Is it time for the Zimdollar to return?

Is it time for the Zimdollar to return? March 30, 2014 by Itai Zimunya Zimbabwe Standard

There is a rising tide of voices calling for the re-introduction of the Zimbabwean dollar as Zimbabwe’s monetary unit.

A cult of self-praising pseudo-pan Africanist scholars lead in arguing that the Zimbabwe dollar must come back to re-establish Zimbabwe’s financial sovereignty since the US dollar is technically not a Zimbabwean or African currency.

They write long articles which to some extent infect Zimbabweans with wrong medications.

Positively, the monetary authorities in Zimbabwe through the Reserve Bank of Zimbabwe (RBZ) argue that the economic fundamentals in Zimbabwe currently do not yet favour the return or re-creation of a Zimbabwean currency.

This article seeks to expand that Zimdollar debate and highlight the economic fundamentals around money and its role in an economy with Zimbabwe as the focal point. In general, the article strongly disagrees with the un-economic “sensationomics” propounded by Tafataona Mahoso and his kind.

Basically, it is important to engage in this debate using tangible and simple analysis based on principles of economics and not recycled political mythologies that always see the shadows of Britain and imperialism in all challenges confronting Zimbabwe.

Firstly, it is important to demystify the technocracy of monetary economics by simply defining money, share its characteristics and re-state its uses.

Economists generally agree that “money” is anything that is generally accepted as payment for goods and services and repayment of debts. It is a medium of exchange which can clear past and present obligations. Land, cattle, maize, platinum, ideas, Victoria Falls, the Rand, the US dollar, are all forms of money.

However, because it is practically impossible to always use “hard assets/money” to exchange or buy goods and services, the globally accepted currency is one that is defined by bank notes and coins, often referred to as “liquid asset/money” (because it’s easier to carry and move around).

Therefore, money is often defined in terms of the three functions or services that it provides. Money serves as a medium of exchange, as a store of value, and as a unit of account.

Money’s most important function is as a medium of exchange to facilitate transactions. Without money, all transactions would have to be conducted by barter, which involves direct exchange of one good or service for another.

The difficulty with a barter system is that in order to obtain particular goods or services from a supplier, there has to be a double coincidence of wants between two transacting parties. Zimbabweans experienced a bit of this in 2008 where in the townships, a splash of toothpaste bought a bundle of vegetables or some other commodity to suit the shifting human wants at that time and space.

In order to be a medium of exchange, money must hold its value over time; that is, it must store value. If money could not be stored for some period of time and still remain valuable in exchange, it would not solve the double coincidence of wants problem and therefore would not be adopted as a medium of exchange. Money may not even be the best store of value because it depreciates with inflation.

The reason why the Zimbabwean dollar collapsed is because it stored no value. It was a burden carrying loads of cash whose value fell every second. This is why, basically, we argue that to maintain the current regime of currencies with value is better for now.

Furthermore, money is an easily transported store of value that is available in a number of convenient denominations. It’s easier and convenient to carry a US$100 or 100 Rand bill to any bus station and get a service than to go with a hoard of six bleating sheep and try to negotiate the value with every passing bus.

At this point, it may be important to share the six basic characteristics of money.

Firstly, the essential quality of good money is that it should be acceptable to all, without any hesitation in the exchange for goods and services.

Secondly, money must be portable. Good money should be easily transferable from one place to another for doing business and making payment. The paper money is easier to carry because it has minimum possible weight than metallic (gold, platinum, tobacco, cattle or diamond) money. Modern trends now use plastic money or “cloud money” — meaning internet or sms banking.

Thirdly, money should be storable and it should not ordinarily depreciate with time. If the money used is perishable it will lose its value in a few days. Paper money has this quality of storability.
Fourth, good money is that which could be divided into small units without losing any value.

Fifth, money should be durable. It should not lose its value with the passage of time. The gold and silver coins do not wear out quickly and quality of money remains the same.

Sixth, good money should be made economically. If there is heavy cost on issuing more money, then that money becomes bad money. Good money is that which has low cost and more supply. This was the Zimdollar’s challenge as well, where the cost of printing one dollar was more than that dollar. It made no economic sense and that is the risk of prematurely bringing any new unstabilised currency.
At a macro-level, national money is the collection of a country’s wealth. Zimbabwe’s stock of tobacco, gold, platinum, diamonds, human capital, cattle and land is its “hard money”.

What the government needs to do is to manage its “hard money” to support “liquid money” which children can carry to the shops to buy sweets and bread.

I would agree however with a thesis that says Zimbabwe must prepare for her own currency. The best way for Zimbabwe to re-introduce her own currency “as money” is not through slogans of sovereignty, but through an inclusive set of strict and multi-connected medications.

These include, and not in any order a) building long term national domestic and corporate savings, b) stocking the national sovereign wealth fund, c) promoting a serious anti-corruption drive and facilitate the repatriation and or injection of fresh capital, d) internalising of expenditure through initiatives like the “buy Zimbabwe campaign”, e) good governance- as in, for example, loans must be given on the basis of productivity and not political connections and last but not least is f), beauty.

Money must be beautiful or have aesthetic value because citizens, especially children, must be proud to hold, share and spend their money.

Domestic banking and spending are very key macro-economic processes that contribute to a sustainable economic growth.

Itai Zimunya is a socio-economic researcher based in Zimbabwe.


  • comment-avatar
    John Thomas 10 years ago

    This article is a waste of space. Nobody wants the Zimdollar back. Let the government try. It will be soundly rejected.

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    Canuck 10 years ago

    What a load of rubbish……
    Lets take an informal poll.
    If it were revived, who would sell all their Rand/$/GBP or whatever and buy Zim$ in return?

  • comment-avatar
    Littledorrit 10 years ago

    The concept of sovereignty must be extended to:-‘
    Cataract operations
    University education for connected kids
    Money stashed in offshore accounts by connected people

  • comment-avatar
    Jono Austin 10 years ago

    Is this a joke? Who would exchange usd for zwd

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    No to return of zim$. The mugabe’s never took the zim$ with them when they went shopping overseas. So take the zim$ and shove it in the place that never sees the sun

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    Mark Talbot 10 years ago

    A few people got rich from the abuse of the ZimDollar, most were impoverished by the ridiculous printing of too much money creating hyperinflation. Having a domestic currency is not supposed to be about a license to print money. We know who wants the return of the ZimDollar.

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    Charles Chindove 10 years ago

    The Fundis should consider the “Cloud Money” called Bitcoin.despite it’s volatility, it can be used as a mobile currency which even Sons and daughters in diaspora can easily send home without hefy transmission charges.Food for thought

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    Senzachena 10 years ago

    Knowing our leaders, and aware of the fact that the country and government is bankrupt I have little doubt that they will soon bring back the Z$. How else are they going to find the money to pay the SF. It is so much easier to print it as and when required. This will of course hasten the total collapse of the country. You never know your luck some stupid country might bail them out for a short period.

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      They will bring back the Zim dollar and overnight the money in our bank accounts will change from US$ to Zim. They will take the US$ for themselves and we get Zim dollars, and when the Zim dollars run out they print more. The black market will return, and guess what will happen to the US$. They will get richer once again. Anyway, Evil does not last forever. Don’t give up. The light will shine through in the end. In the meantime, treat them with the contempt they deserve.

  • comment-avatar
    Mandy 10 years ago

    This is what happens when a country fails in its responsibility at elections and fails to make good choices. You now have clowns and the deranged pretending to be everything but leaders of the nation. An animal farm is upon us. And anything is possible indeed because nothing needs rationale thinking as a justification. It makes sense if Mahoso were to give away his Prado and return to hoofing it because that is how he expressed his solidarity with his fellow socialists not too long ago. Tafataoona your place is in ingutsheni and please leave economics to economists.

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    Nhekairo 10 years ago

    You can’t have a national currency if you don’t have an economy, it’s that simple!!

  • comment-avatar
    Mukanya 10 years ago

    Its the 1st Of APRIL tomorrow Which is “A FOOLS’DAY hence the zimdollar waffle

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    gorongoza 10 years ago

    Be very wary of the amount of real dollars you keep in your bank accounts. You never know what these fools can do overnight. I have decided to run to Musina and open an account kana nePost Office zvayo. Or at Lobatse.

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    Only God is sovereign! Do you think we can get that into our rather dense heads. And if there was anything sovereign about Zimbabwe ZPF long with their leader have squandered it. We lost our currency and they have destroyed their land and slain their people. We have been sold to the Chinese and squandered our independency and come to rely on our neighbouring countries for food and everything else. We are in fact a disgrace and a reproach which is a judgment from God. No repentance! no restoration!

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    moyokumusha 10 years ago

    No farmers no economy, no economy no wealth, no wealth no currency, no currency no trust, no trust no chance. Answer, bring back the farmers first then we can look toward eventually having our dollar back.

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    bruce koffe 10 years ago

    currency is a legal tender for exchange of goods and service. it should have value of exchange. Zimdollar had and will not value of exchange. This is regardless of colour or denomination. where will it trade if its can not be accepted outside the borders of the country.

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    Not only would we like our dollar back under a stable and legit government but we would like our whole darn country back. it has been stolen!

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    Once again all the comments miss the import of the article. The piece sets the conditions that are critical for any local currency to be sustainable. The writer is not saying bring back the Zim dollar now. He is actually decrying the entertainment of such an idea under the current socio-political and economic environment which is rife with corruption and other activities that are inherently violent to a sustainable currency. There are certain conditions which have to be met before any sustainable local currency is introduced and he spells it out, otherwise it will not be money because without those conditions whatever paper you introduce as money will not fulfill the purpose of what money is. The writer spells it all, and I don’t understand how these comments miss it.

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    maita 10 years ago

    liquidity crunch in Zombabwe can be solved easily by just using plastic money. I buy using my card whereever I go and avoid carrying cash. All cash stays with RBZ when shops want to order they get the cash from RBZ but only if RBZ is run professionally unfortunately it is not ne ma cyber PHDs aya zvatotangazve zvekwa Gono zvekuprinter newsprint.

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    Isu-zvedu 10 years ago

    For me, its not about sovereignty or creating conditions for corruption. No. Its about being real to ourselves. Let then bring back the Zim$ and show their professional economic prowess by being themselves-real Zimbabweans. We Zimbabweans are are so useless. Today Mugabe hides behind foreign currency mantra instead of admitting failure with the dying currency. Why do we love everything foreign? I now wish we had a Crimean-like referendum to bring back the British and have them rule us. I am sure 97.5% of us will vote against self rule because those in “leadership” have dismally failed. What are we afraid of that we have not already witnessed under Mugabe rule- from war crimes against the villagers, Gukurahundi-Murambatsvina to Nikuv? We behave like bringing back the Zim$ is more evil than all these acts? If it is, why do you allow Gono the architect of this evil to walk free, not even support Kereke for trying to fight evil in his own way? Why? Zimbabweans you are as fake as ZW$1 trillion dollars that Gono printed!

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    Return of Zim dollar = THE END !!!