BUSINESS EDITOR 22 May 2017
HARARE – Zimbabwean banks say adopting the South African rand will not
help solve the country’s economic challenges.
Addressing delegates at the two-day Financial Markets Indaba in Harare
last week, Barclays Bank Zimbabwe managing director George Guvamatanga
said more has to be done to solve the current liquidity crunch.
“Adopting the rand is not the solution. The question we must all answer is
do we want to be subjected to the South African monetary authorities,” he
Guvamatanga further indicated that Zimbabwe did not have a currency
problem but production capacity.
“If the fundamental issues of productivity are not addressed we will
continue having cash shortages. One of our biggest problems is resource
“Last year we had $5,4 billion in capital inflows, where did all that
money go? Since 2009, we have spent over $3,9 billion importing vehicles
from Japan,” he said.
Zimbabwe abandoned its own hyperinflation-hit currency in 2009 in favour
of the United States dollar, but a widening trade deficit, lack of foreign
investment and a decline in remittances by Zimbabweans abroad have helped
to fuel foreign currency shortages.
This has prompted some quarters of the economy to call for the adoption of
the rand to help ease the current cash shortages.
Last week, the Confederation of Zimbabwe Industries (CZI) said government
should evoke the law in order to enforce economy-wide use of the South
African rand and end cash shortages.
“This will transform the cost structures of both government and the
private sector into soft currency from the current hard currency scenario,
setting the stage for recovery in competitiveness.
“It will also result in the vast majority of transactions in the market
taking place in rands, significantly reducing externalisation risk,” CZI
president Busisa Moyo said.
The CZI boss further noted that if automated teller machines can dispense
rand notes this will provide a strong incentive to consumers to take the
rand for transaction purposes.
“This step is recommended because of the current lack of confidence in the
banking system and the perception that funds in the banking system are
liable to (being) `hijacked’ for other purposes,” he said.
Bankers Association of Zimbabwe president Charity Jinya Jinya – who is
also the managing director for MBCA Bank – said if the country is to adopt
the rand all cost structures have to be first converted into the South
“The United States dollar is a more stable currency and people want to
store their value in a stable currency,” she added.
Standard Chartered Bank Zimbabwe chief executive Ralph Watungwa said it
was very difficult for the country to escape the “United States dollar
trap” without making some hard decisions.
This comes as research has shown that there has not been any economy that
has reverted back to its local currency once it has dollarised.
“If we are prepared to go to the South African rand, then we must prepare
to go to the Zimbabwean dollar,” he said.
Steward Bank chief executive Lance Mabondiani said banks had no problem in
adopting any currency that may help improve the liquidity situation in the
“We are not opposed to rand adoption. Anything that can help with the
liquidity crunch is welcome. Who would say no to the rand as opposed to
waiting in a queue for 12 hours?” he said.