Mugabe backs rand adoption

By Tendai Kamhungira

President Robert Mugabe has backed Zimbabwe’s adoption of the South African rand as its main currency.

After ditching a worthless Zimbabwe dollar in 2009, the country has been using several currencies — United States (US) dollar, yuan and the rand, among other — along with the recently introduced bond notes, a currency surrogate to the greenback.

Speaking in an interview to mark his 93rd birthday, Mugabe said he had actually advised Finance minister Patrick Chinamasa and Reserve Bank of Zimbabwe (RBZ) governor John Mangudya on the idea to adopt the rand, but the two have not been forthcoming on the proposal.

“I don’t know why the ministry of Finance, together with the RBZ, have not wanted to use other currencies. I have asked actually again and again kuti (that) why not have euros, why not have yuan… why not have rand alongside the dollar?” he said, adding that all Chinamasa and Mangudya say is “ahh tichazviita, tichazviita (we will do it)”.

“At least if we had the euro, I don’t think we have sanctions on the euro, but the euro is slightly more expensive than the dollar but the difference is minimum,” Mugabe said.

This comes as representatives of the Bankers’ Association of Zimbabwe and Confederation of Zimbabwe Industries (CZI) have advised Parliament’s Finance portfolio committee that adoption of the rand is one of the key measures required to address the current crippling cash crisis.

In a recent presentation on the liquidity crisis at an economic outlook symposium hosted by the CZI, University of Zimbabwe (UZ) economics lecturer Ashok Chakravat — also advisor to the President’s Office and Cabinet — advocated for the adoption of the rand, arguing that the bond notes can only ease the liquidity crisis if there is adequate supply of US dollars.

“While RBZ recently indicated that Zimbabwe was in no position to join the South African Customs Union, as per requirements the immediate solution is informal adoption as in 2009,” he said.

Respected economist and RBZ committee member Tony Hawkins has also supported adoption of the rand, only if it is accompanied by devaluation.

He said though the rand has downsides, being a volatile currency, it was relevant, particularly in the Zimbabwean setup.

However, Mangudya has argued that it is not possible for the country to adopt the rand on the basis it could worsen the economic crisis being faced by the country.

“We could have joined the Rand Monetary Union (RMU) or Southern Africa Customs Union (Sacu) in 2009, but there are certain criteria we need to meet to do that. That is why we adopted the multi-currency system, and not a single currency,” he said.

“What you are asking for is very dangerous because we might find ourselves in a worse situation. We cannot be members of the Rand Monetary Union without our own currency,” Mangudya said.

At the moment, the RMU comprises South Africa, Namibia, Swaziland and Lesotho, although the three countries still use their own currencies, which trade at par with the rand. Daily News