Harare, August1, 2014 – Zimbabwe must eliminate the United States dollar (US$) and adopt the South African rand (Rand) as a main currency to promote regional competitiveness, former Confederation of Zimbabwe Industries CZI president said.
Joseph Kanyekanye, who is also Allied Timbers group chief executive, told a CZI congress in Mutare that the greenback was making Zimbabwe uncompetitive.
This comes amid escalating worries over the country re-introducing the Zimbabwe dollar, although authorities insist the multi-currency system will stay.
Zimbabwe adopted a multi-currency system – dominated by the US$ – in 2009 after its currency was ravaged by hyperinflation, estimated at 79,6 billion percent in mid-November 2008, and an economic meltdown.
“It is only logical that we should use the rand as a currency, is has depreciated 40 percent in the past year, which works to our advantage,” Kanyekanye said, adding that “I have to dispel this notion of an academic comfort zone that we will only adopt a certain currency after certain optimum conditions are achieved.”
He said “the reality on the ground was the country needed to drastically shift currencies”.
“The US dollar is making the country uncompetitive. We need to adopt a currency that will benefit us in the end. A six percent rise in rand (value) and a six percent rise in US dollar are two very different things” he said.
Zimbabwe currently uses a basket of currencies, with government recently adding the Australian dollar, Chinene yuan and Indian rupee.
“A weakening South African rand is making its goods cheaper for Zimbabwean importers who have a strong dollar. This severely reduces the stock of liquidity as the dollar is used to buy the South African goods,” Kanyekanye said.
“The US dollar is the most sought-after currency by other regional economies, whose currencies are not doing very well like the South African rand.
They are now aggressively pushing their exports into nearby Zimbabwe not bothering going all the way to Europe, Asia or America to earn forex,” he said.
However, Reserve Bank of Zimbabwe deputy governor Kupikile Mlambo said adopting the rand would usher in many complications, noting that the multi-currency regime was market driven and not a government conscious effort.
Also, for Zimbabwe to adopt the rand as a main currency, it has to join the Southern African Customs Union (Sacu), a bloc of five southern Africa countries: Botswana, Lesotho, Namibia, South Africa and Swaziland.
The South African Reserve Bank is on record saying Zimbabwe is a sovereign state and cannot adopt the rand.
Nestle chief executive and former CZI president, Kumbirayi Katsande, also told the CZI conference that Zimbabwe is too irresponsible to be trusted to use the rand as its sole currency.
“The South African central bank has said no with its money for a good reason. The country does not have discipline and until a point were discipline prevails, it is just too dangerous for South Africa to give the green light for rand usage,” he said.