The Reserve Bank of Zimbabwe (RBZ) on Tuesday conceded that the multi-currency system adopted in 2009 was effectively dysfunctional with the economy trading solely on the United States dollar, which has resulted in spiking cash demand, fuelling shortages.
Early this month, the central bank announced the introduction of bond notes as part of a raft of measures to promote exports and ease cash shortages.
But the notes, which central bank governor John Mangudya said will come into circulation in October, are viewed by a sceptical public as a backdoor return of the hated local currency.
Long, winding bank queues and revised bank withdrawal limits, once a feature in the hyper-inflation era of 2008, have returned to haunt Zimbabweans as cash shortages bite.
Zimbabwe six years ago dumped its inflation ravaged local currency, adopting a basket of foreign currencies expanded over time to nine, among them the US dollar, South African Rand, Botswana Pula, Japanese yen, and the Chinese yuan.
But central bank governor Dr John Mangudya said the multi-currency system, as it was envisaged, only worked for a short while.
“There has been a shift from the multi-currency in 2009 to the US dollar in 2016. We have put all our eggs in one basket now which is why the demand for the US dollar has increased,” Dr Mangudya said at a meeting organised by the Roman Catholic Church to discuss pressing economic issues.
“In the southern region they used to use more of South African Rand but they are now using US dollars so it means where we used to import $20 million a month, we are now importing $40 million because there has been a shift from the Rands to the US dollar.”
Mangudya said externalisation of the greenback was largely to blame for current shortages, while blaming Zimbabwe’s “too open economy” for promoting the unscrupulous behaviour.
He said the country’s had failed to manage its foreign currency as imports, which were almost at par with exports between 1990 and 2009, had to date doubled while exports trailed, leading to an average deficit of about $2,5 billion annually.
Mangudya said most Zimbabweans were unaware that exports, primarily tobacco and minerals such as gold, platinum and diamonds were the major source of foreign currency circulating in the country.
“Some of you laugh at the farmers sleeping at the tobacco auction floors but those are the people bringing in the foreign currency,” he said.
The RBZ, Dr Mangudya said, would begin paying exporters the five percent bonus in the form of bond notes in October.
He reiterated the bank would not re-introduce the Zimbabwean dollar in the near future.
Mangudya said the central bank was also encouraging use of plastic money by government institutions and public utilitiesy to reduce demand for cash.
Roman Catholic Church Vicar General for the Harare Archdiocese, Father Kennedy Muguti told the central bank boss that people no longer had trust and confidence in government policies.
“People are still nursing wounds from the past,” he said, alluding to loss of savings when use of the Zimbabwe dollar was discontinued overnight.
Barclays Zimbabwe managing director, George Guvamatanga proposed that the central bank should introduce a maximum withdrawal limit of $500 per week.
He backed introduction of bond notes, arguing that the US dollar was being abused.
”Why should tomatoes that have been produced in Mutoko be paid for in foreign currency, why must workers be paid in foreign currency,” Guvamatanga questioned.
“We need a means of transacting that is not going to be abused. We cannot keep on bringing money into the economy that is disappearing.”
Guvamatanga appealed to bankers to slash charges to encourage use of plastic money. His appeal follows the announcement by Steward Bank chief executive, Lance Mambondiani said his bank would effective Wednesday slash money transfer charges by 50 percent.-The Source
4 Replies to “Multi Currency System Useless-RBZ”
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This Mangudya thing did not go to school, the school went to him instead. That is the reason why he can not make sense at all. What is wrong with a single currency, as long as it is earned. The issue here is that there is a ZANU PF government obsessed with spending when it is not generating money. A ZANU PF government is spending and not earning. ZANU PF thugs are abusing the banks, including the central bank, where a lunatic has been made a governor. CBZ can not be compared with a central bank. The ZANU PF government has used depositors’ cash. The lost governor of the ZANU PF central bank should just shut up. We will soon have a country central bank, not central bank staffed with ignorant ZANU PF thugs. Clever fool of a governor would simply shut his or her mouth. This Mangudya thing is a manifestation of the highest level of ignorance.
This Mangudya thing did not go to school, the school went to him instead. That is the reason why he can not make sense at all. What is wrong with a single currency, as long as it is earned. The issue here is that there is a ZANU PF government obsessed with spending when it is not generating money. A ZANU PF government is spending and not earning. ZANU PF thugs are abusing the banks, including the central bank, where a lunatic has been made a governor. CBZ can not be compared with a central bank. The ZANU PF government has used depositors’ cash. The lost governor of the ZANU PF central bank should just shut up. We will soon have a country central bank, not central bank staffed with ignorant ZANU PF thugs. Clever fool of a governor would simply shut his or her mouth. This Mangudya thing is a manifestation of the highest level of ignorance.
Why skirt around the real issues here. The economy is tanking mot because of the currency, it’s the currency that’s suffering from the state of the economy. The state of the economy itself being a result of poor management by the government through a raft of anti investment policies over many years and rampant corruption especially by people in power.
As long as the government’s hand in this disaster keeps being protected from exposure and open discussion then do mot waste time sitting to discuss the symptoms. People with no hard hearts sit in places of power and will sacrifice the lives if many for their egos. For the love of power and money, we have all been forsaken to poverty and penury and to live as slaves in other countries. For the accollades of neighbors, the father ignores the cries of his children in his own house. More of the evil calibre stand in line to continue with the repression when the current oppressor decides to leave. However, many.of the ordinary people will also continue to bend as commanded and will refuse to recognize their own power to change their own lives and the system whole carry on and on and on eating its own for the praise of the father by foreigners.
Why skirt around the real issues here. The economy is tanking mot because of the currency, it’s the currency that’s suffering from the state of the economy. The state of the economy itself being a result of poor management by the government through a raft of anti investment policies over many years and rampant corruption especially by people in power.
As long as the government’s hand in this disaster keeps being protected from exposure and open discussion then do mot waste time sitting to discuss the symptoms. People with no hard hearts sit in places of power and will sacrifice the lives if many for their egos. For the love of power and money, we have all been forsaken to poverty and penury and to live as slaves in other countries. For the accollades of neighbors, the father ignores the cries of his children in his own house. More of the evil calibre stand in line to continue with the repression when the current oppressor decides to leave. However, many.of the ordinary people will also continue to bend as commanded and will refuse to recognize their own power to change their own lives and the system whole carry on and on and on eating its own for the praise of the father by foreigners.