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The sudden return to a largely stable local currency with low monthly inflation after that mountain peak of high monthly inflation and dramatic shifts in exchange rates over a few months this year bodes well for the continued advance towards the ultimate normal economy where all dealings are naturally in local currency.
However, this is a process, not a single event. A few months ago President Mnangagwa made that explicitly clear, during the worse of the scandalous black market speculation bubble, that Zimbabwe would maintain a multi-currency economy at least until the end of 2025.
This killed rumours and speculation that there would be a dedollarisation fairly soon with only local currency permitted for transactions within Zimbabwe.
However, the policy did come with the condition that the official interbank exchange rate would remain the official exchange rate and all transactions that involved conversion of currency, directly or indirectly, would have to be done at this official rate.
But the redollarisation of the economy, returning to the situation where all transactions were denominated in US dollars and there was no local currency, had already been ruled out.
Finance and Economic Development Minister Mthuli Ncube had carefully explained that people had a choice and that the local currency needed to gain acceptability by being used more and more.
So, while the Government sees the full use of local currency as the desired objective, and uses local currency for its budgeting and financial statements, it recognises the reality on the ground that until the value of the local currency is not affected by speculative behaviour in the private sector and is purely set by fundamentals, which are in favour of a stable local currency.
The Government and many economists recognise that growth does actually required a local currency, along with good fiscal and monetary policies to provide these favourable underlying fundamentals, which must include net inflows of foreign currency. We have ticked the boxes some time ago.
In the business world there has always been differences of opinion. One group of businesses have always sought the local currency return and use after finding that the dollarisation killed a lot of local industry by pricing its products out of the market.
Another group has always desired dollarisation or a return to dollarisation on the basis that this gives a stable currency, at least assuming fiscal discipline by Government.
At times some on the group have even tried to restrict sales of goods and services to those paying in foreign currency, which has seen them hurriedly retreat when the authorities quickly react and stop them.
At other times some in this group have tried to used black market exchange rates for pricing in local currency, and have tried to get around the law by offering discounts for foreign currency, a practice that saw the law change to stop that.
But the general trend has been to block moves towards returning to a dollarised economy, encouraging every greater use of the local currency, and insisting on using the interbank rate, which is set purely by markets without interference.
But now there is a possibility of some backdoor dollarisation, with two Zimbabwean-owned companies, both doing a vast quantity of business within Zimbabwe and being the largest within their particular sectors, wanting to move from the Zimbabwe Stock Exchange, where shares are denominated and traded in local currency, to the Victoria Falls Stock Exchange, where shares are denominated and traded in US dollars.
At present both companies still earn most of their revenue within Zimbabwe and hold almost all their assets within Zimbabwe.
The fact that one is already expanding regionally and the other wishes to is to be commended, but some careful thought is required first over how this affects the currency of their share certificates.
The VFSE was set up for several reasons, and it can go further. Among the early movers was Seed Co, which carefully split the company into two, one trading within Zimbabwe, and remaining on the ZSE, and the other being the regional company, and trading on the VFSE.
This allowed a growing regional commercial powerhouse to remain headquartered in Zimbabwe and for Zimbabwe to start growing as a regional business hub.
Before this, other companies expanding out of Zimbabwe, and bringing in as a result some foreign investment from the countries where they were expanding, tended to separate out their local business as a separate company, but move the regional or international headquarters to another country and create a primary listing for that headquarters company on a foreign exchange.
Without the option of a VFSE listing for the regional company, Zimbabwe would simply become the home of purely local companies, which are fine, and of subsidiaries of foreign companies.
That again is fine when the foreign company is the investor into Zimbabwe, and we have companies like Delta that show how well that can work.
But it is not so wonderful when the foreign company is a former Zimbabwean company investing out that moved its top level out simply because it could not operate fully with an international headquarters within Zimbabwe.
We now have announcements from Simbisa, a fast food company that already has operations in other African countries and wants to expand further, and National Foods, which is very largely Zimbabwean, announcing they will be moving their entire shareholding from the ZSE to the VFSE.
This will transfer a lot of assets now denominated in Zimbabwe dollars and created in Zimbabwe dollars into assets priced into US dollars and in future sold in US dollars should any shareholder sell.
We believe this can be seen as dollarisation through the back door, effectively converting a lot of Zimbabwe dollars into US dollars without anyone having to provide the US dollars in the first place, just changing the currency on a piece of paper, the share certificate.
The Seed Co example appears to us to provide the correct solution and gives Zimbabwe and the local company expanding regionally the best of both worlds.
They can, with a listing on the VFSE, set up the regional or international company with a Zimbabwe headquarters, and retain the local company, which can, as Seed Co itself does, be listed on the ZSE.
We think that the Government, the Reserve Bank of Zimbabwe, and the regulator need to think very carefully about how the VFSE and the ZSE should interact and how a publicly-traded company growing bigger than its Zimbabwean roots should be listed.
Online Reporter