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Zim rejects call to make rand official currency

Apr 24 2017 12:52
Memory Mataranyika

Harare – Despite intense lobbying by industrialists, economists and the business community, officials in Zimbabwe have rejected the call to adopt the rand as its official currency.

The country has had continued cash shortages which local bond notes have failed to address. Introduced in Zimbabwe in November, bond notes have equal value to the widely-used US dollar but are still in short supply at the banks. The Reserve Bank of Zimbabwe says businesses are not banking money while foreign currency shortages are worsening and have started to distract business operations.

Reserve Bank of Zimbabwe (RBZ) governor John Mangudya has said that adoption of the rand as official currency in Zimbabwe is out of the question. This followed intense lobbying by the Confederation of Zimbabwe Industries (CZI), economists and other groups for the adoption of the rand.

Mangudya said “the fundamental problem of this economy is not about currency” but a poor production base and high imports. Zimbabwe has introduced import restrictions but the country’s import bill remains high.

“We can’t talk of adopting the rand as our major currency as we already have it in the multi-currency basket introduced back in 2009,” Mangudya told state media.

However, Joseph Mverecha, an economist at a Zimbabwean bank, said “an immediate return to the local currency is not sustainable” for Zimbabwe. 

The Zimbabwean market has previously rejected the rand, with Barclays Zimbabwe having offered rands at its cash machines although this was met with low uptake.

But Mverecha said that for now the “only logical step to take is the rand, simultaneously addressing deep structural and macro imbalances as necessary to get back our industry production to full capacity (and to) increase exports, forex reserves”.

Zimbabwe’s manufacturing capacity has remained bogged down at below 50% according to the CZI, and industrialists and manufacturers have complained of liquidity challenges in their bid to retool and recapitalise.

The RBZ says it has introduced about $130m in the bond notes which the government says are backed by a $200m facility from Afreximbank. To counter the cash shortages in the economy, the central bank has also been encouraging usage of plastic money, mobile money and other electronic transactions.

zimbabwe  |  africa economy  |  rand


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