Gweru - Zanu PF is pushing for the re-introduction of the Zimbabwe dollar as a way of easing the current liquidity crisis.
The party’s just-ended 13th National People’s Conference resolved to instruct government to work out modalities for the re-introduction of domestic currency alongside the multi-currency system in order to enable people to carry out transactions.
The multi-currency term was extended to 2013 and beyond from its initial expiry date December 31 2012.
The party will also spearhead the adoption of currencies of the Brics countries and other emerging economics as legal tender in Zimbabwe alongside the US dollar.
Options have been thrown around about the route the currency system in this country should take. Firstly that Zimbabwe re-introduces a local currency that is linked to the South African rand through the Multilateral Monetary Area, which also links South Africa, Lesotho, Swaziland and Namibia.
This means that Zimbabwe would revert to its own local dollar but the exchange rate would be on parity with the rand. Analysts say that the MMA would be the best option available because Zimbabwe largely depends on the South African economy in terms of imports, exports and the volume of traffic which includes the movement of goods, people and skills transfer. This system would make it easier to shift to the SADC single currency.
Secondly that the country pushes for full dollarisation where the US dollar is adopted as the currency of the nation. Economists, however, argue that the Zimbabwe economy is remotely linked to the US economy, therefore dollarisation might not be the best option. The US dollar is the commonly used currency.
Thirdly, that there is the introduction of the gold-backed standard. The gold standard is a monetary system in which the standard economic unit of account is a fixed weight of gold.
Lastly, there have been calls for the use of the Chinese Yuan as there were arguments that Zimbabwe’s economic recovery was at the mercy of the US dollar, which was facing threats from the global financial crisis. The move would also consolidate the country’s Look East policy.
The party also resolved to call upon government to set a Zimbabwe Mineral Exchange as a vehicle to ensure that there is no external listing of Zimbabwe’s mineral assets.
In the past there have been calls for all miners to have a primary listing on the Zimbabwe Stock Exchange guided by the policy that the entire value chain should be indigenised. Amendments to the Mines & Minerals Act were supposed to carry the requirements. However the indigenisation ministry is planning to open a stock exchange which will trade the shares that were ceded to the National Indigenisation and Economic Empowerment Fund (NIEEF).
The conference resolved that all export receipts should be banked in Zimbabwe with national local financial institutions.
- Sharara is a correspondent of Fin24 in Zimbabwe