New forex rules worse for women

by Sibongile Mpofu
The Standard, 27 September 2008

ALTHOUGH intended to help alleviate the financial crisis and ease shortages in the economy, the new Foreign Exchange Warehouse and Retail Shops programme in Zimbabwe will likely worsen the plight of already over-burdened Zimbabwean women, especially the large numbers who rely on cross-border trade for a living.

Monetary authorities announced the new programme, which would see 1 000 retailers and 200 wholesalers across the country licensed to sell goods in foreign currency, on September 10. Since then, some traders and analysts have expressed concern about what this means for the most vulnerable in society.
"In a way, we are seeing this programme as only meant for the elite with the spending power. It will widen the gap between the have and the have-nots. We are failing to buy products because they are very expensive here and that is why we are resorting to neighbouring countries,’’ said Thembelihle Moyo.
Moyo, who travels to Botswana every month to buy commodities and clothing for resale, said cross-border trading has been a lifeline for her and her family and she fears that the new programme will negatively affect her business, on which she and her whole family relies.
According to Reserve Bank governor, Gideon Gono, the move aims to ease commodity shortages on the market. "Under this framework, authorised dealers will match sellers and buyers of foreign exchange guided by a pre-determined priority list as set from time to time by the Reserve Bank," said Gono in a monetary policy speech. Food and agriculture inputs are highest priority.
To get a licence, applicants must outline their foreign exchange needs, the goods they sell, capacity to handle foreign exchange, estimated weekly or monthly sale volumes and ownership structure.
At face value, the strategy suggests a positive move. Increasing the availability of foreign exchange and with it the buying power of retailers and wholesalers seeks to help alleviate the plight of local people who face extreme shortages, runaway inflation, and a lack of basic goods and services. However, the potential negative impact requires scrutiny.
After analysing the concept and the context under which the programme would be implemented, it is debatable whether this policy will not in fact bring more woes to the ailing economy — particularly more so to Zimbabwean women, the majority of whom rely on cross-border trade to feed their families and send their children to school.
With a membership of more than 15 000 across the Southern African Development Community (Sadc), cross-border traders, the majority of who are women buy goods in neighbouring countries for resale in Zimbabwe. They then buy foreign currency for the next lot of goods. With the unavailability of foreign currency in the formal banking system, most of the traders, rely on the parallel market to run their businesses.
Dollarising the economy would increase the demand for the hard currency and rates would go up, reducing the spending power of most informal traders. Already, Zimbabweans are faced with the current pricing system, which puts the prices of basic commodities beyond the reach of many and analysts predict that foreign-currency priced goods are likely to be more expensive compared to what people are buying them for currently.
According to Innocent Ncube, National Youth Development Trust Chairperson, this partial dollarisation of the economy would hurt vulnerable groups more and lead to profiteering by unscrupulous businesses.
"This policy also raises questions of whether people will be paid in foreign currency. If not, where are people expected to get the foreign currency from?" he asked. This will worsen the plight of every Zimbabwean and indeed our mothers and wives who face the day–to-day burden to see to it that their families are well taken care of."
Women like Constancia Sibanda, from Rural Nkayi in Matabeleland North province, who have never seen the United States dollar or the South African Rand, are unlikely to benefit much from such a policy development. Sibanda, who survives on subsistence farming, said during good harvests, she sells excess produce and has no prospects of ever getting any foreign currency. In a way, this policy completely excludes her.