Friday 29 September 2023


ZIMBABWE’S industries this week mounted a fresh push to defer trade in multiple currencies until 2030, giving authorities room to build a foundation to defend the country’s fragile unit.

The Zimbabwe dollar has tumbled by wide margins on the parallel market since last month’s polls, whose presidential result was rejected by the main opposition Citizens Coalition for Change, sending shock-waves across a market that had been frustrated by political tensions mid-year.

Upheavals on the currency front have given impetus to industries’ view that exclusive trade in the Zimbabwe dollar must not begin as planned in 2025.

The heads of the Zimbabwe National Chamber of Commerce (ZNCC) and Tourism Business Council of Zimbabwe (TBCZ) said yesterday factors like high inflation and weak foreign currency reserves should be tackled before Harare ends dollarisation.

They spoke as peers at the Confederation of Zimbabwe Industries (CZI) and CEO Africa Roundtable (CEO ART) warned during a high profile meeting with new Industry and Commerce minister, Sithembiso Nyoni, that the country risked slipping into meltdowns if government defies market forces and acts prematurely.

According to a 2017 Reserve Bank of Zimbabwe monetary policy, key fundamentals to be tackled also include tying down inflation within the single digit territory and addressing trade imbalances.

“ There are already a lot of corporate tombstones as a result of controls in Zimbabwe,” Christopher Mugaga, chief executive officer at ZNCC, told the Independent.

“A currency is as good as the underlying economy, which inspires it. But for now, fundamentals are pointing to a market that is not yet ready for a Zimbabwe dollar.

“We must satisfy required fundamentals first and respect market forces,” he added.

The country has been under a multiple currency regime since 2009 when authorities capitulated and took respite in dollarisation after the Zimbabwean unit crashed under 500 billion percent inflation in 2008.

Wengayi Nhau, president of the TBCZ, agreed that dealing with fundamentals would be crucial in frustrating unforeseen headwinds as Zimbabwe swings towards the exclusive use of its own currency.

But he said a strong US dollar would continue hammering industrial exports and service sectors like tourism.

“Business leaders who spoke on Tuesday are hoping that by 2030 we will have addressed the fundamentals,” Nhau said.

“But no country prospers without its own currency. If we continue using a strong currency like the US dollar exports will suffer.

“It will put Zimbabwe at a huge competitive disadvantage. Tourism sells services, and packaging Zimbabwean services in US dollars becomes a deterrent.

“Foreign currency reserves are built as a result of confidence, which we must work on. We can exclusively transact in the Zimbabwe dollar within six months if conditions are right. The best we can do is switch to the South African Rand,” Nhau added.

About 80% of transactions are already taking place in United States dollars, according to a report released by advisory firm, Equity Exis this week.

In their frank interface with Nyoni this week, leaders at CEOART and CZI warned her she had landed into industrial turmoil. They said her decisions will make the difference between protracted volatilities and return to stability.

“Topping the list (of our concerns) is the need to genuinely deal with the boomeranging effects of monetary and fiscal threats, with the government immediately coming clean on the state of the dedollarisation strategy,” Oswell Binha, chairperson at CEOART , told the minister.

“We strongly believe that monetary stability remains a cornerstone to business sustainability, particularly as we struggle to deal with legacy issues of value erosion, extraordinarily high corporate mortality rates, high taxes, death of individual savings, a crippling exchange rate regime and high inflation.

“While the National Development Strategy 1 places a cap of 2025 to mark the end of multicurrencies, monetary economists and business believe the country is not yet ready for a Zimbabwe dollar as a mono currency.

“Zimbabwe’s currency crisis can be checked by extending multi-currency usage up to 2030,” Binha noted.

Kurai Matsheza, president of the CZI, warned that the economy was already gravitating towards decline, held back by a sea of problems including water and power shortages. He said a crumbling infrastructure and high utility and regulatory costs were working against recovery.

“We need a clear roadmap as to where we are heading before we become clueless in 2025,” the CZI boss said.

“The year 2025 has been set as the deadline by which the multicurrency system will end. We need to create and follow through the clear roadmap of what it is that we want to do as a country towards addressing currency issues.

“Let’s have a clear roadmap on the Zimbabwe dollar. If we rush it, this may cause other dislocations in the economy.

“There is a huge need for some steps that encourage the use of the domestic currency,” Matsheza added.

Industrialists gave Nyoni a standing ovation as she entered a parked Rainbow Towers auditorium to gauge post-election business sentiment on Tuesday, before flooding her with a flurry of sobering bombshells pointing to an impending catastrophe. Over 18% of the combined annual overheads are being drained by commitments to comply with regulations.

Matsheza chronicled how the return of rolling blackouts had decimated production.

Business’ frustrations stemmed from the fact that in the weeks before the polls, President Emmerson Mnangagwa had assured them that blackouts were now history, as he commissioned two key units at Hwange, following a US$1,5 billion face-lift.

Away from the auditorium, industrialists said they had been cheated to make firm production commitments to markets, only to begin revising them as blackouts tore through companies. In an analysis, Zimbabwe’s researchers Equity Axis said the currency crisis was at the heart of Zimbabwe’s problems. Zimbabwe Independent


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