Weakening Rand hits Matabeleland

via Weakening Rand hits Matabeleland 12 October 2014

A WEAKENING South African Rand has hit businesses and ordinary people in Bulawayo and the rest of the Matabeleland region where the currency is the most popular of the basket of foreign money being used in Zimbabwe.

The government ditched the Zimbabwe dollar in 2009 after the currency had been rendered effectively worthless by hyperinflation with authorities introducing instead a handful of foreign currencies such as the US dollar, the Botswana Pula and the South African Rand.

The Rand proved popular in Matabeleland region because of its proximity to South Africa with people there not experiencing the same problems with change as the rest of Zimbabwe.

At the time multi-currency regime was adopted, the Rand was trading at around nine units to the American dollar but it has since weakened to just over 11 units to the Greenback this week.

Affirmative Action Group (AAG) Vice president Sam Ncube said people in Bulawayo and the Matabeleland North and South provinces were feeling the pinch.

“Unfortunately Bulawayo has always been attached to South Africa,” he said.

“Now that most of the people here use the Rand and it keeps on losing value to the US$ this is indirectly or directly affecting people in this region. Our appeal to the powers that be is if we can use one currency.

“I know this is a catch 22 situation but we need to put our heads together and come up with better solutions and think of ways of addressing the economic challenges facing our economy.”

Fast food entrepreneur Stanley Ndlovu said profits were being eroded on a daily basis and warned that companies may be forced to shut down.

“My brother, business is about profit but what is happening now is like I am just giving people food for free during the day,” he said.

“So it is better I stop now until things have improved or else I will lose all my investments trying to cover up for the losses.”

The development comes as some industry leaders have urged the government to drop the US dollar because it was making production costs too exorbitant and the country’s exports uncompetitive in regional and global markets.

Former Confederation of Zimbabwe Industries (CZI) president Joseph Kanyekanye recently said Zimbabwe must eliminate the $US and adopt the Rand in order to be competitive in the region.

“It is only logical that we should use the Rand as a currency,” he said.

“It (the Rand) has depreciated 40 percent in the past year, which works to our advantage. We have to dispel this notion of an academic comfort zone that we will only adopt a certain currency after certain optimum conditions are achieved.”

Finance minister Patrick Chinamasa has however, insisted that current multi-currency regime would remain in place for the next five years.

COMMENTS

WORDPRESS: 7
  • comment-avatar
    Phunyukabemphethe 6 years ago

    Biti once recommended Zim join the common Rand Monetary area, but Gukurahundis do not want to adopt the Rand as the common currency in Zim because of their petty jealousies against South Africa’s economic status on the continent; more so in the Southern African region. Funny enough, they destroyed their economy on their own, without South Africa’s involvement.

    With US dollar denominated production costs and exports revenues in dollars – there is no way Zim products can ever be as competitive in the region compared to South African, Botswana or Namibian products whose production costs are denominated in local currencies and export revenues earned in US dollars!!

  • comment-avatar

    All a load of rubbish.Eliminating one currency or the other is not going to improve the situation at all!What needs to be done is a return to honest simple business ethics with a ligitemet government in place and a judiciary and law enforcement that is not politically connected.

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    Mixed Race 6 years ago

    Well said @BLESSING-Zimbabweans are used to cheating methods of trading.They have transformed the USA dollar to the old Zim dollar.It does not matter which currency you use for trading as long as your product is properly priced and of high quality.Our local production costs are made high due to wrongly priced raw material and other production inputs like electricity,transport,labour and others.
    We depend mainly on imported items mainly from S Africa,therefore all imports should be cheaper now,if they do not inflate the prices.

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    Mishonga yanetsa 6 years ago

    True prices are inflated

  • comment-avatar
    Dzenyika 6 years ago

    Agree that prices are inflated. Profit margins are unreasonably high, and that’s driven by the need to pay bribes and kick-backs.

    Corruption and policy uncertainty are the things that are killing the economy. It has nothing to do with the currency in use. It’s actually a good thing that it’s a currency we can’t manipulate. We would have printed millions by now! At least we are being forced to face the problem.

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    Rukweza 6 years ago

    In zimbabwe including matebeleland provinces we are paid US dollars,yiku dinga i news kuphela amanga wodwa.you should have said omalayitsha not us

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    Jonathan Goreraza 6 years ago

    We simply need a change of leadership to bring investor confidence, investment and a return to rule of law