Through Statutory Instrument 142 of 2019, Government announced yesterday that it was abandoning the multiple currency regime and allow all local transactions to be conducted in the Zimbabwe dollar.
The move brings everyone into the economy, as some were beginning to be disenfranchised by businesses that are pricing in foreign currency, primarily the United States dollar.
Businessman and former Zimbabwe National Chamber of Commerce (ZNCC) president Mr Davison Norupiri said the scrapping of the multi-currency system was “a good move”.
“Generally, I think it is a very good move which brings back normalcy in the economy,” said Mr Norupiri.
“Where we were going as a country was becoming uncontrollable in terms of pricing, in terms of costing of goods by industry and in terms of inflation simply because the economy was self-dollarising.
“So the fact that the economy was self-dollarising meant that the US dollar was now in the hands of a few people, and many people didn’t have access to the US dollar and things were now becoming very difficult and very expensive for ordinary citizens.”
Mr Norupiri added that the move by Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya to buttress the policy pronouncements were also critical in turning around the fortunes of companies.
“I think the situation whereby all the legacy debts are going to be paid on a 1:1 is a very big plus to business. Businesses are going to wipe off their legacy debts if they have enough RTGS balances and businesspeople can start on a new slate.
“If you also look at the banking sector, there is a 50 percent interest that has been highlighted in the RBZ circular and I believe this is going to see bankers redeeming some value from loans because the rate of inflation meant that what one borrowed would be meaningless in terms of repayments, say after six months. So borrowers had advantage, but the announcement by the RBZ Governor (Dr Mangudya) brings back normalcy in terms of lending. I think the Minister (of Finance Prof Ncube) has done the right thing because where we were going, it was only the fittest who were making it, and they were very few.
“Yes, it may be tough to adjust now, but it is much better than there recession we were headed to, which would have been difficult to move out of. So I want to applaud the Minister and the Governor for their interventions,” said Mr Norupiri.
Economist Mr Persistence Gwanyanya said the removal of the multiple currency system would be central to “re-industrialisation” which was elusive under a US dollar environment.
“I think it’s an issue of finishing a journey that Government started; Government had undertaken to introduce a local currency, that was the journey, and finally, we have arrived,” said Mr Gwanyanya.
He added that any “responsible Government” would have adopted the same move to prevent economic implosion that was being driven by the loss of value of the local unit due to market manipulation by parallel market forex dealers.
Mr Gwanyanya said the decision by RBZ to increase forex on the interbank and issue LCs would be “a soft landing measure” to avoid economic shocks.
In addition, the pushing up of interest rates on borrowing to 50 percent is expected to stamp out borrowing for speculative purposes.
The country’s second biggest labour representative body, the Zimbabwe Federation of Trade Unions (ZFTU)’s secretary-general Kennias Shamuyarira “overwhelmingly” welcomed the move by Government.
Shamuyarira added that they acknowledge the role of the RBZ in buttressing SI 142 of 2019, adding that the move will correct the “black market exchange rate distortions” that eroded the purchasing power of RTGS dollars. Confederation of Zimbabwe Industries (CZI) president Mr Henry Ruzvidzo last night said he needed to “digest” the measures before commenting.