‘Local currency solution to economic stabilisation’

ECONOMIC consultant Nqobizitha Dube has called for the re-introduction of the local currency saying that was the only road to economic stabilisation.
Dube made the remarks at the Alpha Media Holdings Conversation meeting in Bulawayo on Friday. The dialogue was organised in collaboration with the City of Bulawayo to discuss ways in which industrial revival can be attained.

BY SILAS NKALA

“We are engaged in efforts to revitalise the city of Bulawayo and in doing so we must take note that the Bulawayo of 1963 is not the Bulawayo of today. We need to remap certain things,” he said.

He said the city had to adopt the value changes and adopt the new ways of doing business.

Dube said institutions must push and facilitate for the necessary infrastructure which will promote business and development. He said industry needs to be supported and capacitated by capital. He said at the moment the country is trading using the United States dollar, which raises concerns in terms of the country’s exports.
“Personally I have been worried about us transacting in US dollar which has caused a lot of problems in the society … The crisis that we see is as a result of US dollar,” he said.

Dube said he prefers the re-introduction of local currency which would stabilise the economy. Dube said the localisation of currency would allow businesses to exist and trade properly in the country.

Economic commentator Bhekimpilo Mlilo said the re-industrialisation of Zimbabwe dollar would be a difficult task due to the destabilisation of the agriculture sector since year 2000. He said agriculture was the backbone of the country’s industry. Many commercial farmers were displaced at the height of the land reform programme and most of them relocated to South Africa, Zambia, Mozambique and other neighbouring countries where they are reportedly doing well in farming.

“Re-industrialisation of Zimbabwe will be a very long and difficult road. This is due to the destabilisation of agriculture during the land reform and the proliferation of cheap products from China in the country,” Mlilo said.

He said the state of Cold Storage Company, which once generated massive revenue for the government, leaves a lot to be desired.

Mlilo said it was important that Zimbabwe went back to a situation where it imported few raw materials to make its own products for export other than importing finished goods as this strained the country’s foreign currency reserves.

Mlilo said locally-manufactured goods were expensive due to high production costs and this made local goods uncompetitive on regional markets. He also lamented mega salaries paid to executives when companies were operating below capacity. He said this pushed the prices of goods up.

He said most of the company executives were earning around $10 000 which is not sustainable for companies in Zimbabwe.

2 Comments

  1. The local currency is already failing to stabilise the domestic economic conditions, and has been failing since it was reintroduced in 2016 with the name of a bond note. It’s a currency which has been rolled out to everyone in the country although the excuse was that it was an export incentive. It was never exclusively given to exporters and was never proved to be an instrument supported by a so-called Afrexim Bank facility.
    Rushing to get the local dollar back has been the country’s undoing. This has been exacerbated by the flushing of money, both U S dollars and bond notes, to the informal mining sector, called artisanal miners, to purchase gold. That money has been used to create a parallel market for trading in bond notes as well as other external currencies, drying up the formal sector and taking away all the money from everybody else.
    Speculative pricing of locally produced items by local businesses has not been helpful, further worsened by the sanctioning of the importation of cheap finished goods from China, South Africa and elsewhere, including second hand cars and second hand clothes, and the promotion of traders in second hand goods called crossborder traders.
    Revive Cold Storage Commission, Zim Alloys, Zisco, Mutare Pulp and Paper, Caps, Datlabs and all the vandalised companies, and everything will be well with our economy, with or without the local currency.
    The parallel market, which is thriving right now, was at the centre of the last degeneration of the last Zim dollar into decilions of bond cheques etc.
    With a local currency, businesses will continue to weep and wail over the non-availability of forex for their needs, as they are doing right now.

  2. ECONOMIC consultant Nqobizitha Dube… i don’t agree with the analyses made, if any was made for that matter. The problems facing industries started before the introduction of US dollars. Stop playing hide and seek with the economy, the evidence is clear with whats wrong with it. All fiat currency runs on the confidence people have on the government so stop giving us false medicine and deal with the real issue at hand.

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