The reintroduction of Zim dollar earlier this week was shocking to everybody. Both formal and informal markets have since reacted to this development. While many Zimbabweans saw this as a recipe of more disaster, Finance Minister Mthuli Ncube is of the opinion that it allowed the government to effectively take back control of the economy for the better. As written in The Herald, the Finance Minister said:
This week, Zimbabwe took back control of its economic destiny.
In fact, it had always been apparent to us that for true stability, stability upon which economic growth can be built, our own currency was necessary.
The multicurrency regime was holding us back. Like a headwind for a cyclist who is already peddling up hill, the multicurrency regime had left us exposed to the elements.
In this case, the element was the aggressive inflation caused by the US Dollar pricing. Put simply, we had to take our destiny back into our own hands; we had to take back control of monetary policy to remove that element, and make it up the hill.
Regaining control will first and foremost benefit you, the hardworking Zimbabwean. Our teachers and doctors, our entrepreneurs and cleaners; they don’t earn in US dollars. So why sell in US dollars?
………….The inevitable question posed by many therefore is why didn’t we act sooner? Indeed, they would be right in noting that the multicurrency regime is not a new phenomenon.
The answer however lies once again in our journey metaphor. You don’t trek through the desert without the necessary preparations.
You don’t cycle up a mountain without the necessary training. And you don’t run a marathon (or steeplechase!) without first making sure you are fit and healthy.
Thus prior to making this big decision, it was crucial for us to ensure that our key fundamentals were first put in place. The beating heart of these fundamentals is our national budget.
Once again it was vital that we gained control over our budget, over our spending; what economists call ‘fiscal’ control. We decreased spending, increased revenues and, for the first time in recent memory, the nation of Zimbabwe is now enjoying budget surpluses.
With the preparations complete and our body ready for the next stage of the race to put Zimbabwe back on its feet, we took it upon ourselves to venture past the next juncture, and move another step closer to our destination.
Abolishing the use of multiple currencies, and making the Zimbabwe Dollar the sole legal tender has always been a key component of our transitional stabilisation programme, and a crucial step in restoring normalcy to our economy.
We will work closely with our colleagues in the various ministries and the RBZ to ensure the correct next steps are now taken to guarantee this move is a success. We must continue to rapidly increase the flow of forex into the interbank market. But this must not be for the few.
Forex must also be made readily available to individuals and small businesses across our nation through organised, regulated, and legal channels. This should also include the introduction of a new interest rate policy and a monetary policy committee.
Despite the reported complexity of this decision, day to day, not much will change. Zimbabwean workers will still receive their wages in RTGS dollar and bond notes, and when they go to the shops, the food on the shelves will be priced in the same currency.
Government also guarantees that those who do hold Nostro accounts will of course keep their access to those accounts in the currency in which it is currently held.
We therefore continue as a nation on the march forward on our path of progress, quickening the pace to our destination of prosperity.
We are under no illusions about the rough terrain we will face. There will be many more obstacles to face. But by taking back control of our fiscal and monetary mechanisms, by taking our fate firmly in our own hands, we are one step closer to reaching our destination.
27 comments
Take back control from whom? From the people from whom the State derives its authority? Is this the correct interpretation of that authority?
I’m sorry if you don’t like it but. Zimbabwe is the only country in this world that did not own a currency. How sad is that. And if you are complain about pricing, South Africa literally buys fuel for 14rand per litre and Kenya 100ksh per liter yet both countries have flourishing economies. Zimbabweans should work hand in hand with government desision,mostly cause we have no choice. We have to do our own part. Start producing something of value not just get mad at the government. The US dollar belongs to USA. We now have our Zim Dollar. In the near future you will be proud about it. After all we are blessed people hear in Zimbabwe. God put is in this place to flourish not suffer.
Your assumption is that contributors to this forum are unemployed or unproductive simply because they criticise the govt? Are you a primary school drop-out to be so poor in analysis?..or a paid zanu pf sycophant.
I’m sorry if you don’t like it but. Zimbabwe is the only country in this world that did not own a currency. How sad is that. And if you are complain about pricing, South Africa literally buys fuel for 14rand per litre and Kenya 100ksh per liter yet both countries have flourishing economies. Zimbabweans should work hand in hand with government desision,mostly cause we have no choice. We have to do our own part. Start producing something of value not just get mad at the government. The US dollar belongs to USA. We now have our Zim Dollar. In the near future you will be proud about it. After all we are blessed people hear in Zimbabwe. God put is in this place to flourish not suffer.
Dear Sam, don’t always believe what the politicians say, Zim was not the only country without a currency. What concerns me most is how you say “start producing something of value “, realise that the value in a teacher is that teaching skill and they should be aptly paid for their skill by their employer. Lets leave behind the notion that “value” is only in producing physical artefacts and give our skilled nationals thier due…
What the point owning a worthless currency? Just so you can have the blinfolded view that you have taken bsck your fiscal control. You will have to be naive to think that zim dollar will solve your problems, the root cause goes much deeper than that snd this intervention has not even started to address it. NO INDUSTRY IN ZIM, TERRIBLE BSLSNCE OF PWYMENT FIGURES, HIGH DOMESTIC DEBT YO THE EXTENT OF CROUDING OUT FUNDS TOWARD BUSINESS LOANS, HIGH FOREIGN DEBT, POLICY INCONSISTENCY, the list goes on. Problem is our economy is not being run on sound economic principles, one wskes up snd snnounces whst they dreamt of last night and thats the new policy of the dsy for you my friend
Currencies today are worth whatever people think they are worth and the fact that you think the Zim$ is worthless, eventually leads to its devaluation. Do you realize? America has huge trade deficits, yet you and I believe it’s of value. The UK has a smaller GDP than the US and yet the pound is more valuable to the US dollar. The US owes trillions in foreign debt and it’s currency is relatively stable. Do you need more?
As an ex UCT Economics graduate in Zim, when this Mthuli and Eddie Cross (advisor to FM Mthuli)so called economist & professor wanted to devalue the currency last year, i said to many people around me these guys will destroy Zim economy, because Zimbabwe is a big importing country(fuel, electricity, wheat, many raw material and finished products ), devalue the currency would be suicidal, as everything will become expensive(hyperinflation) and all exporters incl. gold producers will not want ur money anymore, what about ppl salary, gov tax and rates collection would all become worthless, but these guys wanted the currency all the way down. Eddie’s famous words were”our currency is the strongest in the region”after the rate fell to 6:1, and last year before Mthuli speech at UK Chatham House the rate fell to 3:1, his famous sentence at the speech was “the black market was doing the devaluation job for me”, the rate straight fell to 5:1 after his speech at Chatham House (both available on Youtube). The rates fell from 1.5 Oct last year to current 12, now these2 (biggest currency speculators) does not know what to do, as we have no fuel, no zesa, 18hr in darkness, thanks eddie& mthuli. You are legends in destroying the economy in such short time
By the way Eddie, is our currency still the strongest in region after 17:1 today?
When you mention your UCT degree, is it to say it’s better than a PhD from Cambridge University? Where did you get that rate 17:1?
Sam, I like your line of thinking and argument. If only we could work to revive our country together, just as you have rightly put it.
Some of us having working for more than 30 years and this govt you worship and the banks stole from us countless times. We thought that in 1980 we had taken control wtf did we gain then? Very shallow attempt to think.
It would be a waste of time responding to this. You are wrong on many levels. Your punctuation and grammar is wrong too
if u want USD go to America thank you Ministers for bringing back our currency .let’s embrace n move forward.crying will not bring back USD .the future is bright in our lifetime.#MthuliNcube
Tonderai, I’m sorry to tell you that what the minister is doing will not get rid of the USD either. Believe what you want but the USD is here to stay. Most commodities will continue to be valued in USD terms because they are either imports or dependent on imports. Believe this fiction if you want, but the USD will continue to be an important factor in the economics of Zim as it is elsewhere
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What we Zimbos don’t realize is that we do not need the US$ to prosper as a nation. We need stability, and the parallel market was not helping with uncontrollable speculations plunging this economy to its death. Let’s embrace our currency and Zim will slowly crawl out of this pit. But then for many of us, it’s easier to point fingers at the govt for de-dollarizing. What more could they do? Our collective efforts are not earning us enough FC and yet we would expect govt to pay us in FC we did not earn, how naive?
You might find yourself being the naive one when you lose out to this govt’s knee-jeck, myopic policies and the banks’ greediness. Its your choice. They stole from me and they wont get my active or positive support, I pay tax reluctantly. they are daylight liars and crooks – trust them at your own risk.
I think the Minister is on the right track. I m in business, lately I have seen people who do not appreciate the exchange rate attempt to price their products in USD with distasterous consequences to the ordinary person in terms of obscene prices. Local trading has been confined to Zimbabwe dollars whilst those who import or want to deal with the outside world have been given room for that. Our currency of use and reference is now the zim dollar, both the rich and the poor, business and non business people, the cunning and the not so cunning. If you go to neighbouring countries Mozambique, South Africa to mention a few, that’s the scenario they have we now have, even in Zimbabwe yester-year we have the same environment. Let’s support the Gvt, politics aside!
I think the Minister is on the right track. I m in business, lately I have seen people who do not appreciate the exchange rate attempt to price their products in USD with distasterous consequences to the ordinary person in terms of obscene prices. Local trading has been confined to Zimbabwe dollars whilst those who import or want to deal with the outside world have been given room for that. Our currency of use and reference is now the zim dollar, both the rich and the poor, business and non business people, the cunning and the not so cunning. If you go to neighbouring countries Mozambique, South Africa to mention a few, that’s the scenario they have we now have. Even in Zimbabwe yester-year we had the same environment. Let’s support the Gvt, politics aside!
What business are you into? Read the feedback by Durai below, it is more believable than your twaddle.
Why did Zimbabwe abandon its own currency in the first place? Wasn’t it because it had been reduced to useless paper? Has anything changed now. Zimbabwe is highly dependent on imports, that on its own is recipe for disaster. Its too early for us to introduce our own currency when industrial building have been reduced to churches and most of them are just white elephants. We know why Mthuli did this, it is to steal from the business people and the general public. If a company owned a NOSTRO account and all of a sudden they are not allowed to transact in that account. What does that mean, Mthuli has helped himself on their hard earned cash. What a shame!!!!!! Can we lure foreign investors this way? I wonder.
Surely in this country we dnt hv economists or professors of economy hw as citizens allow mthuli and mangudya play pada wth our future these two ar a bunch of failures mangudya and mthuli go hang daylight robbery hw can a country survive without foreign currency? Ar yu mad yu pple and yur saying pple must pay dutty in forex frm wher? Mtuli failed to run his Barbican bank and yu give the entire country to run wat a shame here industry is down no manufacturing no zesa no medecines no diesil all these needs forex and ur planning to create another bond shame to yu
I hailed this policy until I came face to face with reality. As a poultry farmer I was shocked when I went to buy layers YE feed yesterday only to be told that it is now ZWL270 per 50kg. When I started this project the same bag was $30. Now I am at crossroads because I can no longer afford the feed and contemplating slaughtering my 120 birds. I had high hopes that my project would give me returns but the harsh economic climate has dealt me a heavy blow after investing so much.
Sorry Durai but do not despair and don’t give up on your venture. This is a temporary setback because the government has not tried to control prices like in 2008 which caused shortages. What we are seeing is the economy now correcting itself and current prices are just a function of our production. I know many will say prices have short up but in real terms our products are becoming cheaper for export. Salaries may be bad right now but lets wait for the first round of collective bargaining which will surely increase spending power which hopefully will be by a small margin commensurate with our production so as not to put inflationary pressure on the economy
Let’s build Zimbabwe together being negative about our own country doesn’t help us any more, yes 2008 people lost everything when the bearer check depreciated to nothing but thanks to black markets who contributed to that. Using US$ is not helping Zim @ the moment us the ordinary people can’t afford a thing us dollar is very scarce. I agree with Ncube we need our own currency we can control we can’t use american prices in our country we will die if we do that, products that are produced in Zim need to be cheap for zim people.
Those that think the black market was or is the primary root cause of our inflation simply don’t understand the law of demand and supply. when we were growing up in the 80’s and early 90’s the black market was non functional. why?
the answer to that is our primary production (farming & mining sectors) was fully operational, their produce was then passed on to industry as raw material for processing or value addition were necessary and these finished products were then passed on to the wholesalers/retailers who had direct access to the consumer. Somewhere along the way
those who were meant to safeguard this process messed it up and created an opening for the black market which is an alternative market. If one cannot access basic commodities from the local formal market (mind you these were easily accessible in the 80’s & early 90’s) then survival instinct will kick in and one is forced to source these commodities next door (South Africa, Botswana or Zambia). this then creates a demand for forex which by the way is not available on the formal market, leaving the alternative market (black market) as someone’s only source. The greater the demand, the higher the cost. Simple.
The govt you worship is the one that is negatively destroying everything that is orderly and productive by maintaining corrupt officials within its ranks and implementing knee-jeck policies. If you cant figure that out its best to keep quiet. Some of us have been tax payers since 1984 – we’ve seen the madness you’re praising get to dizzying heights by the cheers of those who fail to reason but choose to follow the govt blindly like sheep.