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RESERVE Bank of Zimbabwe (RBZ) governor John Mangudya

Oliver Kazunga, Senior Business Reporter
ZIMBABWE will not be rushed into adopting the South African rand overnight as that would be disruptive to the economy, Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Mangudya, said in Bulawayo yesterday.

Responding to calls by sections of the business community to adopt a softer currency given the continued strengthening of the United States dollar, the RBZ boss said a lot of issues need to be considered before taking such a route.

The Bankers Association of Zimbabwe and the Confederation of Zimbabwe Industries (CZI) have recommended the adoption of the rand as the major transacting currency to reduce concentration risk associated with the strong US$.

The US dollar now accounts for 95 percent of all transactions in the country following the weakening of the rand whose circulation has diminished to about five percent.

Dr Mangudya told delegates who are attending the on-going CZI annual congress in the city that the problem facing the country was not a currency issue but a production matter.

“People say we can now go back to the rand. We can’t do that overnight, we should have done that in 2009. To put it back now is so disruptive that people will lose money because of foreign exchange losses,” he warned.

“We need to work on it (adoption of the rand) continuously by encouraging trade. Whether that is rand or US dollars they don’t come here (Zimbabwe) cheap, you need to export to get foreign exchange.

‘‘The rand is also foreign exchange so you don’t change the economy overnight by just changing to the currency.”

Zimbabwe adopted a basket of currencies that include the rand in February 2009 to address the hyperinflation environment the country was reeling under.

Dr Mangudya challenged local industries to stimulate productivity in order to address the liquidity crisis.

He said bringing back the rand into the economy can only be done administratively by retailers starting to accept trading in rand as well as companies adopting the multi-pricing system.

“No one is refusing companies in Zimbabwe to utilise the multi-pricing system. We’ve spoken to the tourism sector that they can use the multi-pricing system…this addiction to the US dollar is what we want you to change and that change becomes painful.

“It’s not about the Government announcing that the Reserve Bank says ‘starting tomorrow we’re now using the rand’. That’s not the solution, the solution is to start accepting the rand alongside other currencies because we’re in a multicurrency system,” said Dr Mangudya.

Since 2014, the South African rand has been weakening against the greenback, a situation that has put pressure on the US dollar due to strong demand in the economy.

To ease pressure on the US dollar, Dr Mangudya challenged CZI to encourage its membership to start accepting the rand.