THE Confederation of Zimbabwe Industries (CZI) insists it will go ahead and continue pushing for the adoption of the South African rand as the major currency, a noble, but doomed idea.
Comment: NewsDay Editor
Using the rand is a no-brainer, with South Africa being Zimbabwe’s major trading partner, but a strange belief in Zimbabwean exceptionalism and misplaced egotism are the major hampering points.
There is a strong sense of nationalism that makes Zimbabwe’s government believe that adoption of the rand will be accepting that the country is playing second fiddle to South Africa, all based on yesteryear glory, when Zimbabwe was the second strongest economy after South Africa in the region.
That glory is long gone, but Zimbabwe is still clinging onto it and for this reason, not an economic one, using the rand will never be acceptable.
The authorities have come up with bizarre and lengthy explanations on what is needed to join the rand common monetary area, but Zimbabwe has previously used the rand without permission from South Africa.
Central bank governor, John Mangudya has opined that Zimbabwe would need its own currency before it is allowed to join the common monetary area, another disingenuous argument, considering South Africa had long made overtures to Zimbabwe to use the rand.
Despite limited monetary policy latitude, Zimbabwe cannot fathom a situation where decisions on inflation and interest rates are controlled by anyone else — let alone a neighbouring country — and that is the main reason the rand will never be acceptable in Zimbabwe.
A situation where the amount of money in the economy is effectively controlled and where the government’s ability to dip its hands in the till is discouraged will certainly be frowned upon by Zanu PF.
No wonder most Zanu PF conferences since 2010 have passed a resolution calling for the return of the Zimbabwean dollar, because it allows them to embark on quasi-fiscal activities they would not normally be able to carry out if the economy was well-managed.
It is in this regard that bond notes are an extension of that desire to ensure control of the monetary policy.
This could be the reason why the government is so secretive about the deal that facilitated the introduction of bond notes and it could also explain why the authorities kept moving goalposts on the role the currency would play.
CZI can come up with draft legislation, but there is no appetite for that from the ruling Zanu PF.