HARARE – The Citizens Coalition for Change (CCC) on Wednesday vowed a robust challenge to controversial measures to shore up the fast-depreciating Zimbabwe dollar, announced by President Emmerson Mnangagwa last Saturday.
Mnangagwa said banks were indefinitely banned from lending as part of a cocktail of measures to stop the local currency from haemorrhaging further, but economists said the move was draconian and would not work.
CCC spokesperson Fadzayi Mahere said the opposition would take a multifaceted approach to combat the “presidential announcement” made late into the night on May 7.
“It’s clear without any doubt that Mr Mnangagwa was acting beyond what is legally permissible,” Mahere told a news conference in Harare.
“That creature of a national announcement is foreign to our world, it simply doesn’t exist. Policies pronounced by night fall apart during the day.
“We are going to pursue legal remedies against this illegal national pronouncement and our MPs are also going to raise the issue in parliament.”
Banks and businesses have voiced sharp criticism, particularly of the move to ban individual and corporate lending. Banks said interest from loans accounts for up to 50 percent of their income, and the decree was a threat to their viability.
Former finance minister and deputy leader of the CCC Tendai Biti called Mnangagwa’s ban on lending “irrational” and “ill-advised,” warning it would exacerbate the economic crisis.
“This decision must go down as one of the most zany and irrational decisions that any government could ever take,” Biti said.
“It’s without precedent, it takes Zimbabwe to a dark place beyond pariah. It puts Zimbabwe in disrepute and whoever made it is not fit to govern.”
Mnangagwa also announced that the discredited foreign currency auction will remain, while allowing banks to trade foreign currency on a willing-seller willing-buyer basis which establishes a new exchange rate.
Said Biti: “Before the announcements, Zimbabwe was already reeling from a multi-tier pricing system. Now thanks to Mr Mnangwagwa, it’s now subject to a multi-tier exchange rate system.
“It does not make sense. It makes accounting a nightmare and delegitimises official statistics.”
The Zimbabwe National Chamber of Commerce warned that Mnangagwa’s measures would give rise to a parallel banking system with usurious interest rates.
Mahere argued that Mnangagwa’s ban on bank lending would spook investors.
She added: “Mnangagwa did not produce any facts or figures to justify the grossly irrational lending ban. No investor would be drawn to an economy where lending could be halted overnight. Businesses rely on borrowing for short term financing and operational needs.
“Productive sector loans constitute about 76 percent of total bank lending meaning that about Z$70 billion of credit has been impacted.”
Mahere said the ban on bank lending would also have a negative impact on the farming sector, as farmers were looking for loans for their winter crop preparations.
The Reserve Bank of Zimbabwe said the ban on lending was a “temporary, necessary measure to ensure that there is sanity in terms of taming inflation.”
“Some entities were now using loans from banks to purchase foreign currency,” governor John Mangudya said.