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Oliver Kazunga Business Reporter
THE Confederation of Zimbabwe Industries (CZI) is reported to have written to Government advocating for the minting of local currency coins to boost local trade.According to an online publication, the industrial body has indicated in a letter to Government that local currency coins, paired with the present multi-currency system would boost local trade.
The CZI is also said to have asked the Government to reduce income and Value Added Taxes to promote spending and boost local production.
“Currently the high cost of production is rendering local goods uncompetitive. There is need to stimulate consumption in the local market,” CZI was quoted as saying.
CZI president Mr Charles Msipa could not be reached for comment on his mobile while the chief executive officer Mr Clifford Sileya was said to be in a meeting.
Recently, Reserve Bank of Zimbabwe Dr Gideon Gono allayed fears that the country would revert to local currency anytime soon as the economy was not yet able to sustain itself.
He said before the return of local currency, the economy should have taken a sustained path of growth of at least 80 percent capacity utilisation in the manufacturing sector as well as employment levels of not less than 60 percent.
In an interview yesterday, an industrialist Mr Thomas Nherera said the inclusion of local coins would bring convenience on the market.
“At the moment, we have a challenge that every transaction we do is based on the US dollar and thus the cost of basic commodities have become high as their price is based on the value of the dollar because we do not have enough coins in circulation at the moment.”
He said the introduction of local coins paired with a multi-currency system would not jeopardise the economy as monetary authorities will be required to come up with an agreed exchange rate against the green back.
“The pairing of local coins with a multi-currency system will call for the monetary authorities to come up with an agreed exchange rate against the US dollar. The local coins will be required to take precedence in relation to a dollar,” he said.
Economic commentator Dr Eric Bloch said introducing local currency in any form at this moment was ill-advised because the economy was yet to recover to competitive levels.
“At the moment, we should not have our own currency whether coins or not because that will trigger inflationary pressures as the economy has not recovered to competitive levels. To address the challenges compounded by shortage of coins on the market, CZI should take advantage of the new Government to lobby it to sign an agreement with the South African Reserve Bank for the country to access more coins.”
He said if the local currency coins were introduced, the exchange rate against the multi-currency system was dependent on what the market was prepared to offer.
This, Dr Bloch said was also one of the reasons why it was ill–advised to introduce any form of local currency before the economy recovered to competitive levels as it would create inflationary pressures.
Following the adoption of a multi-currency system in February 2009, Zimbabwe has managed to maintain single digit inflation.
Online Reporter