US Dollar Eroding Zim Economy – Zim Dollar on the horizon
The government has been urged to consider initiating a national dialogue on currency reforms in order to come up with an innovative currency system that promotes exports and therefore revives industrial development in the country.
The call comes in the wake of an accelerated closure of companies during the multi-currency era between 2009 and 2014 than the period between 2001 and 2009 when the country was reeling under illegal sanctions imposed by the west.
Mberengwa East legislator, Makhosini Hlongwane said the strength of the US dollar against the South African rand has made Zimbabwean goods more expensive in the export market at the same time making it cheaper for South African manufacturers to export their products into the country.
“In my view, the US dollar has done more harm than good to our industrial and manufacturing sector because of its strength. The depreciation of the South African rand against the dollar is in fact the depreciation of the rand against the Zimbabwean economy because we are basically using the US dollar as our anchor currency and South Africa is our largest trading partner.
“That is what it means, so this is not a sustainable trajectory. If the rand depreciates by another 50%, that means that it will completely wipe out the industrial and manufacturing sector in Zimbabwe and we will become a supermarket of South African goods,” said Hlongwane.
An economic analyst, Mr Bukhosi Mpofu argued that while government will continue to experience a deficit for the next few years because of the currency in circulation, there is need to create opportunities and policies that will stimulate investment and therefore employment creation.
“In economics, we will have a system where manufacturers will choose to stop manufacturing and become middle men. Well, it is just one sector of the economy which we can talk about but we are looking at other sectors like mining and tourism. You find that the US dollar will work well with such industries, and as a result, we also have to look at the input that these industries contribute to the economy as a whole. They provide for the greater good of the people,” he said.
South Africa is currently the country `s biggest trading partner and while there are fears that the weakening of the rand against the US dollar might make the country a supermarket of South African goods, there are also fears that the introduction of the local currency will affect investor confidence and result in situations experienced in 2008 when basic commodities were not readily available.