By Daniel Chigundu
Zimbabwe is facing a complicated currency challenge to the extent that some have suggested the reintroduction of the discarded Zimdollar as a solution.
The currency crisis has reportedly affected the pricing of goods on the local market and has made it even difficult for locally manufactured goods to compete outside the borders or against imported ones.
Some retailers such as Chicken Inn and Eden Lodge in Mutare although they still accept RTGs and Bond Notes as modes of payments, they are however selling their goods and services at discounted prices when one is paying in US dollars.
Various people, including Reserve Bank governor John Mangudya, Finance Minister Mthuli Ncube and even President Emmerson Mnangagwa have said the fundamentals are not yet right to introduce the much-feared local currency which was officially dumped in 2009.
According to Mthuli Ncube, the 2019 budget is however pegged in US dollar terms although most business is and will be conducted in RTGs and Bond Notes which are said to be at par with the US dollar (1:1).
On the black market, the US dollar to the Bond Notes or RTGs is pegged at 1:3.6
Dairibord Holding Limited Zimbabwe chief executive officer Anthony Mandiwanza said the government must quickly address the required fundamentals especially the issue of using a hard currency in an environment where neighbours are using soft currencies.
“The role of hard currency in a soft environment ought to be interrogated and understood because I think it is a key conundrum which ought to be addressed as we go forward. But don’t misquote me I am not suggesting that we do a haphazard emotional decision to go into any other currency without making sure that the fundamentals are in place.
“In fact, the fundamentals which were not in place caused problems which we found ourselves in so it will be foolish for anyone to just bring in another currency by whatever description without having addressed those fundamental issues which protect your currency,” he said.
Mandiwanza added that “One of them which of primary importance is production, the economy must produce, but not only production but production of value-added products so that you are able to defend your local market also to participate in the regional market.
“So that is a critically important aspect which ought to be addressed and of course on the same issues the need to ensure that the Central Bank itself has reserves in place in order to protect your currency, it’s an issue of paramount importance those are the fundamentals which are critically important.
“Third, it is absolutely important that as the government embarks on the development economic transformation they restructure the spending structure so that the fiscal deficit, the difference between the expenditure and revenue is narrowed if it is narrowed then you allow the resources to be used by the private sector to increase production instead of increasing expenditure.
“That is the way we look at these issues and of course it is important that Zimbabwe has to be part of the broader international community, you can’t do without so,” he said.–