Zimdollar to continue as national currency: Minister
THE Zimbabwean dollar will continue to be used as the national currency as over 80 percent of the population does not have access to US dollars and economic growth would be impossible, Finance and Economic Development Minister Professor Mthuli Ncube has said.
In any case, adopting foreign currency as the unit of transaction would increase the cost of production, affect the competitiveness of locally-produced goods, and while giving stability prevent economic growth.
Addressing the National Assembly recently in the wake of calls from some legislators on the need to adopt a stable currency to contain inflation, Prof Ncube said adopting the US dollar would give stability but no economic growth and would render Zimbabwean exports non-competitive.
The solution was to make the Zimdollar a stable currency and to regulate foreign exchange transactions, including those using mobile money platforms where weaknesses had allowed the black market to grow, said the minister.
Legislators had voiced concern over the prices of basic commodities, which they said had continued to erode incomes.
The minister said the use of the US dollar was not the solution.
“We have to be careful about how we balance the use of this hard currency as well. It is very important that we should promote the domestic currency. The reason is that 80 percent of Zimbabweans do not really have direct access to foreign currency in United States dollars, it is only about 20 percent.
“Yes, some of that 80 percent receive remittances from abroad in hard currency but this is survivalist receipts just to keep them above the water but really, in principle, 80 percent of Zimbabweans do not have hard currency,” said Prof Ncube.
He said it was critical to use the local currency, as is happening in other countries, as it promotes the competitiveness of local products on the export markets.
“We should be learning from our neighbours — Zambia and Mozambique — where their currencies are coveted and are loved by the users,” he said.
Prof Ncube rapped mobile money platforms for fuelling the black market, adding that there was need to tighten the regulatory framework.
“Our regulation environment, like elsewhere in the world, was never geared up to manage mobile banking platforms. We were very good at managing banking institutions and the moment you have a banking platform led by an MNO (mobile network operator), what tends to happen is that central banks are kind of left in a limbo. They do not know how to regulate because they only know how to regulate banks. They end up creating a trust account to manage that gap between the network operator and the banking sector and that is when you are able to keep your tabs on them,” said Prof Ncube.
The Reserve Bank of Zimbabwe (RBZ) has already put limits on mobile money limits and last week moved in restrict internal bank transfers to two per day unless under special circumstances, which have to be cleared by the bank’s managers.
The move is aimed at containing the parallel market rate for foreign currency which has led to high prices of goods and services.
RTGS transfers are not affected by the limits now placed on transactions using mobile money, Zipit and internal transfers because these are easy to monitor since details of both the payer and payee are there, and the transfers need approval or approval systems that allow intervention if there is doubt about the legality of the transaction.
Economist Dr Prosper Chitambara said there was need for a holistic approach in dealing with the issue given the inflationary pressures on the economy.
“We are in a tricky situation. You cannot do meaningful business in an environment where prices are not stable. We need macro-economic stability and achieving it is something that must be agreed upon by all stakeholders,” said Dr Chitambara.