Efforts by the Zimbabwean government to strengthen the local currency and build confidence to save it from imminent worthlessness has hit a brick wall as traders across the country are rejecting the currency. News reports have it that the unpopularity of the Zim Dollar has extended to even the rural communities. The currency which has suffered series of devaluation, stoppage and revaluation over the last three years was returned by the government as a legal tender in a move that surprised observers. That decision sources say, was driven by inadequate foreign currency, market confidence and mineral backing causing the currency to lose value within a short period of its introduction.
Inspite of mass publicity calling of Zimbabweans to embrace the currency and help it regain confidence, most shops owners and individuals around the country, prefer trading instead, in the South African rand or the United States dollar. Traders are said to have complained that apart from the Zimbabwe dollar’s continuous loss of value, they were taking advantage of the fact that most residents in the district have relatives based in neighbouring South Africa who remit the rand to sustain their families.
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Many Zimbabweans who live in South Africa use the South African rand when purchasing goods in Zimbabwe which has influenced a trend whereby traders in Zimbabwe have decided to price their goods in rand, while some in the urban centres sell in American dollar. With about three million of its citizens in South Africa, using rand as legal tenders in fast becoming popular in the country. However, despite the fact that all products were priced in the rand, shoppers could be given their change in local currency. This is because the traders say that they do not have any other option than to give customers change in Zimbabwe dollar because Ecocash or mobile money transactions are not popular in some parts of the country.
Speaking on the development, the Confederation of Zimbabwe Retailers president Denford Mutashu said the appetite to trade in forex was high in the market and this was a vote of no confidence in the local currency. “The appetite to trade in forex is high in the informal sector. With the informal sector occupying almost 70% of the economy, sustainability of the local currency is threatened until we fix the structure of the economy. As a country, we have not done enough to restore banking sector confidence which was obliterated in 2008,” Mutashu said.
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Analysts have however advised the Bank of Zimbabwe to allow the market to play its role in balancing the currency through a natural process of dedollarisation instead of redollarisation. This process they say, can only happen after 2020. But the key advice to Reserve Bank of Zimbabwe governor John Mangudya is for him to let the market speak. Respect market forces and don’t overregulate and change goalposts in the middle of the game. It saps away the confidence in the economy. In fact, we need to respect the belief that in their imperfections, the principles of free market economy and good governance are the best drivers of modern-day successful economies, they warn.
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The Zimbabwean Minister of Finance, Prof. Mthuli Ncube had last November told a post-budget meeting that authorities were enduring de-dollarising headaches. ‘It’s very difficult to de-dollarise. Very few countries have managed to do that, but I think we will manage to do that. How many countries have de-dollarised in the past 30 years? None,” Ncube said then
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry