It has not been a week yet since the loan ban has been in force and yet the RBZ has been making exceptions already. First, we learnt that tobacco farmers would be exempt from the loan ban. That is not surprising, tobacco farming relies heavily on input loan schemes and the timetable is rigidly fixed by the TIMB. Messing with that would result in a catastrophic economic meltdown which would strike in the middle of an election cycle. Now thanks to negative press resulting from Tongaat Huletts, Fivet and Wholesale Meat scrapping credit facilities the RBZ has now passed an exemption for all commodities.

Suspension of lending facilities does not apply to marketable commodities such as tobacco, cotton, sugar, maize, etc. All banks have been advised accordingly.

All banks have been advised as was previously advised by RBZ on Monday 9 May 2022
The RBZ on Twitter.

If you read the statement carefully you will notice the lie in the last line. The RBZ has no qualms about telling lies, these are the same people that said they would not scrap the multicurrency and quickly did that. They said they would not bring it back and yet they did. They claimed the rate was 1:1 and woke up one day to admit that it wasn’t so when they lied by saying that banks were told commodities were exempt from the loan ban we all know they are lying. How? Well, first of all we saw the communication from the RBZ to banks and there were no such exemptions. Unless there is another communication, which is doubtful as we will explain below, these exemptions were tacked on later after it became clear just how stupid and detrimental the loan ban is.

There is more evidence to prove that it is very unlikely that exemptions were issued on Monday. Stellar companies like Dairibord, Tongaat Huletts, Fivet and Wholesale Meat among others would never have taken drastic actions as they did. Actions that would negatively affect their balance sheets if they were privy to this exemption material. This is almost certainly the RBZ saving face here. Expect more exemptions to come and a face-saving climb down with the authorities claiming some hollow victory against unnamed currency manipulators.

As we said bluntly yesterday, the Zimbabwean government has really run out of ideas on how to manage the economy. Instead of sticking to tried and tested measures such as spending, loans, money supply and interest rates they decided of all things to ban loans. There is a reason why you should never do this as the president and his colleagues at the RBZ are quickly learning. Banks are an integral part of the economy and lending is the fuel that makes a lot of things run smoothly. Commanding a command economy requires great skill and competency and bucketloads of real-time information. Even China runs what is essentially a capitalist economy under the watchful gaze of the Communist Party. The Zimbabwean government clearly doesn’t have the skills to match this and yet they have persisted in attempting to command vital sectors of the economy with disastrous results.

The loan ban is no different from the Kombi ban, Operation Sunrise or Gideon Gono’s FOLIWARS, it is no different from bond notes and SI 127 of 2021. All these are bad initiatives which will eventually be scrapped. As always it will take further wrecking of the economy for those in power to reverse tack. When they do the economy will be in worse shape than now. Even then they will lie and blame someone else except themselves.