MDC backs rand adoption

Source: MDC backs rand adoption – DailyNews Live

Blessings Mashaya      28 April 2017

HARARE – Morgan Tsvangirai’s MDC has said it backs the adoption of the
South African rand as the primary currency.

In an interview with the Daily News yesterday, MDC shadow finance minister
Tapiwa Mashakada said since 50 percent to 60 percent of Zimbabwe’s total
trade is with South Africa, the most advantageous foreign currency to
adopt is the rand.

“Joining the South African Rand Union would ameliorate Zimbabwe’s cash
crisis but who would want to be exposed to the Zimbabwean contagion?

“Zimbabwe’s largest trading partner is South Africa and it would make a
good business case to adopt the Rand but the mechanisms are not that easy.
For starters, one of the preconditions is that Zimbabwe must have its own
domestic currency.”

Zimbabwe abandoned its own currency in 2009 after hyperinflation rendered
the Zimdollar worthless.

“And at this juncture, conditions are not yet ripe for the re-introduction
of our own currency,” Mashakada said.

“The country has to ratchet up its production and exports in order to
close the trade balance. The country has to rebuild its own foreign
currency reserves in order to back up our own currency. Until all these
fundamentals are achieved, it’s not possible either to adopt the rand or
reintroduce our domestic currency,” the former Economic Planning minister

Recently, former Finance minister Tendai Biti said the ship had sailed for
Zimbabwe to adopt the rand as an anchor currency.

Writing on his Twitter account, Biti said without Zanu PF reformation, the
rand would not save Zimbabwe’s deteriorating economy.

“Too late to adopt Rand. Economy now in so much disequilibrium without
reforms Zanu PF will bastardise the Rand as they have the Zimdollar and
the US$. FDI is not flowing into Zim because of toxic and predatory Zanu
politics. Remove Zanu & billions will pour into this economy.

“Let’s rebuild productive base and build reserves of at least of $9
billion. We maintain regime of multi currencies for now,” Biti said.

RBZ deputy governor Kuphukile Mlambo has said the central bank was
considering a basket of currency reforms, the centrepiece of which is rand
adoption, to try to shore up liquidity after the offer to Zimbabwean
producers for a 5 percent bonus on the value of what they export in US
dollars have failed to address the cash crisis.

This incentive is funded by the new bond notes introduced last November,
which in turn are backed by a $200 million facility provided by
Cairo-based Afreximbank.

Presently, South Africa remains Zimbabwe’s biggest trading partner. In the
first two months of the year, Zimbabwe registered a trade surplus of $14
million against South Africa with imports worth $171 million making their
way into the country compared to exports of $185 million.

Over three million of the 13 million Zimbabweans are in neighbouring SA
and remitted an estimated $450 million in the first nine months of 2016
alone. An adequate supply of rand is available from Zimbabwe exports to
South Africa, Diaspora remittances from South Africa, and access to the
South African banking system with which many of Zimbabwean banks and
financial institutions such as MBCA are already connected.

Various business quarters have been lobbying government to formally adopt
South Africa’s currency as the country’s formal trading exchange.