Zimbabwe’s US dollar question
The Zimbabwean economy is marred by contradictions with some sectors allowed to trade in foreign currency while others are excluded.
This was the message that Confederation of Zimbabwe Industries (CZI) president, Henry Ruzvidzo delivered to the Political Actors Dialogue (POLAD) Economic Summit in Harare last week.
“We have been grappling with issues of currency stability and inflation since the beginning of 2019. The levels that we achieved last year were unprecedented and had negative impact on business,” Ruzvidzo said.
“The transition to a mono currency has been very bumpy. The unrelenting pressure to re-dollarise can be attributed to low confidence in the local dollar due to its rapid depreciation in value.
“Perhaps a national currency stabilisation plan which is clear and time bound is the solution. Government has to lead the way in defending the local currency and one of the ways it can to do so is by exercising fiscal discipline.”
Ruzvidzo pointed out that multiple of regulations, some contradictory, make doing business expensive in the country.
Zimbabwe National Chamber of Commerce president, Tamuka Macheka said that there is need for Government to implement policies that address economic growth.
“…because of where we are coming from it is almost impossible for us to address all issues affecting our country at one go. Therefore, we may need to apply the Pareto principle which will see us target 20% of the issues (that needs urgent attention) affecting us to deliver 80% positive contributions into our economy,” explained Macheka.
He also called for generational sacrifices.
“Our appetite for imported stuff is too high. There is need for us to make radical decisions to buy local. For instance, if Government says the national car is Mazda then we now buy locally than to import cars for government officials. This practice will ensure that we are creating something for generations to come as money will not be lost going outside to finance foreign businesses.”
Macheka added that there is need to commercialize innovations and not just leave them to die in the various innovation hubs in the country.
Meanwhile, the Reserve Bank Zimbabwe Governor John Mangudya says de-dollarisation of the economy is a process, not an event.
“As a Government, we have defined where we are going, and that is the de-dollarisation route,” said Dr Mangudya is quoted as saying by The Herald.
“Because it’s a process and not an event, we are saying as the central bank that we believe within five years, we will complete de-dollarisation.
“By de-dollarisation we are not saying there will be no more foreign currency in circulation; that is a wrong definition of de-dollarisation because if you look at those countries that have de-dollarised, for instance Zambia, Cameroon, Ethiopia, they still accept foreign currency and you can still open a foreign currency account.”