Currency debate in Zimbabwe hots up as Rand problems escalates

HARARE – The government has been urged to consider initiating a national dialogue on currency reforms in order to come up with an innovative currency system that promotes exports and therefore revives industrial development in the country.

The call comes in the wake of an accelerated closure of companies during the multi-currency era between 2009 and 2014 than the period between 2001 and 2009 when the country was reeling under illegal sanctions imposed by the west.

Mberengwa East legislator, Makhosini Hlongwane said the strength of the US dollar against the South African rand has made Zimbabwean goods more expensive in the export market at the same time making it cheaper for South African manufacturers to export their products into the country.

“In my view, the US dollar has done more harm than good to our industrial and manufacturing sector because of its strength. The depreciation of the South African rand against the dollar is in fact the depreciation of the rand against the Zimbabwean economy because we are basically using the US dollar as our anchor currency and South Africa is our largest trading partner.

“That is what it means, so this is not a sustainable trajectory. If the rand depreciates by another 50%, that means that it will completely wipe out the industrial and manufacturing sector in Zimbabwe and we will become a supermarket of South African goods,” said Hlongwane.

An economic analyst, Mr Bukhosi Mpofu argued that while government will continue to experience a deficit for the next few years because of the currency in circulation, there is need to create opportunities and policies that will stimulate investment and therefore employment creation.

“In economics, we will have a system where manufacturers will choose to stop manufacturing and become middle men. Well, it is just one sector of the economy which we can talk about but we are looking at other sectors like mining and tourism. You find that the US dollar will work well with such industries, and as a result, we also have to look at the input that these industries contribute to the economy as a whole. They provide for the greater good of the people,” he said.




South Africa is currently the country `s biggest trading partner and while there are fears that the weakening of the rand against the US dollar might make the country a supermarket of South African goods, there are also fears that the introduction of the local currency will affect investor confidence and result in situations experienced in 2008 when basic commodities were not readily available.

Bod coins

Only US$2,5 million worth of bond coins out of the US$10 million set aside are presently circulating on the local market as banks under-ordered them, an official has said.

As a result, desperate consumers continue to receive an assortment of trinkets as change. The bond coins, whose value is indexed to the United States dollar, are in one cent, five cent, 10 cent and 25 cent denominations and were released onto the market on December 18 last year.

There is still enduring scepticism that the introduction of the bond coins is a precursor to the introduction of the Zimbabwean dollar.

However, both the Finance and Economic Development Minister, Mr Patrick Chinamasa, and Reserve Bank of Zimbabwe (RBZ) Governor Dr Mangudya insist that the local unit will not be coming back into circulation anytime soon.

Critics claim that the central bank did not embark on sufficient public awareness campaigns to warrant a seamless absorption of the coins. Exactly 17 days after their rollout, bond coins are not readily available around the country. By last week supermarkets in Shurugwi, Zvishavane and Mberengwa had not taken delivery of the coins. The problem has also been affecting retailers in the capital.

Last week, Dr Mangudya said the coins were being distributed to businesses through normal banking channels from the Reserve Bank’s Bank Use Promotion Unit, adding that monetary authorities will monitor and ensure that they will be used as change to bring “decency” in the economy.

“The reason why bond coins appear to be in short supply is because banks under-ordered, presumably on the assumption that the take-up wasn’t going to be as good as it has turned out to be.

“This was coupled by the long weekend over the Christmas holiday. We are in the process of engaging banks to ensure full compliance. This is essential because the bond coins are distributed through normal banking channels, with users placing their orders through banks,” explained Dr Mangudya.

Banks have since embraced the coins.

In particular, the Bankers’ Association of Zimbabwe (BAZ) believes that their use will assist in restoring good pricing models and alleviate the problems associated with lack of change, issuance of change vouchers and change in the form of unwanted goods.

Government and the RBZ contend that a complete set of notes and coins will help lower the price of goods and services, but most retailers are yet to positively respond to the new development almost two weeks after the central bank moved in to address the issue of change shortage.

Formerly, retailers cited the unavailability of change as the reason for rounding off prices.

“Monetary authorities, however, continue to engage producers, service providers and retailers to appropriately price their products. Some manufacturers such as Delta Corporation have begun adjusting their prices, while the confectionery industry is mulling following suit.

“Prices of goods and services in the market should reflect the availability of change. Bond coins are supposed to enhance price competitiveness in the market.

“The introduction of bond coins is a fair and selfless initiative. It’s for the benefit of the nation at large. The motive is simple. We, as Zimbabweans, need to respect the value of the US dollar and to know that there is something below US$1.

“It’s about encouraging and enhancing price competitiveness. We need to respect the consumer.

“We need to improve the quality of life of people with the knowledge that a little change can change a lot of people’s lives. Bond coins are all about simplicity and giving value to the consumer. Giving consumers change in rands, tokens and or sweets is not an efficient system of trading when the pricing structure is in US dollars as is the case in Zimbabwe.

“Neither is adjusting prices by rounding up an efficient way of doing business. The price of a commuter omnibus is either $1 or 50 cents in cities, nothing in between, yet it could be 60 cents, 70 cents or even 75 cents. Prices of newspapers are all $1 irrespective of the cost of production,” said Dr Mangudya.

Bond coins are supposed to address such anomalies.

Added the Governor: “It is therefore clear that no one is trying to rob anyone of his hard-earned US dollars but, on the contrary, what the Reserve Bank is doing is to provide convenience to consumers and business and providing a platform for the optimum use of resources and to inculcate a sense of respect for smaller denominations in the economy under the multiple currency system. We need to have respect to take care of cents so that the dollars would take care of themselves. We also believe that it’s never too late to make a right decision in life.

“This is necessary in order for business to remain competitive, especially at a time when the US dollar is appreciating against major currencies. We are confident that within the next few weeks some prices of good and services shall be adjusted to reflect the availability of usable change,” said Dr Mangudya.

Meanwhile, the Urban Commuter Omnibus Operators of Zimbabwe has pleaded with its members to accept the new coins.

Mr Simbarashe Ngarande, the president of the commuter omnibus body, said commuter operators are now accepting the coins after their concerns were addressed.

“There was a challenge between commuter operators and service stations as the fuel providers where not accepting them.

“We had to engage the services of RBZ to assure service stations that bond coins were a legal tender and we urge our members to accept bond coins,” said Mr Ngarande.

Ignorance breeding scepticism

Most of the people interviewed in the capital last opine that the bond coins are a re-incarnation of the bearer cheques that were introduced in 2003 to deal with cash shortages.

The people spoken to believe that the apex bank has simply re-fashioned the tokens to deal with change shortages.

Generally, many do not understand key issues surrounding the bond coins and what underpins their value, signifying that there might be need for more public awareness campaigns.

However, most retailers such as OK Zimbabwe, Spar, TM and Food World are now accepting the bond coins, which is a step in the right direction.

Below are views from a snap survey in Harare.

Liberty Chaipa, Harare resident

“We are still sceptical about these new coins given that in 2009 we had Zimbabwe dollars in our saving accounts and when we switched to multi-currency, we were not given anything. This is why it is difficult for us to accept these coins.

“Also, given the history with bearer cheques, you might wake up and find that the coins are no longer legal tender in Zimbabwe. This will create problems, especially if you have a large sum of money.”

Bonni Chikwangangwana, a vegetable vendor

“We are not accepting the coins because farmers who come to Mbare musika from places such as Chihota, where I buy these vegetables from, are refusing to recognise these coins as legal tender, so I end up refusing the coins from my customers.

“There is need for Government to evenly distribute the coins in all areas as well as to raise public awareness regarding the coins.”

Simbarashe Chingwana, a commuter omnibus conductor at Copacabana terminus

“We are not accepting these new coins mainly because members of the public are refusing them.

“Secondly, we are afraid that customers might come with 50 one cent coins such that by the end of the day we will have sacks and sacks of coins. The other issue is that fuel service stations do not accept coins, especially if they are in large sums. Accepting these bond coins will put the business at great risk.” 

Related Posts
Cresta hospitality spends $7,2 mln on refurbishments, Q1 revenue seen up 4pct
HARARE, – Cresta Hospitality group says it has now spent $7,2 million on the refurbishment of its flagship lodge at Msasa in Harare while the group’s revenue for the first ...
READ MORE
‘Come and arrest me; I am ready’ – Mujuru
HARARE - Hounded former vice president Joice Mujuru maintains that she is not afraid of the ruthless and unrelenting onslaught on her — including murky allegations of plotting to oust ...
READ MORE
Trevor Ncube’s media accused of rightwing agenda by ANC in South Africa
JOHANNESBURG - South African ruling party ANC on Friday accused the Mail&Guardian, a publication owned by Zimbabwean media mogul Trevor Ncube of a rightwing agenda in the way it reports ...
READ MORE
Mugabe grooming Mnangagwa for Presidency
HARARE - President Robert Mugabe has reportedly resolved to appoint Vice-President Emmerson Mnangagwa as Acting President each time he goes out of the country so that the Justice minister quickly ...
READ MORE
Mugabe shrugs off concerns over AU-West relations
Addis Ababa - Zimbabwean President Robert Mugabe on Saturday shrugged off concerns that his appointment as new African Union chair would harm relations between the pan-African bloc and the West. "What ...
READ MORE
ZSE is world’s best-performing bourse
HARARE - Zimbabwe's $3,3 billion stock market is up 22 percent this month, more than any of the 94 equity indexes tracked by Bloomberg globally. Zimbabweans are piling into equities to ...
READ MORE
I’m prepared to work with Mujuru: Tsvangirai
HARARE - A buyount opposition leader, Morgan Tsvangirai, yesterday promised his supporters “better” times ahead, while coming out clearly for the first time that he was prepared to work with ...
READ MORE
With faith and Facebook, Zimbabwe preacher takes on Mugabe
JOHANNESBURG (Reuters) - With a Bible in one hand and iPhone in the other, Evan Mawarire makes an unlikely adversary to Robert Mugabe, who has seen off foes from apartheid ...
READ MORE
Barclays Africa Hastens Talks To Buy Banks In Zimbabwe, Egypt
JOHANNESBURG – Barclays Africa Group said talks to buy its parent company’s operations in Egypt and Zimbabwe have been accelerated following management changes at Barclays. “Our ambition is to do the ...
READ MORE
UK, US using Kasukuwere to topple Mugabe – war vets
HARARE – Zimbabwean war veterans have made sensational claims that some elements within the ruling Zanu-PF party are working together with Western countries to topple President Robert Mugabe. In a video posted ...
READ MORE
Cresta hospitality spends $7,2 mln on refurbishments, Q1
‘Come and arrest me; I am ready’ –
Trevor Ncube’s media accused of rightwing agenda by
Mugabe grooming Mnangagwa for Presidency
Mugabe shrugs off concerns over AU-West relations
ZSE is world’s best-performing bourse
I’m prepared to work with Mujuru: Tsvangirai
With faith and Facebook, Zimbabwe preacher takes on
Barclays Africa Hastens Talks To Buy Banks In
UK, US using Kasukuwere to topple Mugabe –

Arts & Entertainment

Arts & Entertainment

Ex-Utakataka bassists to launch album in Mzansi

25th March 2017 Staff Reporter 0

RONNIE Mudhindo’s musical journey is not complete without the mentioning of his early days with the late Tongai “Dhewa” Moyo and Utakataka Express band. The reference involves both sweetness and sourness. Utakataka fans may remember […]