By Itai Mushekwe
HARARE – President Robert Mugabe’s regime is planning on a launching a new currency backed by a gold standard in 2015, as part of the Zanu PF leader’s final wish to “liberate” Zimbabwe from Western monetary imperialism.
High level government sources told Nehanda Radio that Mugabe, who is standing for his last election as a presidential candidate before the end of September, wants to seal his egregious land reform and indigenisation program agendas with a powerful local currency backed by gold reserves.
Harare has been using a basket of foreign currencies, since the formation of a coalition government, with the US Dollar and South African Rand being dominant. Now plans are at an advanced stage to eliminate the US dollar, which Zanu PF ‘think tanks’ see as losing its power as a world reserve currency.
Under the veteran leader’s often chaotic agrarian reform, scores of white farmers were forced to leave their farms without compensation, a responsibility which Harare argues, the British government must shoulder.
Likewise the indigenisation drive, has resulted in seizures of foreign owned companies, resulting in massive capital flight and a decimation of the local industries. Indigenisation is Zanu PF’s manifesto for this year’s election.
The new money, whose design and security features are said to be complete, shall retain its name as the Zimbabwean dollar.
Under the plans the currency will be put in circulation during the presidency, of either defence minister, Emmerson Mnangagwa or current Vice President Joice Mujuru, seen as a moderate and reformer by the international community.
Mujuru looks as a hot favourite, on paper to succeed Mugabe, if Zanu PF is to follow its constitution and organogram in resolving who becomes the next party leader.
She however seems to have lost the military muscle, which is needed by any leader to run an administration with reports that Mnangagwa’s chances at power have been growing following endorsements by senior security chiefs.
According to Reserve Bank of Zimbabwe (RBZ) insiders, the planned new Zimbabwean dollar will come in six denomination notes of $1; $10; $25; $30; $50 and $100.
The central bank plans to emblazon, the notes with portraits of the country’s leading liberation figures such as the late vice presidents, Joshua Nkomo and Simon Muzenda.
Mugabe’s own portrait is ear-marked for the $100 bill, while that of his successor may be featured on the $10 note, according to senior staffers at the RBZ. A coin regime of 1cent; 5cents; 10c; 20c; and 50c reportedly accompanies the new notes.
Zimbabwe last saw a new currency – the Rhodesian dollar – in 1970 following the decimalisation and replacement of the local pound. The exchange rate then was $0,71:US$1.
At the time of Independence in 1980 the local currency remained stronger than the greenback. The rate was $0,68: US$1. The currency gradually declined after 1980 until its dramatic crash on November 17 1997 after an unbudgeted $4 billion outlay to pay war veterans.
The country experienced an unprecedented shortage of currency in 2003. The RBZ failed to print enough banknotes due to a foreign currency crisis, leading to the introduction of travellers’ cheques and later bearer’s cheques.
Zimbabwe has in the past printed its money in Britain, Germany and Canada. Indications are that: “China this time around will print the new money for security reasons,” said an official with the ministry of finance.
“We are waiting for a new finance minister from Zanu PF to get things moving. Biti (MDC minister), has been a stumbling block.”
The idea for the gold-backed currency was first discussed in private, between Mugabe and fallen Libyan leader Muammar Gaddafi, on the side-lines of the inauguration of South African leader Jacob Zuma, in Pretoria in 2009, according to senior government officials.
Gaddafi wanted a common gold currency for the whole African continent, while Mugabe had proposed that it was better for the African Union (AU) member states to introduce the gold standard money individually, before announcing one common currency at a later stage so as to throw international financial players into confusion.
A second meeting to finalise discussion on the matter, took place in Harare on 23 August 2010 between Mugabe and Gaddafi’s son, Saadi Muammar Gaddafi, who claimed to have come to discuss investment opportunities with Zimbabwe, sources said.
RBZ governor, Gideon Gono, has already lifted the lid on the secret currency recently in the local media.
“There is a need for us to begin thinking seriously and urgently about introducing a gold-backed Zimbabwe currency that will not only be stable but internationally acceptable.
“We need to rethink our gold-mining strategy, our gold-liberalisation and marketing strategies as a country. The world needs to and will most certainly move to a gold standard and Zimbabwe must lead the way,” Gono has said.
“The events of the 2008 global financial crisis demand a new approach to self-reliance and a stable mineral-backed currency, and to me gold has proven over the years that it is a stable and most desired precious metal.
“Zimbabwe is sitting on trillions worth of gold reserves and it is time we start thinking outside the box, for our survival and prosperity,” Gono said.
China has been proposing for the replacement of the US dollar as the international reserve currency in the past years. Beijing wants a new global system controlled by the International Monetary Fund (IMF).
China holds Foreign-exchange reserves amounting to US$ 3 billion as of March 2011. To bring about a new regime to the current system, Beijing had previously suggested expanding the role of Special Drawing Rights (SDR), introduced by the IMF in 1969 to support the Bretton Woods fixed exchange rate order, but things collapsed in the 1970s rendering the overtures irrelevant.
At present, the value of SDRs is based on a basket of four currencies, which include the US dollar, pound sterling, euro, and yen.
The US Dollar Index comprises of just 6 currencies. The euro has a weighting of some 58,6%, followed by the Japanese yen with 12,6%, others are the pound sterling (11,9%) the Canadian dollar, Swiss franc and Swedish krona account for the remaining 16,9%.