The lifting of Statutory Instument (SI) 122 made this writer to revisit a debate that made headlines in the post-election period in Zimbabwe. This was premised on whether Zimbabwe should join the rand monetary community or not, or just to declare the rand as the main currency with the United States dollar as the reserve currency.
By Brightface Mutema
From my point of view, adopting the rand as the main currency is now paramount more than before because of several reasons. Chief among the reasons being the fact that those who would have imported the basic commodities into the country will never sell them back home at the bond note value, but at rand value. This phenomenon will see the perpetuation of the parallel market in the country, hence the lifting of SI 122 would fail to bear the desired fruits.
South Africa remains one of the most important trading partners for Zimbabwe. A snapshot of statistics obtained shows that Zimbabwe imports about 40% of its total imports and exports about 75% of its total exports to South Africa. In 2017, South Africa’s exports to Zimbabwe were almost US$3 billion.
In February 2018 alone, the Zimbabwe National Statistics Agency (Zimstat) reported that Zimbabwe exported goods worth $216,9 million to South Africa and imported goods worth $261,2 million.
These statistics are just but one of the many reasons why adopting the rand would be good for the country whilst we work towards bringing back our own Zimbabwean dollar.
Using the US dollar as our main trading currency will remain a challenge since it is in meagre supply and beyond the reach of many ordinary citizens, let alone the amount of trade between Zimbabwe and Washington as compared to Zimbabwe-South Africa trade. Zimbabwe needs to look beyond the US dollar if ever we are going to bring back our own currency.
South Africa has proved to be our real brother and our all- weather friend. It is our leading trading partner and statistics are there for everyone to see. As if that is not enough, most Zimbabweans who live outside the country are resident in South Africa. In short, without much of an economics background, even a layman would see the necessity of Zimbabwe formally joining the rand community.
So there we are, Zimbabwe needs to rise up from the economic doldrums that it has been languishing in for close to two decades. The country has been without its own currency for long now which should also mark the thrust while the rand helps us to reach that milestone.
We need to exploit the advantages inherent in the adoption of the South African rand. These are, but not limited to, favourable transaction cost, investment promotion, and exchange rate stability due to common currency.
Since South Africa is our major trading partner, adopting the rand would guarantee exchange rate stability. This can also double as the panacea to the challenges exerted on the economy by money changers who are a common sight in most of our towns and cities.
The welcome consequences can be witnessed in price stability which can help the ordinary Zimbabwean to project life and be able to budget. Our market has of late been subjected to a distorted pricing system where, for example, in the pharmaceuticals, the critical drugs are priced in the US dollar. Most people cannot afford this because they can’t access the hard currency.
The market has proved that even if we may try to hold on to the narrative that there is exchange rate parity in the country, the truth is that notion is hard to adhere to. We need to adopt the rand and stabilise our economy as efforts are underway to rediscover the lost mojo of our local currency.