During a cleanup operation in Southlea Park, President Mnangagwa said Zimbabwe would have its own currency by December. The event took place yesterday (Friday 7 June).
Between 2008 and 2009 our country’s currency lost value and some people became billionaires or trillionaires due to high inflation.
At the time Government decided to adopt the multi-currency regime where we started using, the US dollar, Rand, the British Pound or Pula for transacting.
It was a policy measure to address the challenges that were being faced then. We, however, cannot continue going forward without our own currency.
South Africa has its own currency and when you go there with the US dollar or Euro you would have to convert it to the Rand before you can transact.
The same applies to Zambia, Botswana, Mozambique and the UK. A country cannot develop using other nations’ currency.
A currency is only printed by its owners and the only way to get it is through exports, Diaspora remittances or foreign investments but as a country, we should have our own currency and we have embarked on that journey (to have a local currency).
Will this work?
First of all Zimbabwe now already has its own currency. It has had this currency for close to 6 years now even if the government only acknowledged it this year. You see after it lost the ability to print money the Zimbabwe government resorted to electronically printing RTS$ leading to a shortfall in actual USD.
When people could no longer work withdrawals they introduced bond notes and coins under various claims. For example, bond coins were introduced to solve the “change” problem. Bond notes were an “incentive”. The government has never really been open as to how much RTGS$ electronic, bond notes and bond coins are in circulation.
This year the RBZ went on and ratified these currencies and now we call them what they have been all along; money. To be fair the populace has never really fallen for the tricks and from the beginning bond notes have traded at a discount.
That makes economic sense when you consider it. The bond note cannot be equal to the USD and should never have been. It’s simple economics. Consider this: bond notes can only be ever used in Zimbabwe. If you wanted to make an international payment you had to take the time and effort to actually convert the pseudo currency to USD. That alone took time, effort and money without ever considering the fact that it became impossible to do this exchange formally.
Over the years the Ministry of Finance and RBZ have both shown a remarkable ability to continuously lie and deceive when it came to economic policy. It is probable that all this deceit is not malevolent in nature. It is probably because both the fiscal and monetary principles think Zimbabwe has a confidence problem and want to shoar up support and instil confidence using what is in essence propaganda.
Unfortunately, it means the government has lost a lot of people’s trust. When the policies eventually unravelled the naysayers are continuously proven right. So no a new currency is not going to change our fortunes. Too many people who matter are not impressed by this change.
Besides bearer’s cheques and the former governor’s voodoo economics antics are still fresh on our minds.