Piggy has witnessed floods of news on social media relating to the 2022 Academy Awards incident whereby Will Smith slapped Chris Rock on stage and swore at him after the comedian made a joke about his wife, Jada Pinkett Smith. “Jada, I love you. GI Jane 2, can’t wait to see you,” Rock had joked, in an apparent reference to Pinkett Smith’s shaved head. Pinkett Smith has stated that she shaved her head after struggling with alopecia, a disorder that causes hair loss. While Will Smith has been banned from attending Academy events for the next ten years, the whole incident raises a lot of questions about jokes and joking. We note that jokes can be fun and funny. Don Rickles—the famous comedian—developed insult humour into a popular art. Many people today imitate his comedy routines in real life and on the internet. Making fun of others is oftentimes rewarded by laughter and praise from like-minded audiences who agree with us. This reaction signals that we all share certain values, which motivates us to hang together as a group or as a movement. Humour also lightens the atmosphere and enables good feelings for each other. However, simplistic, and vicious humour that abuses outsiders rarely accomplishes constructive goals in the long run. Instead, it prevents us from understanding and empathising with each other. That said, there has been a joke circulating on social media about the 100-dollar twins.
The 100-dollar Twins
Source: RBZ, The Week
The joke states that while the notes are similar (both represent 100 dollars), one of them is a down syndrome. This of course emerged after the Reserve Bank of Zimbabwe (RBZ), introduced the new ZWL100 notes for the purposes of improving convenience for the transacting public as the use of small-value denominations had been rendered cumbersome by inflation. In April 2022, the annual inflation rate crept up from 72.70% to 96.4%. Clearly, there are fears of value-destruction amongst economic agents given that inflationary pressures have re-surfaced. The new ZWL100 note is only worth US22c at the obtaining parallel market rates of ZWL450/USD.
The RBZ has cited that the new bank notes will not cause inflation given that no new money is being printed since it is a conversion of RTGS balances to physical money. That has however not taken away concerns about money supply growth given the electioneering environment as well as geopolitical risks. On the ground, prices have been rising with food retailers being forced to frequently adjust pricing. A look at the economic history of Zimbabwe reveals that the country lost an estimated c50% of its gross domestic product (GDP) between 1999 and 2008, a period which became known as the lost decade. The economic crisis was largely rooted on the political system. In fact, the period that was characterised by negative economic indicators was triggered by the decision to pay each of the estimated 50,000 liberation war veterans a once-off gratuity of Z$50,000 in 1997, an amount which had not been budgeted for. Further, several other political decisions contributed to economic instability. For example, the country’s entry into the Democratic Republic of the Congo (DRC) war in August 1998, the chaotic fast-track land reform of 2000 and the uncontrolled monetary expansion driven by quasi-fiscal activities. All these events also triggered a loss of investor confidence and a depreciation of the Zimbabwe dollar (ZWL).
All in all, fiscal indiscipline has always been the number one culprit especially during election seasons. While there are indeed some positive developments such as (i) an improved Foreign Currency Account (FCA) balances position of cUSD2.0billion, (ii) the cUSD1.0 billion SDR allocation from IMF, (iii) increased foreign exchange receipts and (iv) an improvement in remittances to USD1.4 billion in 2021, politics will likely take centre stage in 2022. That said, Piggy believes that the stock market will still serve as an avenue to preserve value in 2022. This is because the stock market has been able to effectively track exchange rate movements. However, stock picking will be of paramount importance. The financial services sector remains attractive given the potential for valuation corrections. Some good names include ART Corporation, FBC Holdings, First Capital Bank, Hippo Valley, Innscor Africa Limited, Meikles Limited, NMBZ Holdings, Old Mutual Zimbabwe Limited and Zimre Holdings Limited.