‘Zim risks redollarising’

Zimbabwe Ezekiel Guti University pro-vice chancellor Gift Mugano has said Zimbabwe risks going back to dollarisation in the first quarter of 2020 due to failure by the local currency to boost public confidence.

BY RUTENDO MATANHIKE

Presenting at a pre-budget briefing seminar in Harare yesterday, Mugano blamed government for putting in place reactionary policies to deal with the high levels of inflation without looking at their impact on the people, which he said had further plummeted public confidence in the local currency.

“Statutory instruments (SI) are a reactionary way of dealing with the situation; it just lessens the confidence in the currency by local people,” Mugano said.

“We cannot burn the house to deal with a rat, but we have to set traps to deal with it. In order to stop the black market, there is need to set traps to deal with them without necessarily affecting everyone else.”

He added: “We end up having an economy that is speculative than productive because of this form of reactionary policies that want to deal with problems. The policies are formed from a good basis, but they are affecting everyone even those who are not trading in foreign currency on the black market. We run the risk of going full dollarisation in the first quarter of 2020, which is not a good thing for Zimbabwe.”

Zimbabwe banned the 10-year multi-currency system in June this year after government workers demanded salaries in United States dollars which government could not afford. Since then, the country has been in a hyperinflation mode; with prices skyrocketing against stagnant salaries, a feat that has forced citizens to the wall.

Mugano said the recently introduced policies, including the SI 142 that introduced the Zimdollar, caused businesses to act in ways that protected their business investments.

Also presenting before MPs, economist Persistence Gwanyanya said: “Our major problem is that Zimbabwe is not producing. We are a consumptive economy which consumes up to 80% of our gross domestic product. We are eating into the country’s future. Currently, people have to buy their own hard-earned money, so we really cannot establish confidence in our local currency.”

4 Comments

  1. Production is essential especially starting at the primary level where we do farming, produce sunflower, Soya and maize in hectares so that we do not import as such to cushion ourselves against high levels of imports.Our farmers are in need of full support so that we retain our bread basket status and curb the food scarcity in our nation.There must be a full audit of what is happening on the ground in terms of farming and gross support given to all 75% and above fully productive farmers…Thank You

  2. The economy is already dollarized, on unofficially. Everything priced in Z$ currency is pegged to USD. Most transactions happening in the SME sectors are in USD currency.

  3. Chinhu Chedu Chaora

    Economy yakaisvo dollariza kare. Its only in OK, TM Supermarkets, Choppies & Food World where there are increasing prices every hr where u get transactions in ZWL the so called strongest currency in the region, else where tiku tambidzana ma green. How is it possible that izvi zvikuitika and u dont know about it. Where is the finacial intelligence. Munongoziva zvekuti pane vanhu varikuronga demo ye regime change when u dont know kuti this economy has already dollarised. Nxaaa!!!

  4. To understand Zimbabwe’s economy imagine a bunch of monkeys in a mango tree where all the mangoes have been eaten, yet a small bunch of big monkeys jealously guard the tree in case some small monkeys come to steal mangoes. It does not matter whether the mangoes are valued in Z$ or US$…there are no mangoes!

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