Zimbabwe Rules Out Dollarisation, Wary Of Transforming Into A "Supermarket" Economy

The Zimbabwean government has ruled out dollarisation in the foreseeable future, saying that while it may appear to be a quick solution, it will result in deindustrialisation and transform the country into a mere “supermarket” economy.

During a question-and-answer session in the National Assembly on Wednesday, Finance, Economic Development, and Investment Promotion Deputy Minister David Mnangagwa said that the country would continue using a multi-currency system while implementing measures to attain full de-dollarisation. He said:

If I can highlight the easiest thing for Government to do will be to dollarise, but that will be the worst thing that we can do for our country. It is the easiest thing, but it is the worst thing that we can do.

What will happen over time, Zimbabwe will de-industrialise, and we will see those dividends dissipate.

Our children will have no jobs in the future. We will become a supermarket of other nations. We will attract the worst elements. These are the effects of dollarisation. I agree it is the easiest thing to do, but it is the worst thing to do for the country.

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What you are seeing is a competition between the ZiG and the US dollar within our economy on a sliding scale, which we want to reach full de-dollarisation by a certain period. It will not be easy or smooth.

Mnangagwa also ruled out allowing a system dictated by a parallel market arguing it would ultimately hurt consumers.

He also rejected suggestions that retailers be allowed to offer discounts to consumers paying in foreign currency. Said Mnangagwa:

The problems we face are a cocktail of three groups of people, I would say. You have retailers who are sticklers for the law and will follow whatever policy is there. You have some who lag behind and then you have a large group who are just greedy.

Regardless of how good a law as a policy is, they will find ways to arbitrage that and it is easy under the current system that we have, allowing a discount-based system will defeat the purpose of our de-dollarisation agenda.

I think His Excellency has been very clear, we are on the roadmap to mono-currency. We are on the roadmap to have as a sovereign nation, our own currency. So, all these measures that are being put into place are meant to protect our local currency.

Again, it will not be perfect, nor be smooth, albeit it might have some mistakes, but we learn from those and continue to try and do the right thing.

Zimbabwe adopted a multi-currency regime in 2009 following the demise of the Zimbabwe dollar after years of debilitating hyperinflation.

The transition to a multi-currency system provided a much-needed reprieve from the hyperinflationary spiral.

Since then, the government has made intermittent attempts to reintroduce a mono-currency system, but these efforts have not been successful.

Citizens have quickly lost confidence in the gold-backed ZiG currency introduced as recently as April 2024.

More: Pindula News