Why we need the Zim Dollar back
By Brighton Musonza
Picture: courtesy of Alex Magaisa – Two milk packs; one from Dairibord Ltd and the other imported from South Africa. We used to be a net exporter of dairy products. What we see in this picture is the true effect of multi-currency. I have been banging on about the need to bring back the local currency and some people think I’m mad.
I’m not going to stop anytime soon. My argument is purely on behalf of industrialists point of view and not on the side of economic commentators or politicians trying to score a point. If you read in Dairiboard’s last financial report, they say local input costs to get milk onto the streets and what used to be their export markets are now largely expensive because of dollarisation and so explained by my own example.
For them, instead of buying packing material from local Saltrama Pvt Ltd or Flexible Packaging, Hunyani Holdings etc, they are having to import it from South Africa and Botswana because its cheaper that way. On the back of that companies like Saltrama Plastics will also face problems. They pay a producer a dollar per x units whereas a SA farmer pays a Rand per x units.
The domino effect is that the locally produced product becomes vulnerable to imports produced at a lower cost and our prices are now less competitive, hence the contraband now full in our shelves.
Our variable and fixed production costs per unit ie labour, energy, rent, and other business rates and statutory charges are now the highest across Africa in terms of the exchange rate against the green bag and so our local production facilities are vulnerable as indicated by the proliferation of massive new foreign supermarkets from the region ie Choppies from Botswana, Horizon from Kenya, Pick n Pay and other SA retail stores.
The result is the escalation of the on-going de-industrialisation (local factory closures) leading to trouble for some legendary strategic food processing companies like Cairns Holdings. This is all down to the multi-currency and alongside this there is a deflation that is now deeply entrenched in the system and there is no solution on how to deal with it.
