Tendai Kamhungira 23 February 2017
HARARE – President Robert Mugabe has backed Zimbabwe’s adoption of the
South African rand as its main currency.
After ditching a worthless Zimbabwe dollar in 2009, the country has been
using several currencies – United States (US) dollar, yuan and the rand,
among other – along with the recently introduced bond notes, a currency
surrogate to the greenback.
Speaking in an interview to mark his 93rd birthday, Mugabe said he had
actually advised Finance minister Patrick Chinamasa and Reserve Bank of
Zimbabwe (RBZ) governor John Mangudya on the idea to adopt the rand, but
the two have not been forthcoming on the proposal.
“I don’t know why the ministry of Finance, together with the RBZ, have not
wanted to use other currencies. I have asked actually again and again kuti
(that) why not have euros, why not have yuan… why not have rand
alongside the dollar?” he said, adding that all Chinamasa and Mangudya say
is “ahh tichazviita, tichazviita (we will do it)”.
“At least if we had the euro, I don’t think we have sanctions on the euro,
but the euro is slightly more expensive than the dollar but the difference
is minimum,” Mugabe said.
This comes as representatives of the Bankers’ Association of Zimbabwe and
Confederation of Zimbabwe Industries (CZI) have advised Parliament’s
Finance portfolio committee that adoption of the rand is one of the key
measures required to address the current crippling cash crisis.
In a recent presentation on the liquidity crisis at an economic outlook
symposium hosted by the CZI, University of Zimbabwe (UZ) economics
lecturer Ashok Chakravat – also advisor to the President’s Office and
Cabinet – advocated for the adoption of the rand, arguing that the bond
notes can only ease the liquidity crisis if there is adequate supply of US
“While RBZ recently indicated that Zimbabwe was in no position to join the
South African Customs Union, as per requirements the immediate solution is
informal adoption as in 2009,” he said.
Respected economist and RBZ committee member Tony Hawkins has also
supported adoption of the rand, only if it is accompanied by devaluation.
He said though the rand has downsides, being a volatile currency, it was
relevant, particularly in the Zimbabwean setup.
However, Mangudya has argued that it is not possible for the country to
adopt the rand on the basis it could worsen the economic crisis being
faced by the country.
“We could have joined the Rand Monetary Union (RMU) or Southern Africa
Customs Union (Sacu) in 2009, but there are certain criteria we need to
meet to do that. That is why we adopted the multi-currency system, and not
a single currency,” he said.
“What you are asking for is very dangerous because we might find ourselves
in a worse situation. We cannot be members of the Rand Monetary Union
without our own currency,” Mangudya said.
At the moment, the RMU comprises South Africa, Namibia, Swaziland and
Lesotho, although the three countries still use their own currencies,
which trade at par with the rand.