Debate on the rand gathers momentum

HARARE - As the country’s economy continues to die, and cash shortages worsen, the debate on the need or otherwise for Zimbabwe to embrace the South African rand as the country’s anchor currency is gathering momentum.

This comes as the Confederation of Zimbabwe Industries (CZI) encouraged the government at the weekend to enact a law which will allow the prices of goods and services, including salaries, to be denominated in rands — as a way of promoting business competitiveness and the wider use of the South African currency.

“We are not calling for the dumping of the US dollar ... what we are saying is that we need to look at a framework that ensures the little hard currency that we may have is ring-fenced.

“Our argument is that when we adopt the rand, we cannot have an individual coming from say, Pakistan, searching for the rand.

“We can continue importing US dollars, but history has shown that that alone cannot be a sustainable solution to the problem,” CZI president, Busisa Moyo, said.

But some experts warned in interviews with the Daily News yesterday, that the calls by business to peg prices and salaries in rands were akin to trying to adopt the South African rand via the back door — and that this would not help Zimbabwe.

“The cash shortage is not about the currency, but more about the lack of production. As long as we are not producing enough, we will not get enough rands anyway.

“What we need is producing enough to sell outside Zimbabwe for us to get foreign currency. There is also the argument that the rand will not be attractive for people to come in here and take it outside like the United States dollar, but it is not like these people are coming in here and stealing it.

“They are being given the money in exchange for something,” economist Witness Chinyama told the Daily News.

Another economist, John Robertson, also said the proposals to have prices and salaries pegged in rand were misplaced, as the country desperately needed to instil confidence among investors.

“The cash shortage is because we are not earning money. What we need to fix is the lack of confidence in the country. That is what is causing externalisation, as people are taking out their money out of this country.

“So, what we are saying is, let’s fix the confidence issue instead of promoting a currency. The issue is, we can no longer make most of the things we used to make because of investors’ lack of confidence in this economy,” Robertson said.

“There has to be confidence by external banks that if they lend money to Zimbabwe, they will get it back. Right now that confidence is not there.

“If we say let’s go for the rand, it’s like saying let’s not fix the real problem, but see how we can cope with a different currency.

“We need to make money by working, and at the moment we are not working and we are not producing. We need to go back to producing goods that will be good enough for foreign markets,” Robertson added.

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 also 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.

Comments (7)

Under the present regime with an economy that is not producing adopting the Rand or any currency for that matter is an exercise in futility. This thieves forced the surogate currency - Bond Notes into circulation so that they could loot all the US dollars that were in circulation. Angola is has got nearly 500million USD in circulation how come US cash flight is not an issue there.

Sinyo - 15 May 2017

The only solution is to change the government & replace them with the people who will be able to turn the economy around.We need to solve the root of the problem,that is the only way we can bring back our Zimbabwe,, the real Zimbabwe not zanumbabwe.

Matsotsi - 15 May 2017

Yafa yakarodha iyi. Haimbomuki

Zuze - 15 May 2017

For the cash problem solutions: there are short term , medium term and long term solutions. The use of the RAND is the most viable short term solution to the cash crisis.The in medium to long term we can talk of increase of production, investor confidence etc. People want to just have acces to the little money they are aerning period. It doesn't make any sesnse for a citizen to struggle to withdraw just say US$50 or any equivalent. Adopting the rand will just help poor citizens to access the little they have. This will also marginally increase domestic aggregate demand.

Charakupa - 15 May 2017

there are a people who hide behind our shadows we need to be realist on this one most foreigners here are not doing us any good but taking or should I say they are wiping away our foreign currency reverses while pretending to bring sub standard goods did you notice that they don't open accounts and if any ,no savings is in there so if the rand is adapted no one will take it hence no more money crisis it will help restore our reverses all you will start to see these guys going away see what I mean

chikapu - 16 May 2017

Charakupa, while we know that there are short, medium and long term solutions to the cash problems and also know that your solution probably works, what we also know for certain is that the government is reluctant to implement progressive policies that will make the economy recover. They will put a band-aid on a broken bone and it'll appease us then we just get back to where we are. They should start by implementing policies that will start to instill confidence in the country, as a show of good faith, then they adopt the rand.

nyasha - 16 May 2017

As fixing the fundamentals is not going to happen over night (and probably not until after the 2018 election if then) lets just denominate prices and bank accounts in Rand and at least be able to get money out of the bank again. This is no different to the current situation with the US Dollar. We didn't have to ask for permission from America or join the Dollar Zone. All this stuff about needing that sort of thing is nonsense - a big chunk of the country was using the Rand in 2008/2009/2010 without those things. Lets just do it now for the whole country.

Peter Morison - 16 May 2017

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