Top Economist Calls On Government To Extend Multi-currency System Beyond 2030
Economist and banker Nigel Chanakira argues that the government should consider extending the United States usage policy beyond 2030 to encourage significant infrastructure investments.
In 2023, President Emmerson Mnangagwa introduced Statutory Instrument 218 of 2023, which extended the multiple currency system until December 2030.
Speaking with NewZimbabwe.com on Wednesday during the ZIMREAL Property Investment Forum, Chanakira said that Zimbabweans have yet to fully embrace the new currency, ZiG. He said:
Zimbabwe has been a beneficiary of the US$ currency. To begin with, we shouldn’t be where we are. Normally we want a strong domestic currency. But whatever happened, happened. We can’t run away from reality.
Now that such has happened, we have ended up with the hard currency as the main currency we are using and the one which a lot of people have confidence in. ZiG has been introduced and it’s still gaining momentum but the confidence isn’t out rightly there.
As long as we still have doubting Thomases and you will always have them, guess what? We need to extend the US$ usage tenure. Why? Because we have a deficit of infrastructure funding including housing, water and electricity.
In economics, we talk about medium to long-term funding. In banking terms normally that is a preserve of Building Societies, Insurance Companies particularly life companies and pension funds to fund that infrastructure.
As long as they are funding with US$, then there is a limited life of the foreign currency. Investors will always consider their liabilities.
Chanakira urged authorities to consider extending the tenure of any medium to long-term funding to attract the right infrastructure. He said:
So there is a need to take advantage of this. Don’t condemn it, in business we say give the customer what they want.
You don’t try and fight the market. Right now the tenure of the US$ usage is set to end in six years. So what are we saying?
We are therefore limiting the amount of investment from going into what is badly needed and that is infrastructure. I hope the argument is simple, elegant and progressive.
Meanwhile, on July 4, Mnangagwa said that the new gold-backed currency, ZiG, would become the sole legal tender before the previously announced 2030 deadline to phase out the current multicurrency system. He said:
In two years, in fact two years is too far off, but there will come a time when our ZiG currency has fully penetrated the market, then I will give a directive that the country will be using the ZiG only.
If you go to the shops to buy with the US dollar, they will refuse it. Even those who were performing and entertaining us today, who were being given US dollar tokens, in two months’ time you (they) will be given the ZiG and no US dollars because that is our currency and we should propel it.
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