Monetary Policy and Socio – Economic Instability in Chipinge District

On 1st of October 2018, the Reserve Bank of Zimbabwe (RBZ) governor Dr John Mangudya presented his mid-term monetary policy statement while Minister of Finance,  Prof Mthuli Ncube presented his statement on fiscal measures. This was a moment the nation waited with abated breathe on how the government intended to organize the financial sector in an effort to better serve the people. The expectations of the people were premised on the need to move towards abolishing inequality and exploitation that is prevalent in the economy. The basic role of the monetary policy is to shape and guide our economy and most importantly instill  confidence in the banking system. 

The 2015 Baseline Study of the Title II Development Food Assistance Programs in Zimbabwe posits that 97 percent of the population lives in poverty and that the primary drivers of consumption at the household level are access and availability.

The monetary pronouncement influenced and impacted the people of Chipinge’s livelihood options as it increases uncertainty in the economy. A snap survey by PYD at Checheche growth point, Chibuwe Centre and Vheneka Trading Centre in Chipinge District has discovered that the 2 cents tax per dollar on every electronic transfer has already been effected and prices in local shops have subsequently increased. Cooking oil have increased from $4.50 to $6.50, beef from $4.50/kg to $7/kg and rice from $2.50 to $3 per 2kg. Consumers intending to use ecocash platform are charged 25% more on the stated prices.

“There is panic buying here in ward 28, Vheneka. When the news of shortages was circulating, I rushed to a local pharmacy to buy haematocrit (HCT) for my grandmother. I could not buy it because the stock had dried up within minutes of the rumour. People are not sure of what the 2 cents per dollar actually mean to their livelihood here in Chipinge” said Cherriel Dzobo of Vheneka ward 28.

“In Chibuwe, prices have gone up and people are devastated. After the monetary policy, most traders in the area could not make head or tail of the announcement and they just increased their prices from an uninformed position. Common people are bearing the brunt of the confusion” Catherine Vhutuza of Chibuwe ward 20 was quoted as saying.

PYD strongly believes that the monetary policy imposed high opportunity costs on the vulnerable members of the community who are already reeling in adverse poverty. 

PYD is of the opinion that the consumer uncertainty in Chipinge District represents a harmful element for the effectiveness of monetary policy at community level, and that financial stability must not be considered as a simple goal of monetary policy, but a precondition for reaching the goals of output stability. The governing authorities need to address uncertainty that is prevalent in the community economy by devising precise economic policy to be implemented with the aim of improving the performance of the economy.