Uncertainty over the future of the multi-currency regime has often been blamed for the slow growth in bank deposits. It is also partly blamed for the anaemic growth of foreign direct investment (FDI).
The emotive nature of the issue means everyone has a view on it. This article outlines some of these key viewpoints, which are by no means exhaustive and are based on pronouncements made by some movers and shakers in the local economy. The notable thing is the lack of a common position around which business can rally for planning purposes.
It is unfortunate that these days when one talks about the government’s viewpoint on a number of things, one has to think about at least two viewpoints, and sometimes three or more. The Finance ministry is supposed to be the voice of the government, at least on the issue of the currency regime, but what currently passes off as the government’s viewpoint is a curious amalgam of extreme, partisan and uncompromising positions, though both Zanu PF and MDC-T agree that Zimbabwe should eventually return to its own dollar.
Finance ministry: Finance minister Tendai Biti recently said Zimbabwe would not revert to the ZWD, but would push for a regional currency, and until then, would maintain the multi-currency regime to which current macroeconomic stability is largely attributed. However he argues that if the ratio of exports to imports was to improve from 1:3 to 5:1, the country would be ready to have its own currency.
The Reserve Bank of Zimbabwe (RBZ): The apex bank favours the introduction of a gold-backed Zimbabwe dollar which it argues would not only be stable but internationally acceptable. The RBZ argues days of the US’s greenback as the world’s reserve currency are numbered hence the proposal to peg the ZWD to the yuan in line with the Look East Policy. The RBZ also contends that despite the stabilising impact of the multi-currency regime, it has spawned a number of challenges such as loss of monetary policy autonomy to influence economic variables such as the exchange rate and interest rates. The Reserve Bank ,however, acknowledges that the ZWD should only return when the fundamentals are right.
The Confederation of Zimbabwe Industries (CZI): The CZI’s Economics and Banking Committee recently shot down calls for the country to adopt the South African rand saying it is the most controlled currency in the region. They instead proposed that the country should continue with the current multiple currency system until the adoption of a Sadc monetary union and concluded the government should come out with a policy position on the ZWD against the multi-currency in order to protect holders of foreign currency by way of issuing a statutory instrument officialising the multi-currency system.
Zanu PF: The party, passed a resolution to re-introduce the ZWD alongside the Chinese yuan at its December 2011 Annual National Conference in Bulawayo. It argued that the move would safeguard the country’s sovereignty and solve its liquidity challenges. Party spokesperson Rugare Gumbo was once quoted as saying the party would re-introduce the local currency once it won the next general elections and assumed control of the Finance ministry.
MDC-T: Meanwhile secretary-general Tendai Biti characterises those who call for the premature return of the ZWD as “merchants of destruction” and “shareholders of insanity”. In mid-January 2012, he vowed that: “As long as the MDC-T remains part of this government, it will not allow the return of the Zimbabwe dollar”. Apparently, he would rather throw himself from the roof of the RBZ Building at 80 Samora Machel Avenue, than to see the return of the ZWD, or so he says.
Bankers’ Association of Zimbabwe (BAZ): Has consistently opposed moves for a premature return of the ZWD without adequate import cover.
In late 2010, the BAZ asked the government to extend the use of multiple currencies by five more years amid fears of externalisation ahead of national elections. “The currency position needs to be clarified in the Budget statement so that it can be legislated in the Finance Act. The Budget statement should clearly state the minimum duration of the multi-currency regime. A minimum of five years is recommended,” said the then BAZ president John Mushayavanhu.
Vox populi: One need not look any further than the court of public opinion in order to hear the loud voice of the man in the street. In the public media, any news story that in any way hints at the return of the ZWD in whatever form is usually accompanied by a torrent of hysterical, neurotical responses of ordinary Zimbabweans who bore the brunt of hyper-inflation. Someone calling themselves “Bemused” recently wrote in one of the local papers that “The Zimdollar should stay buried just like it did to all our hopes and dreams.” This voice should not and cannot be ignored because in order for the ZWD to function as a currency, one of the necessary ingredients is for it to be readily acceptable as a medium of exchange.
There is no doubt in my mind that despite this multiplicity of viewpoints, a fair number of which populate the extreme ends of the spectrum of opinions, the viable option for Zimbabwe will most likely be somewhere in the middle ground. Either way, what will ultimately make the difference is the performance of the real economy, not what one person or group of persons think, say or want. Weigh in with your insights on firstname.lastname@example.org.
l Omen N Muza writes in his personal capacity. He is a banker and managing director of TFC Capital (Zimbabwe) (Pvt) Ltd, a Harare-based financial advisory company with interests in banking, technology and agriculture as well as the convergence area among them.