for growth and market driven stability. That is what it is all about. What concerns me is that so few business leaders have the national interest in mind when they seek the ear of our political leadership. So often it is their own narrow interests that prevail when they get an opportunity to talk to power. If we can get around that, this will be a very different place in a very short space of time.

Eddie Cross
Harare, 27th March 2021

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Shortly after the Government was sworn in August 2018, they agreed to an economic and monetary reform program. Since then much of this ambitious plan has been implemented and the consequences have been a sharp deterioration in living standards and disposable incomes. What has been already carried out?

First they had to deal with the burgeoning fiscal deficit which had reached over 15 per cent of GDP and 40 per cent of the State budget. They raised taxes and forced all government Ministries to live within their allocated resources – in a few months Government was operating on a cash basis and had a fiscal surplus. Then they delinked the new forms of currency in use from the US dollar – effectively trying to move away from the US$ as a primary means of exchange, although this created a new problem – that of price discovery – what was everything worth and in what currency?

The Government then gave everyone the right to open foreign currency accounts at their Bank and hold any foreign currency receipts in those accounts. At first this was not trusted but today – just six months later, these means of holding foreign currency are accepted. Then came the February monetary statement from the Reserve Bank. In this statement the Government announced that the conversion rate of 1:1 for currency retained by the Reserve Bank for use in importing essentials was being abandoned and would in future be determined on a ‘willing seller, willing buyer’ basis.

In a futile effort to restrain the movement of currency markets to a market driven rate, the Reserve Bank fixed an artificial ‘peg’ of 2,5:1 and tried to hold the open market rate at that level. As any student of economics could have told the Government, in the absence of unlimited amounts of US dollars which the Governor could supply to the markets at 2,5 to 1, they could never hold the rate at that level if fundamentals dictated otherwise.

In two weeks the Bank was forced to allow a daily shift and the interbank rate fell to 3:1. Then another attempt to hold the rate at that level and the market moved open market rates to 4,6 to 1. Everyone needs to understand where this situation puts those who actually generate foreign exchange – the Miners, Farmers, Industrialists and Tourism Operators. Then there are the interests of those living in the Diaspora who send home about US$10 million a day to help their families and to pay for things like medical services and education. For these interests, if we assume that about US$20 million a day is involved, then the difference in local revenue in RTGS dollars range from RTGS$60 million at 3:1 and RTGS$90 million at 4,5:1. That is a margin increase of 50 per cent – no exporter or beneficiary of Diaspora remittance money can afford to ignore that sort of margin.

So when the Reserve Bank tries – in violation of the Monetary Policy Statement in February and therefore unlawfully, to hold the rate at a level below what is perceived as the real rate, then those holding foreign currency balances will shift their sales of such currency to the informal market. So, over the past month I doubt if US$100 million has been traded on the formal sector interbank market.

The effect of such activity is the opposite to what the Reserve Bank was trying to achieve. Price discovery is accepted as being the rate in informal markets and this then sets the rate at which local prices are determined. In many establishments the prices are listed in US dollars and the company then uses a rate – 4 to 1? To determine what we pay in RTGS dollars or in Bond notes. This has the effect of driving inflation rates even higher.

One very unexpected development is that the much despised ‘Bond Notes’ issued as a surrogate local paper currency is actually trading at much stronger levels that the RTGS dollar. In fact, at 3,5 or 3,8 to 1.

But the situation is actually worse than that because the trade margins in the informal sector are much higher than those levied on any formal markets and between Banks. Margins of 5 to 10 per cent on individual transactions are reported. This means that the traders operating in the informal market are making huge profits and are reluctant to allow the trade to move into the formal market. In this they are in fact supported by the Banks themselves.

My own view is that if the Reserve Bank had allowed the full implementation of the Monetary Policy that this would have quickly resulted in the transparent and formal interbank market handling the bulk of the trades in foreign exchange. Sales margins would decline to 1,5% or less and the Commercial Banks would be strengthened. Under such circumstances I am also quite sure that market rates would strengthen to 3 to 1 or even less. This would reduce market prices as soon as this was recognized as the ‘real’ market rate. It would also allow everyone who needed foreign exchange to buy what they needed on the market through their Banks. The conversion rates used by everyone for price discovery would decline to 3 to 1 or less; exactly where the RBZ wants rates to stabilize.

My own view is that we need a weak currency to stimulate the productive sector and strengthen export activity. If we, under these circumstances decided to hold the rate at, say, 3,5 to 1, we would have to buy US dollars rather than sell US dollars to hold the rate at the lower rate. This would allow the RBZ to build up their foreign reserves, something we are going to have to do for debt clearance in the long term.

But what are not facing up to is the need to mitigate the impact of these massive swings in policy on ordinary consumers. Since the program was initiated inflation has been at hyperinflation levels for months, prices have doubled or trebled while incomes have stagnated. In the previous dispensation, our export industries were being used to subsidise the prices of essential consumer items such as fuel, maize meal, cooking oil and bread. This was crippling our exporters and boosting consumption of imported essentials and thus driving up the import bill. It could not have been allowed to carry on or the country would be completely crippled.

Now we have effectively boosted the revenues of all exporters and the local receipts on Diaspora remittances by a factor of 3 to 4. Exporters profit margins as expressed in local currencies have soared and tax receipts been boosted. The problems created by this strategy are massive – the ‘legacy’ debts of all those who had thought they were trading at 1:1 and were able to secure currency at this rate suddenly found themselves in a market where they have to pay 3 or 4 to 1 for foreign exchange to settle ‘legacy debts’ owned to parent companies or suppliers.

In addition, we are now faced with a situation where maize – currently being sold at RTGS$240 a tonne will have to go RTGS$1000 a tonne or more – four times present prices. The same applies to bread and cooking oils. Fuel is already up by a factor of 3. This a nightmare and has to tacked immediately and no one wants to do so because of the consequences.

In April Government raised salaries by 18 to 30 per cent and the private sector is now following suit. But much more is needed. We must start now to plan to raise salaries by another 25 per cent in June and again in October. Then I suggest that the PAYE ceiling in RTGS dollars should be raised to several thousand dollars a month to give wage earners more disposable income. Fast growth is coming in the wider economy – but will lag a bit because it takes time to get the increased capacity in place. In the mean time we must manage the aftermath of change.

Eddie Cross
7th April 2019

The post We need a weak currency to stimulate the productive sector – Eddie Cross appeared first on Provoker Magazine.

I am referring to the first statement by our new super star Minister of Finance Mthuli Ncube.

Ncube is a slim, young (by my standards) and very clever guy with an impressive record in the global financial services industry.

We (local economists) have been saying for the past three years that the fiscal deficit was out of control, that it was unsustainable and would inevitably lead to trouble in the form of rising inflation and monetary failure.

On Monday and then on Friday last week the minister confirmed our worst fears — Treasury Bill stocks had risen by billions of dollars in the past three years, domestic State debt now exceeded foreign debt, interest payments were unaffordable and worst of all, the government overdraft at the Reserve Bank was 3,5 times above the legal limit.

As any decent economist will tell you that, printing money, in whatever form, can only lead to hyperinflation and monetary collapse. We all know that and memories of the former Reserve Bank of Zimbabwe governor Gideon Gono-induced crisis in 2008 are still fresh in our minds.

Nothing is more likely to boost inflation out of sight, than an unsecured overdraft at the central bank. Treasury Bills and State debentures are bad enough but the overdraft is the worst thing you can do.

Why? Because we are spending money that we are not collecting from our tax base and are unable to borrow from abroad to finance the gap that it is creating.

We therefore have to manufacture (print) money to cover the gap. Bond notes are not the problem — they have been remarkably successful; the problem is the other forms of money that we have been creating.

Zimbabweans have to understand that one way or another, they will pay for this delinquency. We have been paying for it in the form of inflation — my own estimate is that we are either at or beyond hyperinflation levels already (50% plus per annum) and this is reducing our disposable incomes by the same amount unless our employers have increased salaries.

In addition, we pay for the fiscal deficit when our cash disappears into the vaults of the government, or when they reach into our accounts and take our surplus funds and issue Treasury Bills (just another form of an IOU) or debentures. We also pay when inflation devalues our savings.

The decision by the minister to recognise the existence of a local currency in the form of the so-called “RTGS dollar” and the “bond notes and cash coins” was overdue.

It is now formal — there is no link between our bank balances and the hard currencies that are circulating.

We all knew that a long time ago — the fact that the rand and the US dollar have vanished from our markets is ample testimony to that.

Then there is the market for the different currencies circulating — RTGS dollars — about 35 US cents, the bond notes and cash a bit higher.

The rate today is 3 RTGSD to 1 US dollar.

Goodness knows where the rand or the pula is in this melee.

These rates are not set by stuffy officials in luxury offices at the Reserve Bank, in fact no one knows who sets the rate — it just materialises out of nowhere every hour or so and it controls transactions outside the banking system as a whole.

But the one thing everyone must understand is that when that rate appears, it affects the money people have in their pockets, in their bank and under the mattress.

In fact, it is a tax on everyone and the poor pay the most as a percentage of their incomes, followed by people in paid jobs.

Zimbabwe is again a financial crash victim — a crash not between two vehicles but in money markets and the cause is the high speed nature of the printing machines at the Reserve Bank.

As any ambulance attendant will tell you, the first thing you do at a crash site is to get the victims’ airways clear so they can breathe and to stop the bleeding.

Only when these two things are done can we then say the patient is stable and can be moved to somewhere where the other things that are wrong can be corrected.

We are breathing — but only with difficulty, but we are bleeding to death and have been doing so since Zanu PF won the 2013 elections.

This was the most urgent thing that confronted our new Minister of Finance.

The 2 cents per dollar on all electronic transactions is a massive tax — it will yield twice as much revenue as VAT.

It is also easy to collect and will not cost anything to do so. It is a simple transaction tax and will be paid by everyone who uses the electronic payments system.

In 2017 the electronic transfer system handled more than $110 billion — five time our gross domestic product (GDP) and reflecting the fact that our GDP is not the formal estimate of US$20 billion a year but more like US$55 billion a year.

It also reflects what economists call the circulation of money and the multiplier effect.

Spend a dollar on house construction and it becomes 4 or 5 dollars of economic activity in the wider economy.

So a cent in each dollar means over $1,1 billion a year to the fiscus.

Our deficit this year was set at $3,2 billion — 40 cents in every dollar spent by the State was being borrowed or covered by an overdraft.

Inflation is reducing costs in real terms and inflating income so the deficit may be declining, but it is still $200 million a month or more.

The new tax will cover this and by the end of the year the new minister should be able to point to a balanced budget for the first time since the GNU (Government of National Unity).

Then starts the job of fixing all the other things that are so wrong in our country, Command Agriculture, inflated salaries and allowances, civil servants with no jobs, too many policemen with no roadblocks to employ them and so on.

We have to fix our tax system, make it less burdensome and easier to administer, we have to close all the loopholes in our borders and get our fiscal balances back in the black.

But the minister had to stop the bleeding and he has done that and it must not be reversed.

No gain without pain.

What he has not yet done is to get us breathing again.

What do I mean? When the Minister of Finance started to get us into the awful mess we are now in from a fiscal point of view, he also abandoned the freedoms we had secured in 2009 when the Zimbabwe dollar crashed.

Then we had no exchange control, we used hard currencies for everything, we ran a budget surplus and “ate what we killed”.

There were no import controls and our foreign trade ballooned to US$6 billion a year and our GDP expanded exponentially by 14 times in four years.

Then they introduced import controls and then exchange controls and these are loved by everyone who cannot compete in an open market and all officials who then have the right to allocate “scarce” resources or licences.

Suddenly we were back in the old Zimbabwe — we had to get an import licence to import stuff, the Reserve Bank drew up a ‘priority list’ for the allocation of foreign exchange.

We created the new currencies — the bond note, the Treasury Bill and the RTGS dollars.

As the differentials in these new currencies widened, so the “shortage” of hard currency worsened and now we have shortages of nearly everything again and queues are emerging.

Why? Because we cannot breathe — we need the freedoms that were taken from us in 2014 and 2015. We need to take the Reserve Bank out of the exchange control business, we need to lift import controls.

Why are imported goods here three to four times more expensive than in Johannesburg?

It’s because of the senseless controls and restrictions and the allocation systems for foreign exchange.

Let the market allocate and price hard currency, let the market decide what to import.

If we want to protect our local industries then impose a tariff on finished goods — make money from the trade, but make sure that all inputs for local business are available at the lowest cost possible.

If we do that, the shortages will vanish, hard currency will again be available because it is properly priced by the market and if the monetary policy committee is established as announced by the RBZ governor, even the queues outside the banks will disappear.

Fiscal and monetary sanity will prevail again.

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