Stressed Zim cries for rands

HARARE - With the current acute cash crisis worsening by the day, experts have made renewed calls for the country to adopt the South African rand as Zimbabwe’s anchor currency, to stem an impending economic implosion.

This comes as Parliament has summoned under-pressure Reserve Bank of Zimbabwe (RBZ) governor John Mangudya and Tobacco Industry Marketing Board (TIMB) chief executiveW Andrew Matibiri to explain the payment chaos that is being experienced by farmers at the Harare auction floors.

An economist with a local commercial bank, Joseph Mverecha, told the Daily News yesterday that the country urgently needed to adopt the rand as its anchor currency to save Zimbabwe from an economic disaster.

“Unless we count on miracles, the only logical step to take now is to adopt the rand, while simultaneously addressing deep structural and macro imbalances, to get back our industry production to full capacity and increase exports and forex reserves ... and thereafter introduce a graduated return of the local currency.

“Going forward, and if dollars continue to flow out of the formal system as is happening at present, we will have only two options left — either a full scale return to the Zimbabwean dollar or the much maligned rand.

“An immediate return to the local currency is not sustainable. Significant long-term damage can be done to this economy through a hurried and injudicious return of the Zimbabwean dollar,” Mverecha said.

Economics professor Ashok Chakravarti also said adopting the rand would help the dying local economy.

“There are no economic issues in adopting the rand tomorrow as I have always said. All it needs is a simple law, a statutory instrument from government with an exchange rate re-denomination of all US dollar balances, salaries and prices.

“The obvious currency of choice is the rand because of the strong trade link with South Africa. About 70 percent of our exports go to South Africa and 40 percent of imports come from South Africa.

“The rand is an answer to many of our problems . . . The rand is also a non-convertible currency that will remain in the region and, therefore, cash will be maintained,” Chakravarti said.

Economic analyst Vince Musewe also said it made “sense” to adopt the rand.

“It has always made sense to have the currency of our biggest trading partner as the main currency . . . this would also minimise externalisation and also help with trade transactions between the two countries.

“However, in my view, retailers and other service providers just need to also price their items in rands. After all, the currency is already legal tender in the country, so it is not like there are legality issues with doing this,” Musewe said.

“Of course, the currency issues are indicators of deeper economic challenges like fiscal and monetary discord.

“I also do not understand it when people keep stressing that the rand is volatile. Yes, it is . . . show me a currency that is not volatile. What is the point of having a stable currency that you do not have in the system?

“It is simply an issue of choosing between two devils here, and the rand is the better devil. The RTGS system is already in Rands as well, so it is simply an issue of ensuring that everything is also priced in rands.

“It will save Zimbabweans from United States dollar over-pricing. So, it will have a positive impact on the pricing regime and get rid of all these ridiculous mark-ups and margins we have seen in the economy,” Musewe added.

CZI president Busisa Moyo is also on record pleading for the adoption of the rand.

“We have been talking about randisation and individual members of CZI have come out strong on randisation, and I think we need to have some sort of action towards this,” Moyo has said.

This comes as the National Assembly has summoned Mangudya and Matibiri to explain the payment chaos being witnessed at the tobacco auction floors, which were turned into a mini-war zone last week after police fought running battles with angry farmers who had staged a demonstration demanding their cash for their delivered crop.

“Obviously, I am not happy with what is happening at the auction floors,” chairman of the parliamentary portfolio committee on land and agriculture, Christopher Chitindi, said.

“After my investigations, I realised that there is still a shortage of cash at the banks, which is why there was that noise. When I checked with them (TSF) again, they assured me everything was now back to normal.

“But as a committee, we have resolved that we will call in Mangudya and Matibiri so that we get the full information why we are still having this problem yet they promised us that things will change,” he added.

Tobacco farmers were earlier this year advised they would be permitted to withdraw cash of up to $1 000 from their first sale, and $50 for subsequent sales in light of ongoing cash shortages.

However, many of them have not been able to withdraw those amounts, which has seen them sleeping out in the open on empty stomachs, as they wait to access their money.

Despite authorities injecting more bond notes into the market and increasing their weekly importation of US dollars by 50 percent, the government continues to battle to stem the country’s severe cash shortages which have seen desperate Zimbabweans besieging overstretched banks as they despairingly try to withdraw their money.

This comes as banks are reporting a rising demand for cash despite the aggressive push by authorities to promote the use of plastic money and mobile platforms as part of their measures to promote a cashless society.

At the same time, analysts have warned in interviews with the Daily News that the snaking queues which have become a permanent feature at banks around the country signalled the fact that “panic” had set in among both ordinary Zimbabweans and businesses — amid understandable fears that the dying local economy is hurtling towards the debilitating lows of 2008.

They also said that the accelerating disappearance of the country’s surrogate currency — bond notes, which were meant to mitigate the country’s acute cash crunch — was worsening the panic.

This comes as United States dollars have long vanished from the formal market — with the coveted greenbacks now only easily available in the country’s thriving black market.

Economist Godfrey Kanyenze also warned long-suffering Zimbabweans earlier this week that all indications were that the current long cash queues would worsen as the watershed 2018 elections approached.

“There is a real problem in the sense that what precipitated this problem in the first place was the government’s fiscal indiscipline … you will notice that it is because of this imbalance that Treasury is scrambling to pay bonuses which were not budgeted for in the 2017 National Budget … and therefore the immediate future is not looking good.

“Then of course, there is the fact that the country is headed for an election and due to the state of things in the country and in Zanu PF, with its factional fights, populist decisions cannot be ruled out, so this situation can only be expected to worsen,” Kanyenze told the Daily News.

In the meantime, the disappearance of the country’s surrogate currency from the market is also forcing banks to give desperate Zimbabweans their cash in sackfuls of coins.

The RBZ introduced bond notes at the end of last year to ease the severe cash shortages, but so far this has completely failed to satisfy the market’s cash needs.

This has seen banks limiting the amount of money both individuals and companies can withdraw to as low as $20.

Zimbabwe is deep in the throes of a debilitating economic crisis which has led to horrendous company closures and the consequent loss of hundreds of thousands of jobs.

At the same time, economists have said that poverty levels in the country are skyrocketing, with average incomes now at their lowest levels in more than 60 years — with more than 76 percent of the country’s families now having to make do with pitiful incomes that are well below the poverty datum line.

This comes as Zimbabwe has now been officially ranked as the poorest country in Africa.

Comments (12)

Do we still have a governing government in Zimbabwe?? Where are all the Drs and PHDs and Professors and PolAds etc, some with 6 or seven degrees???? Pamberi nechimurenga!!!!!

gamuchirayi - 10 May 2017

The Rand is already in circulation, a full on adoption has some stringet requirements attached to it, one being that the RBZ will then have to conform to SA Reserve Bank. The other being that for any member state to be in the RAND UNION the member must have its own currency. NO the answer is not randisation but the answer lies in political overhaul including the so called experts quoted in the above publication.

Sinyo - 10 May 2017

The non-availability of cash at the tobacco sales last week could be attributed to the demand for cash for the country's first citizen trip to the far east for regular routine medical checkups. Its good that The Parl Comm is surmoning governor and matibiri but its an exercise in futility those lads are part of the looting machine.

Sinyo - 10 May 2017

If the Rand fails whats next? Remember Biti said Zim's problem is not about the currency, the US$ disappeared, the strongest currency, what makes people that the Rand wont disappear as well? Guys we know the problem, ZANU PF! It should just leave the public offices, nomatter what currency we are going to use if this monster is still part and parcel of the government we are doomed,

matemba - 10 May 2017

@sinyo you are point on. it's simply for 2 reasons. 1) the rand is already in circulation so retailers should just price their good in rands, RBZ doesn't need to be consulted abut that 2) as long as there is not enough capacity from production to sustain foreign currency earnings, whatever you use will get sucked out of the system like a leaking balloon. Point in case, where does Mugabe get his cash for forex trips? He charters a plane full of allowance earning aides producing nothing but bring duty free goods to sell in the country, thereby sucking more cash out. Have you seen Russell's Gorereza (or whatever the f*^ his name is) luxury cars with Zanu PF plates, Grace buying a $1M ring etc etc... more looting. We hear Bob takes at least $4M per trip and with a avg of 2-4 trips per month that is $100M vanishing into thin air. There is more we do not know. If diamond revenue can not be accounted for, you are simply treating symptoms versus the causes. Mangudya is right, no easy way out of this one Zanu PF.

Zuze - 10 May 2017

These armchair economists? Recommending adoption of such a week currency for what purpose? There is plenty of US dollars and bond notes in pillows. People will eventually take them out in the end. Just watch how they spend it on beer. Mangudya leave them like that dont put more dollars and bonds vachabudisa chete! ZvemRands izvi ndezvekupenga. Kana vanawo ngavashandise besides the rands are legal tender in ZIM.

Manje so - 10 May 2017

Zimbabweans are a confused lot. What has the Rand have to do with a tattered economy? It's like a patient is suffering from malaria and you want to treat him for shivering. A point of note: "what if the rand fails" spot on. These pertinent questions must be answered first: What is causing the disappearing of the US$? What caused the introduction of the Bond? How far has the Bond note gone in achieving its mandate? What was the mandate of the Bond note in the first place?

Regalia - 10 May 2017

chidyausiku better aende imhata

ichoo - 10 May 2017

Quite clearly, the problem here is Zim's pride in having to accept the currency of a fellow African country. Additionally, there are certain "up-theres" who are clearly benefiting hugely from the current situation.

Essexvale - 11 May 2017

Do not look very in Bulawayo they have been using the rand since the adoption of the multi currency, can someone have a closer look at that,how are shops in Bulawayo pricing their goods, circulation the currency etc. Bulawayo can be the best case study.

Gidza - 11 May 2017

The adoption of the rand is simple and straightforward..It makes perfect economic sense. However, I think all of you people are missing one very important point: We have a narcissistic, egoistic despot running and ruining this country who views everything with selfish individual self adulation interests. As long as Mugabe mwana waBona lives and is in control, the Rand will never be adopted. He will never want to suffer the humiliation of subjugating himself ''an African icon who is above Mandela'' to South Africa, a country which only became independent in 1994 and that he helped to become independent. Ko sovereignity that he single handedly fought for. Even worse; to admit to place himself under the economic control of Zuma et al, these black guys he harboured in Zim during apartheid? Hell no, it wont happen. You might ask, 'what then is the difference with the US$?' a narcissist, a lot. The US as a country is geographically far and is ruled by whites with white capital. The US has leaders who do not compete with our supreme leader for self adulation and being an African icon.

Tinashe - 11 May 2017

Guys if we adopt the rand then how will our bribe offering chinese externalised their loot. me and a couple of zanu bigwigs are getting bribes from the nice KIND chinese to keep the us dollar as the major currency. How do you expect them to get 10million rand across to s.a for exchange with the usd? They will be detected by everyone including cats, armed robbers, dogs and goats and will be dead before they can say Petersburg. Guys the the various bribe amounts are too tempting for me and Mangungdya. Stop it please. makuda kurohwa manje.

Madhala - 11 May 2017

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