The announcement by Zimbabwe’s Bankers Association and Configuration of Zimbabwe Industries earlier this week that they have made recommendations to the Reserve Bank Zimbabwe to adopt the Rand as the main trading currency in the multi-currency system introduced in 2009 is welcome news to the general public of Zimbabwe. South African northern neighbour has been hit hard by the escalating cash shortages in a struggling economy currently dominated by the US greenback.
The news also comes at a time where the desperate monetary regulator has postponed the introduction of bond notes that have received widespread condemnation from the public. Zimbabweans’ trust in its own currency has eroded over the years and any attempts by the government to introduce the bond notes will be perceived as if they are trying to bring back the failed Zimbabwean dollar via the back door.
The fact that South Africa is Zimbabwe’s biggest trading partner and that the majority of Zimbabweans who fled the economic crisis that peaked in 2008 are based in the neighbour south of the Limpopo River does not require an Economist to justify why the Rand is the short to medium term solution in addressing the current cash crunch. The majority of companies still driving the Zimbabwean private sector are South African. Moreover, the bulk of foreign remittances are also being propped up by Zimbabwean migrant workers in SA. The dominant US dollar has not been doing any good to the majority of investors coming in with a volatile rand.
As a member of the public deeply affected by the ailing economy in Zimbabwe like the rest of Zimbabweans whose situation has also been worsened by the drought of last season, we are confident that there are already high level talks between the policy officials of these two key neighbours on the implementation process that will be followed in making this viable solution workable.
Back in Zimbabwe, the yet to be implemented bond notes must be precluded as any form of currency can only succeed based on public confidence and trust. The $200 million facility from AFREXIM Bank must rather be used to add more bond coins to those currently in circulation to alleviate change shortfalls when doing cash transactions in the multi-currency system. These coins as opposed to the notes that will suffer wear and tear, can then be melted for recycling in the future when the economy is back on its feet and ready to absorb the born-again Zimbabwean dollar.