South African Rand: The best currency solution for Zimbabwe not worthless Bond Notes
Americans who travel to Zimbabwe to enjoy Victoria Falls may feel like home with the greenback as the official currency in this Southern African nation. Due to the strength of the US dollar, the Zimbabwe government recently wanted to bring in bond notes to replace American currency.
Outspoken Tourism Minister Dr. Walter Mzembi has his own suggestion to manage the economic crisis facing his country. The solution for him is the South African rand. The official South African currency should replace the US dollar, Mzembi suggested.
Tourism Minister Mzembi said the rand would work well for his ministry against a strong US dollar.
Many in the Zimbabwe government proposed the introduction of bond notes to ease cash shortages. This solution is currently facing stiff resistance from a cross-section of Zimbabweans, but most of Mzembi’s colleagues in government have vowed the decision will not be reversed.
Introducing bonds may cause a similar situation the country experienced when their own Zimdollar exploded in inflation. Bringing bonds back may be bringing Zimdollars back through the back door. It has sparked panic withdrawals of cash from banks, resulting in long queues, as people desperately try to take out their savings before the introduction of the bond notes.
Mzembi, who was speaking on South African television news channel, ANN7, on Wednesday, said it would be sensible to turn to the rand, as South Africa was Zimbabwe’s major trading partner.
“I am following the debate on bond notes with a lot of interest. But notwithstanding the fact that I am a Cabinet member as Minister of Tourism and quite senior by any stretch of imagination,” he said, “I can understand what the government is trying to achieve in terms of inducing liquidity in the market, but the multiple currency basket already has nine currencies including the rand, which I have always submitted is part of the solution, to the extent that 70% of our exports go into South Africa or via South Africa; 70% of our imports come from South Africa; and 80% of our diaspora, globally, are residents in South Africa, and, therefore, they have an impact on the profile of remittances into Zimbabwe.
“So it just makes absolute sense that we align to a regional currency that favors us to that extent.”
Mzembi described the rand as the perfect currency for Zimbabwe under the circumstances, as long as it did not burden South Africans, forcing them to print for the country.
The Tourism Minister said: “I have already spoken to President Robert Mugabe and the Reserve Bank Governor to say that mine is an exclusive situation; special conditions apply because 70% of my source market is South Africa.”
“They (South African tourists) need to be motivated to come and spend in this destination, but unfortunately they are finding Zimbabwe uncompetitive because of the bullish nature of the US dollar against the rand.”