Zimbabwean economists encourage faith in local currency

Economist Dr Davison Gomo
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ZIMBABWEANS should have faith in the local currency and co-operate with Government in exorcising the appetite for the United States dollar-indexed cost structure, economic commentators have said.

Despite the introduction of the local currency in June last year, some businesses continue to charge goods and servicesin foreign currency citing perceivedlack of confidence in the Zimbabwean dollar. 

The practice is not only illegal but has created arbitrage opportunities linkedto parallel market exchange rate distortions. 

Industry executives have noted that the continued use of the US dollar as the point of reference for all pricing, including wages, was having a negative impact on the stability of the local currency.

“The ghost of the US dollar continues to influence our pricing including wages. This needs to be exorcised from our minds if the transition to a local currency is to become a reality,” said Dr Israel Murefu, president of the Employers’ Confederation of Zimbabwe (Emcoz).

In view of the anticipated 2020 monetary policy statement due for presentation by the Reserve Bank of Zimbabwe (RBZ), economist Dr Davison Gomo said confidence in the local currency must be a collective position.

“People need to shift their attitude and appreciate that the development of their own country is tied to the strength of their own currency,” he said.

“The character of a nation is tied to its own currency. The independence of a nation is tied to its own currency. At the moment it’s a crisis of confidence and that crisis of confidence is a product of history.”

Dr Gomo said the local market needs to believe that the economy will not rebound until the country starts to resuscitate it through increased production.

“That will begin to strengthen the currency. I think it’s going to be a series of major socio-economic adjustments that bring about an environment which we will bring the transformation that we all desire,” he said.

Dr Gomo said relying on strong currencies like the US dollar would not stimulate productivity as it negatively affects exporting companies. As such, he said, the return of the Zimbabwe dollar was not ill-timed.

“All things being equal Government must ensure that it takes up the mono-currency route, equally creating an environment where our own economy is taking off, indeed it is,” he said.

Another economic analyst Dr Keith Guzah said monetary authorities should come down strongly on people using foreign currency in domestic transactions. He said when the country introduced a mono-currency, Government made it clear through the relevant legal framework that the multi-currency system had been outlawed.

“The challenge that we have at the moment is at implementation level. We have got very clear policy pronouncements but they are not backed by proper enforcement. So, everybody tends to do as he pleases in this country,” Dr Guzah said.-