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Strive Masiyiwa Advises Zim Businesses To Price In Rand, His Math Is Wrong BUT He May Still Be Right

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Strive Masiyiwa

A lot of publications have run with this story already but I couldn’t find the original Facebook post. Strive Masiyiwa posts extensively and engages quite much on his page so I spent an hour trying to locate the post then decided to trust the publications that ran the story. Here is what Zimbabwe’s richest man, Strive Masiyiwa is quoted to have said:

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Let me put the proverbial cat among the pigeons, a loaf of bread in South Africa costs R9.50. It costs R30 in Zimbabwe. 3x!!! Eighty percent of imported goods in Zimbabwe come from South Africa. It’s not uncommon to find those same goods costing anything above three times the cost.

The people who pay for a lot of goods are Zimbabweans living in South Africa, through their remittances. The cost structure – labour and goods – in Zimbabwe is distorted by the arbitrage of the United States dollar as a currency of settlement for rand imports.

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This is not the same thing as joining a rand monetary area, or customs union, which is a much more complex process. This one can be done overnight, and even voluntarily.

Where the math is wrong

The very example that Masiyiwa gave betrays the error and it’s not his fault. The currency issues in Zimbabwe are just as confusing for residents. A loaf of bread in Zimbabwe is NOT costing R30.00.

Zimbabwe devalued currency by introducing the RTGS$ and floating it against all other currencies including the USD and the Rand. This official position was already late. Everyone knew already that since the introduction of the bond note, the money in our bank accounts was not at par with the USD which was the currency of record.

Even now, we all know the real value of the RTGS dollar is not determined by the interbank market because that market is inaccessible to any of us if we need to buy the USD or Rand. Of course banks will gladly buy USD from us at that rate but none of us will accept that unless you are a tobacco farmer who is being compelled to do so by the RBZ, the state and its guns.

So what is the Rand price of bread in Zimbabwe? First let’s use the official inaccessible interbank rate. Here are the interbank exchange rates on the last day of trading before the long weekend:

From RBZ

Using the above rates, bread in Zimbabwe is costing just above R15.

On the same day, 17 April, the parallel market rate between the USD and the RTGS$ was 4.85 and it was 2.87 between the Rand and the RTGS$. This puts the price of bread at just above R10. Quite close to the bread price that Masiyiwa quoted for South Africa.

Why this matters

Someone is obviously going to comment that I am knit picking or that I want to sound smart or that I hate Strive Masiyiwa. It’s crazy how we have lowered the standard of debate in this country. Anyway, the above matters because it defines the problem in Zimbabwe differently.

We will be in error if we interpret the problem under false assumptions because we will switch things around including currencies of record and still be stuck in the same place.

If you do price comparisons between Zimbabwe and South Africa using the reality of the currencies we are using here in Zimbabwe you will not find much of the arbitrage that Strive Masiyiwa mentioned. If we use his math it would mean Masiyiwa’s business Econet is also benefiting from arbitrage and the cost of telephony in Zimbabwe is much more expensive than in South Africa. This is simply not true.

The problem in Zimbabwe is that we were robbed of US dollars that we had been earning and saving since 2009 and they were swapped with RTGS$. The RTGS$ itself was devalued, first by real market forces and then later by official decree when the interbank market was introduced. However, our earnings were not adjusted to reflect this devaluation.

The price of bread in real terms has not gone up (in some instances it has actually gone down) but our capacity to afford it has been eroded. This reality will persist even if prices are quoted in Rand. We will still be charged for goods in a currency we are not earning whilst the currency we are earning is continuing to lose value.

Where adopting the Rand may make sense

Masiyiwa’s comment on how 80% of our imports are coming from South Africa is accurate. Adopting the Rand thus makes sense but not just businesses quoting prices in Rand as he suggests because that may make things worse. What would make sense is what Tendai Biti proposed: total adoption of the Rand.

Zimbabwe definitely needs a stable currency and the US dollar is not too good. South African businesses and others from other countries will continue flooding their wares here hunting for the USD. A strong and high demand currency is a curse when in the position Zimbabwe finds itself in right now.

However, the problem above may be achieved by other currency reforms that are not necessarily the adoption of the Rand. This is why diagnosing the problem is important before administering medicine; it broadens up the possible solutions.

The government is insincere in saying the price adjustments are not justifiable. They must admit that the problem is that Zimbabweans are daily losing their capacity to afford basic goods and services because of chaotic currency regimes. Admitting that as the real problem is the first step to solving it. Whether the solution is Rand adoption or not doesn’t matter as long as the solution is structurally sound based on the real problem.


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45 thoughts on “Strive Masiyiwa Advises Zim Businesses To Price In Rand, His Math Is Wrong BUT He May Still Be Right

  1. If USD adoption is a curse, how come it worked well when it was introduced (GNU period)? Mentioning GNU is really important because at the end we will realize the root cause is Politics, bad governance, again, politics. We need to get our Politics right, the future of this nation is bright. Nomatter how brilliant the guns at RBZ may be, as long as the political environment is bad as it is, no solution will be accepted by the masses. WE HAVE A CONFIDENCE ISSUE A.K.A PROBLEM.

  2. When l wrote my MBA thesis at you in 2016 l realized that zimbo wanted to force their too to ocuppy 50% of the floor space in shops but they did not cry about high pricescoz it was USD .now that pole collect useless money they don’t want 50% floor space and complain not about imports .my friend m Mpofu wrote a topic on the effects of dollarisation it was thrown away coz some pole said it did not affect the future of zim business but just 2 years after it was thrown away l see what he wrote as you arguments to save him.those who want to contact him plz use 0773055517 maybe he can give a cure this mess.l think as zim we must learn to share the cake and not out compete like MNCs do if not checked .that was my recommendation she l researched on Buy Zimbabwe.Lt was clear at that time that pole were forced to buy zim even when they did like .now we were made to adopt bond but no mechanism was put on standby should it it fail thats

  3. When l wrote my MBA thesis at you in 2016 l realized that zimbo wanted to force their too to ocuppy 50% of the floor space in shops but they did not cry about high pricescoz it was USD .now that pole collect useless money they don’t want 50% floor space and complain not about imports .my friend m Mpofu wrote a topic on the effects of dollarisation it was thrown away coz some pole said it did not affect the future of zim business but just 2 years after it was thrown away l see what he wrote as you arguments to save him.those who want to contact him plz use 0773055517 maybe he can give a cure this mess.l think as zim we must learn to share the cake and not out compete like MNCs do if not checked .that was my recommendation she l researched on Buy Zimbabwe.Lt was clear at that time that pole were forced to buy zim even when they did like .now we were made to adopt bond but no mechanism was put on standby should it it fail thats tradgedy we have .our policies are implemented without a back up should they fail!

  4. Selfishness and Corruption are the main assassins of Zim economy. I have noticed how important it is for liberation movements to realise that they did well in liberating the nation, be humble and genuine enough to handover the running of the country to a sober generation with a drive and knowledge of finance and economics.

  5. Selfishness and Corruption are the main assassins of Zim economy. I have noticed how important it is for liberation movements to realise that they did well in liberating the nation, be humble and genuine enough to handover the running of the country to a sober generation with a drive and knowledge of finance and economics.

  6. The problems are more distorted economic systems that are endemic in each location, sector, and periods and makes it difficult to see through rather than believing that the fair view for that sector, location, etc are exactly what is there in the market. Any other suggestions, are gerrymandering. A look at the cross rates between the USD and the rand would seem that the interbank rate is fair.comparing the direct USD/ZAR rate in SA

  7. All I know is to never take our economic advice from a person who doesn’t stay in Zimbabwe. Poor understanding of any problem always yields a poorly drafted solution. Being the richest doesn’t make you the wisest, but I’d rather be a wealthy fool any day 😉

  8. Whatever you may wish, please please know that the Head is rotten period. The “ruling party” was never created to develop Zimbabwe for you and me. They’re here for “chinhu chavo” and that is why they, since 1997 have been stealing from you and me. Zimbabwe’s population is gullible. A few hyenas are decimating your future while you debate issues here and in the social media. From paying war vets – which moneys went to build Gracelands, C&M mansions in the Brooke, to Blue Roofs, etc. Can’t you all see whose thriving from your misery?

    Just a few days ago, over $7million was discovered in Al Bashir’s house. How much was in RGM’s house in the November coup? Why was it kept closed? Who doesn’t know that Gono was printing and devaluing your salary every night to buy US$ on the black market for RGM and himself? How come the mansions brigade is only found among RGM and his close partners in gov’t? What value did they contribute to the economy to deserve what they have taken from it? What’s ED’s son and his girlfriends doing on the market? Where is that forex going? To build Zimbabwe? No.

    Why was the bond note created? Exactly, to steal your US$ and replace it with papers, same way they stole your salaries and used them to buy US$ during Gonos time and then decommissioned it as useless. These thieves will keep flip flopping in order to confuse you (muddying the waters in order to eat your children during the confision) so you won’t see what happened. NO MATTER WHAT YOU DO, THERE WILL BE NO PROGRESS IN ZIMBABWE. WE ALL WIRJ FOR THE OLIGARCHY CALLED QUEEN B. WE ALL FEED QUEEN B. If there is nothing for Queen B, they will eat your children by robbing you. Period.

  9. Now that its clear we are at the end of the cul de sac, what are we gonna do? Import AKs and fight the hyenas who dug this hole and are still digging?…or have naive faith that the zombis at ZEC and ConCourt will introduce and conduct free & fair processes that produce undisputed results? …or wait for intelligence (or impatience) to grow in the rural chieftaindoms?

  10. The power axis in Africa is controlled by the security apparatus. Unfortunately, these are ill educated people.

    A person doesn’t choose to put his life on the line as a first career choice. Only desperation forces you to choose military because you cannot make it in the cut throat corporate world, which require multi disciplines and astitute mind gymnastics.

    Here we are waking up with a Class D intelligence person holding a gun and says to you lie down or I shoot! He now suddenly realises the power of control that the gun gives him, no negotiations required. You have to comply or I kill you. This is the person who now determines who the CEO of the country is.

    What motivates a nation to spend time discussing every detail but the qualities of the pilots who are in our cockpits? That area is controlled by unknowns, why? These guys never achieved anything on life. But they promise they security guard with gun in hand that they will get everything. A leadership of teachers and lawyers who do nit study wealth creation but wealth consumption. The skill to write on a black board or spending life in the courtroom shouting ‘objection your honour’ cannot deliver wealth. Running country or a company is a unique science. That’s why China will be the world superpower for centuries to come,

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