After unfreezing the bank accounts of the implicated GOLDMAFIA crooks, Zimbabwe’s governor of the central bank, Dr. John Mangudya, has urged people to use the local currency saying forex is needed for critical needs such as electricity.

While the Government has permitted the use of foreign currency in conjunction with the local dollar as an official medium of exchange, at least through 2025, with the ultimate goal being a full return to the Zim-dollar system, some economic players are aggressively pushing for full dollarization citing the local currency’s declining value as a store of value.

Although Treasury acknowledges that the dual currency system is a helpful transitional solution for the economy, it openly said that the long-term goal is to de-dollarize.

In the midst of this situation, speculative market forces have been utilising the window to fuel exchange rate volatility on parallel markets, which has caused price inflation and a decline in consumer purchasing power.

Dr. Mangudya stated during a seminar hosted by the Chamber of Mines of Zimbabwe that Zimbabwe has roughly US$2,4 billion in deposits, half of which is retained as liquid assets by banking institutions for their exporters’, primarily mining industries’, clients to use as funding.

Contrary to the widespread belief that the government earns enough foreign currency to be able to dollarize, he claimed that more than 70% of the nation’s exports came from the mining industry and that the money earned does not belong to Treasury.

His remarks came in response to worries expressed by conference attendees that the Government was withholding foreign currency for the importation of energy, among other difficulties the mining sector was facing. This is in light of worries that power company Zesa is having trouble importing electricity due to a paucity of foreign cash, among other issues. The difficulty is hindering productivity in the mining industry, which needs roughly 2000MW.

Dr. Mangudya claimed that the mining industry was boosting the economy because it had given the industrial sector a boost and given new life to several businesses whose locations had been used as churches for a while.

He argued that it was odd that a nation that cannot import energy because it lacks foreign cash would wish to dollarize its economy. According to him, a small group of people and exporters want to dollarize the economy and abandon the use of many currencies.

“Because you are consistently exporting, people say we can now dollarise. This money is not ours — it belongs to the exporter,” said Dr Mangudya.

“It means that we have no capacity to dollarise because already we have a shortage.”

The RBZ Governor said the best solution was for citizens to have confidence in their own local currency. The Government has always expressed concern over citizens’ lack of confidence in the local currency and has chided businesses and individuals that inflate prices of goods in local currency as a desperate way to discourage local dollar usage.

As such, Dr Mangudya said there was a need for stakeholders to fully embrace the local currency for local purchases and spare foreign currency for importation of electricity and other critical services.

“The country has no sufficient foreign currency to dollarise. As you heard Zesa cannot import enough electricity because there is no foreign currency,” he said. “What it means is that what people are asking for, we have no capacity to dollarise. We have more than US$2,4 billion in our deposits and of those deposits, US$1,4 billion is in banks as liquidity for them to fund their customers,” said the Governor.

“That money belongs to few people and companies that are the largest exporters. Most of the money belongs to the mining sector so it means me and you we don’t have foreign currency.

“So, people who want to dollarise are individuals but we don’t have capacity and what it means is that we need to embrace our local currency for local purchases so we reserve foreign currency for imports,” said Dr Mangudya.

He said there is a need for more robust discussions on the way forward as a country, noting that the demand in the economy for electricity shows lack of capacity to import enough power, and appealed to citizens to understand that numbers do not lie.

He said the market clearing exchange rates only focus on clearing foreign payments and not domestic payments hence there is rampant duplication of resources for local payments and foreign payments.

The mining conference proceedings ended yesterday and today delegates will participate in a golf tournament.- State Media/Agencies