Renowned economist Prof Mugano explains why Structured Currency is going to fail

Renowned Zimbabwean economic analyst Professor Gift Mugano says there are a number of factors which would lead to the failure of the much anticipated Structured Currency set to be launched this Friday.

According to Mugano one of the key factors that will cause problems for the new currency is a dominant informal sector which is governed by informal rules.

He says this has no regard to govt policies – the informal sector has its own governor, mattress bank, minister of finance, etc.

Posting on his X handle, Mugano added that devastating drought & subdued commodity prices which have a combined effect of reducing availability of USD liquidity is also a cause for concern.

He writes:

The enemies of our currency & the so-called structured currency are:

1. Excessive printing of money & excess liquidity caused by command agriculture; wrong financing model on roads & key infrastructures;

2. A dominant informal sector which is governed by informal rules & has no regard to govt policies – the informal sector has its own governor, mattress bank, minister of finance, etc

3. devastating drought & subdued commodity prices which have a combined effect of reducing availability of USD liquidity.

4. unresolved confidence crisis caused by loss of capital/ pensions/ savings/ insurance/ investments as a result of incessant currency collapse & currency crisis

5. lack of policy clarity – our economic problem is centred around structural rigidities which requires structural policies (industrial, trade and agricultural policies).

We haven’t seen much activities & media coverage on these policies in the same way we have seen visibility & pronouncements on monetary & fiscal policies. In short, our structural policies are not up to scratch.

1. drought of production – the best way to defend our currency is to institute policy measures and conditions that promote a productive economy (e.g., sound structural policies, working markets, market led economy, sound financial sector, stable political environment powered by rule of law, constitutionalism and strong institutions).

2. Broken politics – we have invested so much energy on disunity & hate speech instead of fostering peace, unity, tolerance and love. We are allergic to national dialogue, social contract, divergent views, etc. Ironically, we expect to see flawless implementation of public policies and attainment of the desired economic goals when we are divided?

Structured currency = bond note, gold coins/gold token/ZiG. Bond note & ZiG were/are local currencies backed by USD & gold, respectively but failed dismally because of the reasons I mentioned above.

This is why I am convinced that a local currency or structured currency will always fail as long as the factors raised above are not adequately addressed.

Zwnews