CONFEDERATION of Zimbabwe Industries chief economist Cornelius Dube says if de-dollarisation occurs without ZiG transactions dominating the market, there will be massive capital flight as the economy is awash with the greenback.
In recent months, the government has announced plans to de-dollarise the economy, yet, according to official estimates, it generates at least US$14,2 billion in annual revenue from the informal economy and has the equivalent of US$3,85 billion in the formal sector.
However, from the formal side, only 70% to 80% is actual foreign currency.
Hence, the market has resoundingly rejected the government’s de-dollarisation proposal, which it already tried from June 2019 until March 2020, when the government was forced to return the greenback after the economy nearly collapsed owing to the COVID-19 pandemic.
Analysts, business membership organisations, companies and investors alike have since warned the government against the proposal, opting for a more measured approach akin to what many other countries have done.
Dube was speaking on Wednesday, the second day of the five-day Zimbabwe Economic Development Conference (Zedcon) 2025 being hosted in Bulawayo.
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It is an annual event organised by the Finance, Economic Development and Investment Promotion ministry in collaboration with other stakeholders.
“It (de-dollarisation) needs to have timeframe milestones. In other words, it is a journey. Probably, we can say let us have specific variables or indicators that we can define to say ‘by this time, we need to be doing this, and we need to be there’, so that at least we can track progress as well as come up with strategies that can lead us to make any revisions,” he said.
“And, most importantly, there should be an anchored implementation. I think we heard the Reserve Bank talking about building reserves. Obviously, we need to build reserves to anchor this. Also making sure that the reserves are the basis on which we can ensure it is a market-driven approach towards de-dollarisation.”
He then proffered a practical goal.
“I think what I can mention Honourable minister (Finance, Economic Development and Investment Promotion deputy minister Kudakwashe David Mnangagwa) is that this economy is awash with dollars ... We cannot just wash them away overnight,” Dube said.
“So, what can be the strategic goal? The strategic goal is to ensure that by at least 2030, let’s aim for ZiG transactions dominating rather than talking about savings because the moment we try to talk about de-dollarisation of savings, there is a risk of capital flight because of scepticism.
“But, if we target to have transaction de-dollarisation as a quick win in the short term, then in the long term, we gradually shift towards savings I think we can cause minimal disruptions in the economy.”
This year’s theme of Zedcon highlights the need for sustainable national economic policies combined with targeted support for key sectors such as agriculture, mining, and manufacturing.
Professor Charlotte Buitendag, at the Thabo Mbeki African School of Public & International Affairs within the University of South Africa and a non-executive director at the South African Reserve Bank, commented on what Zimbabwe needs to do.
“I like to play around with numbers, but only if I am able to tell the story because numbers and sophisticated economic metrics, etc, are there to support us,” she said.
“But if we cannot utilise it in such a way that we can address the issues and allow policymakers and decision makers to hear us and to make a change to be inspired by that, then it’s nothing.
“Yet evidence-based policy is absolutely not a nicety, but a necessity in going forward, especially where Zimbabwe is at this very exciting time in their progress and development.”