Emmerson Mnangagwa whose recent inauguration was notably absent of leaders from across the African continent, except for three Presidents, has boldly declared his intention to resurrect the Zimbabwean dollar. His statements were made during his controversial swearing-in ceremony for his second term in office.
Mnangagwa asserted that the local currency serves as the linchpin for Zimbabwe’s economic growth potential over the next five years. This announcement comes after years of economic turmoil, currency instability, and strained international relations.
Zimbabwe had previously adopted a multicurrency system in February 2009, predominantly using the US dollar, as the nation grappled with hyperinflation and economic collapse, with inflation peaking at a staggering 200 percent in August 2008.
At present, Zimbabwe operates under a dual currency monetary regime, marked by the volatility of the domestic currency due to the strong preference for US dollars, which now account for over 76 percent of transactions.
Mnangagwa’s commitment to the local currency reflects a desire to bolster economic autonomy and sovereignty. Relying heavily on foreign currencies can leave a nation vulnerable and limit its capacity to independently pursue economic policies.
The utilization of local currencies offers greater control over monetary policy, capital flow management, and the protection of economic interests. This autonomy empowers countries to respond effectively to economic challenges and tailor policies to their unique domestic needs, promoting sustainable development and inclusive growth.
Analysts and economists have echoed the President’s sentiments, emphasizing that the country stands to benefit more from its own currency. They stress that measures to boost production are essential for achieving faster and more robust growth.
Christopher Mugaga, President of the Zimbabwe National Chamber of Commerce (ZNCC), has called for dedollarization as a priority for the new government, making the currency transition a key performance indicator (KPI).
To stabilize the Zimbabwean dollar, the Reserve Bank of Zimbabwe (RBZ) has introduced measures to manage liquidity effectively. Analysts argue that excessive reliance on strong foreign currencies, like the US dollar, can hinder the government’s ability to manage monetary policy and diminish export competitiveness.
Economist Dr. Prosper Chitambara highlighted the importance of value addition and beneficiation to maintain currency stability. While using a local currency is crucial, it necessitates fiscal and monetary discipline to avoid economic instability.
Eddie Cross, an economist aligned with Mnangagwa, emphasized the need to transition to a single local currency for domestic transactions to ensure monetary stability. He also stressed the importance of moving away from raw material exports towards higher-value products.
In conclusion, Mnangagwa’s commitment to strengthening the domestic currency reflects Zimbabwe’s determination to achieve sustainable development while asserting economic autonomy and sovereignty. The nation’s path forward includes enhancing its currency, supporting productive sectors, and cultivating a competitive manufacturing base. However, it does so against a backdrop of regional and continental isolation, emphasizing the challenges Zimbabwe faces on the international stage.