HARARE – The current cash shortages must jolt President Robert Mugabe and his Zanu PF government into action to quickly adopt the South African rand to save the economy from total collapse.
Instead of introducing the much-hated bond notes, which have induced all manner of trepidation in the public and rekindling 2008 déjà vu moments, the central bank and Treasury need to look at the rand as a potential saviour.
Over the past six years, the dollar’s appreciation has made imports cheaper, exports more expensive and contributed to a cash crunch resulting in local companies losing their export competitiveness.
To save what’s left of our industry and ease the cash shortage, we suggest that the country adopts the Rand.
Official figures show that Zimbabwe imported goods worth $2,5 billion from neighbouring South Africa last year, more than from all its other trading partners combined.
In addition, the two countries’ economies are further entwined by the estimated two million Zimbabweans who migrate to find jobs in Africa’s most industrialised economy, according to United Nations estimates.
By using the rand or joining the Rand Union, Zimbabwe stands a better chance of economic revival through the removal of restrictions on the transfer of funds, whether for current or capital purposes among the member States.
We totally agree with Bankers Association of Zimbabwe president, Charity Jinya, who recently suggested that the country needs to craft a mechanism to introduce the rand into the system.
Adoption of the rand also entails that there is no restriction on cross border investments from South Africa, thus contributing to economic growth and economic integration.
It will be easier for local investors and deficit units to enter into South Africa’s rich capital and money markets to increase their capital bases, making it easier for local firms to court partnerships with listed firms on the Johannesburg Stock Exchange, resulting in capital inflows.
The existing Rand Union regulations provide that a member can issue out its own currency pegged at par with the South African rand, as is the case with the current signatories. Since South Africa is one of Zimbabwe’s major trading partners, joining the union will mean fixed and predictable exchange rates.
This will assist in giving economic agents a platform to plan over a long planning horizon without uncertainty due to exchange rate volatility.
As is currently the situation with the member countries in the Rand Union such as Swaziland, Lesotho and Namibia, Zimbabwe will be presented with a platform to resuscitate the operations of the country’s central bank, being responsible for the country’s monetary policy.