By Wisdom Mumera
Initially, the Zimdollar went out without much fanfare. It died a natural death and was mourned by none.
It slowly disappeared as the market self-dollarised and the government had to play catch-up by announcing the formal entrance of the multi-currency regime.
After the entrance of bond notes, the market has been in the process of self-dollarising again, slowly squeezing the life out of the Bond notes and RTGS.
The government has decided to announce the banning of the foreign currencies whilst bringing under one umbrella the varied currencies we already have and naming them Zimdollar.
Government has gazetted SI142 of 2019 known as Zimbabwe (Legal Tender) Regulations. The Bond Note and the RTGS are now the only currency to be used for day today transactions in Zimbabwe pic.twitter.com/WecUAUnlWv
— Ministry of Information, Publicity & Broadcasting (@InfoMinZW) June 24, 2019
From the Statutory Instrument’s wording, it follows that a new currency will be printed to be called the Zimdollar.
The hope is that our having a formal local currency, at this time, will among other things do three things which are largely for political expediency and fractionally economic.
The first reason the regime is seeking to gain mileage from an aggrieved electorate which has been suffering under the wave of US dollar priced goods whilst receiving bond salaries.
There has been a lot of political consternation within the regime ranks with much murmurings and conspiracies all speaking to disenchantment with the current economic state of the country.
Removing the US dollar goes a long way in erasing a huge problem for the President Mnangagwa government. Who can now demand an illegal tender as a salary?
The move heals none of the essential sicknesses the country is grappling with – Vincent Kahiya
The banning of foreign currencies as legal tenders will also return some modicum of control to the electorate. They now only have to worry about the steepness of prices and not inability to acquire the medium of exchange.
Secondly, the move acts as a futuristic part of the ultimate need to have its own currency in the larger than life plot to deal with what is fundamentally wrong with this economy. That’s in the future.
Thirdly having our own currency enhances competitiveness in issues to do with exports and production. However in a situation where the industry is almost non-existent the competitiveness point is currently academic.
For now, what Finance Minister Mthuli Ncube has done is to merely Christian an old baby with a new name. It changes nothing about its character but gives the community giggles when they call it out.
As journalist Vincent Kahiya has said the move heals none of the essential sicknesses the country is grappling with. As a straw man argument, it’s responding to a none-existant point, and if any, a non-essential one presently.
The Zimdollar won’t bring Foreign Direct Investment. It won’t end the scourge of black markets. It won’t bring down the prices in shops. It won’t increase forex inflows and it has not made the market any happier, but tentative and uncertain.
Save for a few academic points, we already had a local currency, the bond notes, and they have not been of much use in relation to the points for which the Zimdollar has been brought in.
A Zimdollar that is equal to the bond notes, is currently the bond notes and is coming to exist in the same productive vacuum in which the bond note is, is ultimately a freshly named old bond note and useless.
An argument can be made that it’s good to have our own formal currency but presently it cannot be made about its importance in changing the current state of the economy. Something else is needed currently and it’s not a new currency.
A new currency is a topping to fundamental changes, very much important in the whole scheme of things but very much secondary in the protocol towards real reforms as Zimbabwe needs them.
What weighs us down has more to it than the name of currency and renaming an old bond will change very few of the dynamics to make any long term impact.