‘Prioritise Zimbabwe dollar use to promote economic growth’
Sikhulekelani Moyo, [email protected]
CONFEDERATION of Zimbabwe Industries (CZI) has urged the Government to prioritise the use of local currency in a bid to bring competitiveness hence promoting industrialisation and economic growth.
The country adopted a multi-currency regime, often dominated by the US dollar, in February 2009 as the economic meltdown resulted in record inflation, which peaked at 200 percent at the last official count in August 2008.
Presently, Zimbabwe is using a dual currency monetary regime, a situation that has also been blamed for the volatility of the domestic unit due to the strong preference for US dollars, which now accounts for over 76 percent of transactions.
Notably though, wider use of and trade in local currencies can strengthen a nation’s economic autonomy and sovereignty.
Relying on a foreign currency for local and international transactions can create vulnerabilities and limit a country’s ability to pursue its economic policies independently.
Economists say trade in local currencies strengthens a nation’s economic autonomy and sovereignty. Relying on a foreign currency for international transactions can create vulnerabilities and limit a country’s ability to pursue its economic policies independently.
Speaking during the Ministry of Industry and Commerce and private sector interface breakfast meeting in Bulawayo last week, CZI Matabeleland Chapter vice president Mr Joseph Gunda said there should be a clear road map that will promote a gradual de-dollarisation backed by macroeconomic stability.
“Use of local currency should be a top priority with a clear road map towards gradual de- dollarisation that is backed by macro-economic stability.
“Issues of de-dollarisation require a functional financial market, exports are currently uncompetitive in the regional market as high costs associated with the use of United States dollar (USD) together with export retention are discouraging,” said Mr Gunda.
“Government should spearhead the use of the Zimbabwe dollar and incentivise the use of the local currency through demanding taxes in local currency exclusively.
In June this year, the Government introduced a set of macroeconomic policies, which were meant to promote the use of local currency and mopping liquidity from the market.
Amongst the policies, the Government directed defiant local authorities and state agencies to charge fees and levies in local currency saying demanding foreign currency is in violation of the country’s laws.
During his swearing-in ceremony, President Mnangagwa said Zimbabwe will continue to put in place measures to entrench the use of the domestic currency because having its own currency forms the basis for sustainable economic growth and development.
He said the local currency is the backbone of growth this economy can realise in the next five years.
Other issues raised by CZI include the need for constant power supply, unavailability of lines of credit and regulatory environment, the introduction of a one-stop border post, and addressing of water challenges in Bulawayo.
Mr Gunda said since the economy has been on an upward trend impacting power consumption, there is a need to upscale power generation.
“There is a need for investment in the power sector to generate more capacity. Due to climate change, sustainability of the hydropower is now questionable, and the use of nuclear power is another alternative power source, but it requires capital investments into the project.”