Zimbabwe News and Internet Radio

Case for return of the Zimbabwe Dollar

By Ayanda Nyanga

I am aware that many fellow Zimbabweans including economists and non economists do not want to hear anything about the return of the Zimbabwe Dollar. Even political parties were reluctant to talk about it during the election campaign.

Zimbabwe Dollar
Zimbabwe Dollar

In this article I will argue that the economy will not be revived until there is a local currency. In addition manufacturing companies will continue to go down while on the other hand retailers will see growth in business in the short term before a major slow down is witnessed. 

I have tried to summarise my arguments in point form so that many people will be able to spare their time and read within some few minutes.

1. Value for local currency

The value of our local currency is embedded in road infrastructure, Plant, property and equipment, Cars, furniture and fittings that we already have. We do not need foreign currency to trade these amongst ourselves as Zimbabweans.

We only need foreign currency when we sell to a foreigner or Zimbabweans who wants to take his money abroad. The crisis we find ourselves in is that we are failing to exchange these goods among ourselves because we do not have foreign currency to use as a medium of exchange which is not rational since we need a local currency to trade these among ourselves.

2. How much capital is required by our industry is foreign currency?

Confederation of Zimbabwe Industries (CZI) can do their research and advise us all, how much of their requirements is in US$. If the total working capital requirement is US$10bn, I will argue that more than 70% of this should be in local currency.

Most of these companies are failing to buy local raw materials and pay for local labour. Why should we close companies because of a shortage of foreign currency to buy local raw materials and pay local labour costs? The Government should facilitate injection of the local currency through banks which will in turn lend to the manufacturing sector.

3. Example: – How much foreign currency do you need to build a residential house

You need Zimbabwean labour, Bricks from Zimbabwe, Tiles from Zimbabwe, Cement from Zimbabwe, sand from Zimbabwe, ceiling boards from Zimbabwe, roof tiles from Zimbabwe to construct a house.

The fact is; we are not building because we do not have US$ to buy things that are locally available. Is this rational? Producers of raw materials in this industry such as PG are closing down because people do not have foreign currency to buy from them. People in this sector are losing jobs because we do not have US$ to buy our own raw materials. Money is simply a medium of exchange and that’s all we need to revive some sectors of industry.

4. Acceptance of the local currency

I have heard arguments that the local currency will not be accepted by the market. I will argue that this might not be true. If a written paper from OK or Chicken-Inn can be accepted as change (effectively money). I will argue that a Government backed currency will be accepted.

How much does this country have in coins that are still in banks, market or RBZ? You cannot tell the nation that these do not have value compared to a small note from retailers as change. At least their silver component or copper is still valuable and we cannot throw these away or just remove them from circulation.

The rate of unemployment in this country is so high such that if the ZW$ is backed by Government, at least new employees will sign contracts in ZW$. Just flight an advert and see the responses. In addition the ZW$ will be legal tender, hence at least Government institutions and local authorities will accept these for settling bills.

5. Comparison with other countries

How much is South Africa’s GDP and how much is its foreign currency reserve? These figures are readily available. South Africa’s foreign currency reserve including gold has traditionally average between $30bn – $40bn. Its day to day trade is not supported by the same foreign currency reserve but by local currency. If you are to stop the use of the rand in South Africa, the whole economy collapses.

How much foreign currency does Zimbabwe have in banks and informal market as well as cash in circulation. It should be in excess of US$6 billion. How much import cover is this (More than six months)? How does this compare with our GDP? Calculate the ratio of South Africa’s foreign currency versus rands as follows:

Foreign currency reserve/ Rands in circulation

Apply the same ratio to calculate the ZW$ that we need based on our current foreign currency reserves.

6. Reserves in gold and silver

We cannot allow a situation where by all the gold produced in the country is being exported. The government should go back to basics and buy this gold and silver to keep as reserves. RBZ, Local Banks and individuals should be allowed to own gold which is kept in Zimbabwe.

7. Argument for gold backed currency

Central banks throughout the world have failed to sustain this. The latest country which has failed is USA and no one in Zimbabwe should dream that they can do better than all those central banks which have failed on the same issue.

The US$, GBP or Rand we are using is not backed by anything other than the stock of goods in these countries which we can buy using their currencies. We just need a currency which is backed by the stock of goods that we have accumulated as a country from Mbuya Nehanda’s time to date. We do not need US$ to buy a house constructed in 1930. We do not need foreign currency to buy a car manufactured or imported in the year 2000.

8. Abuse of the ZW$

A system will need to be put in place to ensure that ZW$ in circulation are under control. There is nothing complicated about maintaining the value of a currency.

9. Hierarchy of needs: – Water and Electricity

The Government should resolve the water crisis first. This is a basic necessity. It should take a bold step such as using some of the ZINARA money and use this in ensuring that we have water. The Government can be successful in ensuring that there are good roads but the issue is who cares if he does not have access to safe drinking water.

It is not fair that some families especially in Glen Loan are spending at least $70 a week just to buy water. How many Zimbabweans have spent money on useless generators from Asia, China etc? Do we need to import so much in borehole pumps? To make matters worse, the same local authority which fails to supply water penalises you for drilling a borehole as a solution to its failure

10. Impact of lack of the ZW$

Exports will come down

Exports are very competitive and the margins on exports are very low. In addition, the terms may not be that good. One might have to wait for over 90 days to get paid. It does not make sense for a Zimbabwean company to export if it can sell on the local market and get US$ quickly as well as better margins. Hence most companies will stop exporting and developing the same export market will take years. Is there any incentive to export under the current system? Mines are exporting because they have no local market and this will remain as a key source of exports.

Imports will continue to flood the market

Exchange control is difficult to enforce and corporates are not the problem but individuals. Everyone is earning in dollars and can go to Dubai, China, Tanzania or South Africa without having gone to the bank to apply for forex. Such a system has never worked anywhere in the world. We need an effective exchange control which can be used as a tool to reduce imports and preserve jobs.

I am of the view that Bulawayo’s industries are the worst affected because of its proximity to South Africa and Botswana. As long as there is no effective fiscal and monetary policy in place, injection of funds in these firms will not be effective.

Liquidity challenges will persist

The current system encourages imports and any injection whether from export of minerals, Loans from IMF, PTA, IFC or Chinese banks will find its way out of the country quickly and will be of little benefit to the economy. I will argue that over 70% of such injections will leave the country within a period of less than 6 months. Liquidity challenges in the industries will be managed through the introduction of the local currency as well as putting in place an effective exchange control system.

De-industrialisation will continue

Zimbabwean firms require funds to buy local raw materials and pay local labour as well as the import content for some of the raw materials and skilled labour. Demand for local products is low because firms do not have the local currency to buy the products.

Even if the country gets foreign currency injection of over $10bn, it will not be enough to support trade in the local transactions and demand will remain depressed and firms will continue to close down.

Local companies that were previously controlled by Zimbabweans will end up being controlled by foreign firms.

Local companies that are currently owned and controlled by Zimbabweans will end up being taken over by foreign investors. Zimbabweans will not get US$ to buy into local companies but only international investors with access to US$ will be able to do so.

Despite the fact that people are talking of indigenisation, the truth of the matter is that this program will not be successful unless there is a local currency. Local firms such as Cairns and Astra paints which used to be controlled by Zimbabweans but will soon or are already controlled by foreign firms is just an example of what to expect under the current system.

Monetary and fiscal policies will remain ineffective, hence the government has no control of the economy

The current system will not allow the Government to control the economy or even the liquidity position in the market hence the economy will remain with no direction and freely collapsing with no driver to blame.

Recommendation to Government

Closure of industry cannot be resolved by the Minister of industry and commerce only.

The challenges in the sector are due to ineffective monetary policy and fiscal policy. The ministry of finance needs to play a significant role in planning for the recovery of the economy. The Reserve bank needs to have an effective exchange control system which works, however, no exchange control system will work when everyone has foreign currency in his pocket and does not need to consult anyone before spending the same US$ locally or abroad.

Introduce a multicurrency system which includes the ZW$

Introduction of the ZW$ as one of the multi-currencies will assist in easing the liquidity crisis as well as facilitating the eventual return to the use of the local currency for local transactions.

Meeting with retailers

The ministry must identify major importers in the country and my assumption is that these include OK, TM, SPAR, Open House, FABS, Tiles for Africa and a number of Indian shops. Simple economic implications of their actions must be explained and they must be made to understand that they are exporting jobs. This will result in a number of people being unemployed, hence reduced buying power, hence low sales for the same shops in the medium to long term.

The minister must follow this up by introducing a fiscal policy which stops the same firms from importing things that are readily available in the local market.

Water and electricity is a priority

The Government needs to channel resources to water and electricity. Residents are wasting money on drilling boreholes, importing water pumps and generators and can save a lot of money by relying on the provision of water by local authorities as well as electricity by ZESA.

Even resources from ZINARA collections should be focussed on these two because even if we manage to have a very good road infrastructure yet we do not have water to drink that will not help. Let’s ensure that we resolve the challenge of water, it is a basic right.

Educate Zimbabweans on TV and radio about the impact of imports

The minister must have an educative program on TV and radio to educate Zimbabweans on what they need to do to support revival of the economy and stop exporting jobs.

Retail informal sector must be discouraged while manufacturing informal sector is encouraged

The informal sector which is in retail needs to be discouraged and policy must be directed towards closure of the sector while on the other hand the Ministry must encourage the informal sector which manufactures goods.

Most of the imports which are destroying the economy are coming through the informal sector and is being distributed through informal markets with no rent or electricity bills thereby making them more competitive than local products being sold through formal markets.

Import of used items

We cannot have a country where used clothes, shoes, blankets etc are imported and sold in the local market. The Government must stop this.


The minister of industry must identify major imports such as floor tiles from China and ask companies to set up manufacturing firms for the same products. What is special or difficult about manufacture of tiles? ZINARA is expected to keep spending money on repairing roads.

Where are we getting tar from? If it is being imported, the minister must set up local firms or known entrepreneurs to establish such companies. If an investor has assurance that the Government will protect such a company from imports, he will come up with the capital.

No need for Government to spend money on these. However incentives such as tax breaks may be considered.


Introduction of the local currency will not reverse any gains that the country has witnessed so far, if anything, it will reverse the current de-industrialisation and facilitate the creation of jobs.

The argument that local currency will be introduced when GDP or exports reaches a certain level is incorrect because GDP or exports will not grow under the current operating environment which is characterised by a weak exchange control, liquidity crisis and lack of export incentives.

  • Simba

    Spot on! This is the best macro economic report I have ever read. You have explained it very well, kana asina ZJC would understsnd this.
    You have left corruption. Imagine 2 billion revenue a year from diamonds we are losing to these Government people. To make matters worse, they bank the money in offshore accounts in Europe and Carribean Islands and suffocate our local banks of cash deposits. Varungu vaye vamunotuka then invest using that stolen hidden money to make more money out of it; something that we should be doing ourselves.
    They should also respect the rule of law as it is one of the biggest risks investors look at in foreign markets.
    Thank you for the article!

  • godwill

    Quite correct, but, the monstrous huddle is corruption. All Government arms, politicians, businesses, human, and all forms of socio economics are entangled in corruption so much that if you attempt to rid it, it is you who is got rid of

  • Nhubu

    Your first point is disaster. If you sell your house in local currency to a fellow Zimbabwean, the buyer after the transaction will be holding the asset and the seller will be possessing the local currency. The cash possessed by the seller and the house possessed by the buyer are all assets but which one is riskier? The first thing we need is business confidence to back our currency. So many factors bring business confidence, our policies, our relations with other nations, investment protection, governance, tax laws among other factors. If these are addressed, then we can talk about local currency, remember the local currency will be trading with other currencies.

    • Robalitheka

      Well said. Who wants to sell their house in $ZW after what we have been through? The holder of the cash CANNOT buy an equivalent property anywhere in the world in $ZW

  • Kule Kule

    The writer puts it across as if we have not used the Zim dollar before and still became a failed state. We used Zim dollars and spent days in ques to access the same local currency you now treat as a serviour. My view is that if we bring Zim dollars during this multi currency period everyone earning Zim dollars would be looking to convert it into US dollars (asap) and it would quickly loose its value. Three things first before you bring Zim Dollars. 1. Availabity of water and electricity is vital for any efficient manufacturing process and is also a basic human right. 2. All ZPF chefs bring back all their funds invested outside the country to show they have confidence with the country (I doubt they will). 3. Transparency with the diamond sales and cash receipts ( I also doubt they will)


      You should have done this in 2008, shut up LET US ENJOY CREAMORA

  • Mutengesimukuru

    Eventually Zim dollar should be back, all we need is an atonomus, educated and informed reserve bank governor, and a government that respects his autonomy. Our currency was made worthless by Robert Mugabe constantly poking his nose into things he didnt have a clue on. If we really look at it, the 2008 crisis was a self inflicted crisis, caused by excessive printing of the currency without regard to simple economic principles of money supply management.

  • Mike

    One of the most practical opinion piece I have read in years; easy read and to the point. I would suggest that Zimbabwe can use local coins (ZW$) as change. For example, in the transport industry, and also in retail where coins in $5; $1; 50c etc. This would be one way to introduce the ZW$

  • Robalitheka


  • fx

    you did not mention anything about our past experience with the local currency, writer.
    you did not mention corruption
    you did not mention why those strategies you are talking about didn’t work previously
    lastly you wrote as if we have never used the currency before

  • john munyaradzi


  • Collin

    As long as Gono is governor and there are less exports than imports, and for as long as government spends much much more than their budget allocations/ more than the available financial resources then still the Zim $ will not work. We’ll still face the liquidity challenges and Gono will obviously inclined to print more Zim $ when there’s few in the market.
    Since we also strongly rely on imports then government will print more Zim $ to buy all the forex on the black-market (if that would be the case then) & therefore prices will keep going up, up and more up. This is what we call common economics. We simply need to improve our exports by boosting production in all the sectors of the economy, esp in mining (diamond in particular, because they say we now have the largest deposits in the world).
    We also need to improve our relations with the outside world, esp those who’d provide some donations as this will put less pressure on the little forex that would be available in the economy. The Chinese do not help in any way because theirs is simply doing business & heavily milking our nation in order to improve their GDP.
    Then Chinotimba should crack more jokes in parliament in order to soften the hearts of the policymakers, who are hurting the masses of this nation by constantly creating more problems for the nation

  • Tagu

    I strongly agree especially with the recommendations to the Gvt. The gvt shld find a way to incentives the manufacturing sector and exports

  • soundmind

    Zim dollar my foot take your analysis and keep it kumba kwako.Who ever thinks this is a good idea must be mad.you cannot just plan like we never used Zim dollar you need to balance your opinion look at Zim dollar years and US dollar years and see why Zim dollar failed to bring food to the table.Dont tell me its now going to work it has failed and it will always chase the US dollar if you havent changed the macroeconomic fundamentals and policies dont lie to people its stupid for you to suggest this.Zim dollar failed failed so why now?Keep your theories at home rather give us evidence for your arguments

  • hozhwa

    There is a problem when you write an article as if you live in a utopia. Go back to basic monetary economics. What is money? Intrinsic value of money? Advantages of money as mean of exchange. As a country we FAILED in all aspects to make local money an acceptable means of exchange. That’s why we are using foreign currencies of what we call ‘hostile’ nations. Believe me, the current government would like to revert to the local currency so much that if your argument was in the least sound they would have reverted to it yesterday. Please next time don’t make an argument whose limited logic implies if you are trading LOCAL goods, no ‘foreign’ currency is necessary. The country is not what they call in Economics a ‘closed’ economy and every good has an impliedor explicit international baseline foreign currency value.

  • zvangu zvauya

    Ayanda Nyanga, forgive me for asking, Im NOT being rude; before I contribute to your article, I wish to know your qualifications and possibly profession!!

    • Tichafa Tazvigwira

      Good question Zvauya.

  • Tichafa Tazvigwira

    This is voodoo economics. Even Joseph Chinotimba will tell you that you are crazy to come up with such proposals. With all due respect, I advise the writer to go to school and read economics proper. You failed to address the key question why the Zim Dollar had to go in the first place? What fundamental changes have been made since then?

  • Wasling

    Idzi ndidzo fodya chaidzo, muface wakarohwa nemadudu. You DELIBERATELY ignore all the other things can puncture your arguements, and pretrend as if all the people who were exposed to $ZIM are dead/mad. Wake up muface that currency will not survive for more than 60 seconds. I can join you in basic economics class Mr/Miss/Mrs/Dr/Prof./Cde Nyanga, coz I also do not understand the subject you made so clear to a layman like me. $ZIM harishande…….

  • Moses Mabika

    well wish it was that easy , dont u thinkl the gvnt knows all this , we ddnt jus wake up the next morning using us dollars and other foreign currency , yes money is jus a medium ,bt as for now our industries r crippled ,we relying on imported finished goods ,wic u cn not buy with that mondi paper we had then

  • Prince Prince

    This is utter rubbish! Why was the economy and industries struggling before the introduction of the multi currency regime? What has changed. Ironically, Jonathan is on record saying Chinamasa brought the multi currency regime not Biti. What has suddenly gone wrong since he is back to the Finance Ministry? And why all of a sudden the return of the Zimdollar? What good? Biti aizvifambisa sei? Just do that. Consume what you produce. These stupid, shallow and careless articles are a pointer that the inevitable is coming, ZIMDOLLAR. Tongai tione