Chronicle Editor
Farirai Machivenyika, Harare Bureau
DOLLARISING Zimbabwe’s economy may appear to be a quick solution, but will have catastrophic effects, potentially reducing the country to a mere “supermarket” economy as it is de-industrialised once again, Government has said.
Finance, Economic Development and Investment Promotion Deputy Minister, David Mnangagwa, told the National Assembly on Wednesday that Zimbabwe would continue using a multi-currency system while implementing a cocktail of monetary and fiscal measures to protect and stabilise the local currency, the Zimbabwe Gold.
Speaking during Parliament’s Question and Answer session, Deputy Minister Mnangagwa said dollarisation, in the short-term, was the easier thing to do but ultimately would be costly to the country’s economy.
“If I can highlight the easiest thing for Government to do will be to dollarise but that will be the worst thing that we can do for our country. It is the easiest thing, but it is the worst thing that we can do. What will happen over time, Zimbabwe will de-industrialise, and we will see those dividends dissipate.
“Our children will have no jobs in the future. We will become a supermarket of other nations. We will attract the worst elements. These are the effects of dollarisation. I agree it is the easiest thing to do, but it is the worst thing to do for the country.
“What you are seeing is a competition between the ZiG and the US dollar within our economy on a sliding scale, which we want to reach full de-dollarisation by a certain period. It will not be easy or smooth.”
He said while there was a need for restructuring in the economy, allowing a system dictated by a parallel market led by speculators would hurt consumers.
Deputy Minister Mnangagwa also shot down suggestions that retailers be allowed to offer discounts to consumers paying in foreign currency.
“The problems we face are a cocktail of three groups of people, I would say. You have retailers who are sticklers for the law and will follow whatever policy is there. You have some who lag behind and then you have a large group who are just greedy.
“Regardless of how good a law as a policy is, they will find ways to arbitrage that and it is easy under the current system that we have, allowing a discount-based system will defeat the purpose of our de-dollarisation agenda.
“I think His Excellency has been very clear, we are on the roadmap to mono-currency. We are on the roadmap to have as a sovereign nation, our own currency. So, all these measures that are being put into place are meant to protect our local currency.
“Again, it will not be perfect, nor smooth, albeit it might have some mistakes, but we learn from those and continue to try and do the right thing,” he said.
The Deputy Minister acknowledged that some goods were now being found mainly in informal markets due to exchange rate distortions but said surveys had shown an increase in local products availability on shelves of formal shops.
“These are issues that are being dealt with and you will find some measures coming into place to make sure that we deal with this ill,” he said.
Following the escalation of prices of basic commodities in formal shops in the past few weeks, the Government is engaging stakeholders in a bid to curb speculative pricing while protecting formal retailers.
Online Reporter