Business leaders want lasting solution to the currency debate

Prosper Ndlovu in Victoria Falls

ZIMBAWE needs to provide a lasting solution to the challenges related to the currency issue to resolve the distortions associated with periodic exchange rate movements in an environment where the country is using a dual currency system.

The Treasury has stated that the use of the dual currency model, which uses both local currency and forex would be in place until 2025 when the country would shift to mainstream the local dollar.

Speaking today at the Chartered Governance and Accountancy Institute of Zimbabwe (CGAIZ) Annual Conference in Victoria Falls, Zimbabwe National Chamber of Commerce (ZNCC) chief executive officer, Mr Christopher Mugaga, suggested that the preference for dollarization by some business players was not sustainable.

“We need to deal with the currency challenges,” said Mr Mugaga while noting that the modicum of stability brought about by the adoption of the US-dollar dominated multi-currency system in 2009, and its return currently, was not entirely good for the economy.

“Dollarization gave us a false hope of stability but in reality no country can develop effectively without its own currency, it’s uncompetitive,” he said.

“As long as the US-dollar remains strong like it is, it will be difficult to recover.”

Without advocating for the immediate return of the Zimbabwean-dollar as the sole legal tender, Mr Mugaga said Government, working closely with stakeholders, must urgently engage seriously on tackling the currency question to tame recurrent exchange rate volatility pressures, which often lead to speculation. He also stressed the need to resolve the external and domestic debt overhang, and promoting a savings culture.

Economist and member of the Reserve Bank of Zimbabwe (RBZ) Monetary Policy Committee, Mr Persistence Gwanyanya in his presentation also weighed and acknowledged the business concerns regarding currency but noted that authorities have recently managed to foster stability through tight monetary policy interventions that have largely curbed money supply, which usually stokes inflation pressures.

He said it was ironic that dollarization was continuing despite the prevailing stability, noting that the biggest challenge was to promote public confidence in the local unit.