Monetary authorities must smell the coffee

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John Mangudya

THIS week’s projection by top economist, Gift Mugano that Zimbabwe’s economy might fully dollarise by June gave the most elaborate indication that the economic crisis is barrelling out of control.

Authorities are glossing over this brewing crisis because they don’t want to admit that they have completely failed to manage the economy.

Under normal circumstances, no citizen would be happy to carry out domestic transactions using foreign currency.

This is why when travelling across Africa, Zimbabweans have been rebuffed by businesses the moment they pull out United States dollars to pay for goods and services.

Citizens everywhere ought to take pride in their own currencies and visitors have to change money in banks, not on the streets as is the case here, to be able to transact.

But Zimbabwean consumers and businesses have been badly affected by the sustained erosion of buying power to their currency that they now embrace any form of foreign currency that they can lay their hands on.

This is shameful.

A currency must be the pride and joy of every nation.

This economy has been so badly affected by mismanagement to the extent that even stable currencies like the United States dollar are depreciating in Zimbabwe, but remain strong in their own jurisdictions.

But it is the drastic decline in the Zimbabwe dollar’s buying power, and exchange rate volatilities, that have lately been of much concern.

It is not surprising that businesses are now demanding US dollars as it is difficult for them to sustain their operations based on an unstable currency.

With authorities seemingly resigned to fate as the Zimbabwe dollar’s value blows away, the rate at which this economy is relapsing back into dollarisation is frightening.

But if, as Mugano said, the country could be fully dollarised by June, that will not be the end of Zimbabwe’s problems.

We say this with the benefit of hindsight.

Zimbabweans remember the long banking hall queues that became a permanent feature from 2015, when US dollar notes began disappearing from the market.

This is surely going to return.

The US dollar is prone to so much abuse and manipulation by the big shots, who have been benefiting from the chaos they have created.

It is something that the market must start bracing for as the economy marches towards re-dollarisation.

But in all such problems, it is the consumer that suffers the worst.

The solution is to make sure that Zimbabwe does not end up with another big currency crisis.

Authorities must smell the coffee.

The headwinds are mounting, and everyone knows this.

It is time to act.