PRESIDENT Mnangagwa has said the country will revert to the exclusive use of the local currency as the sole legal tender and ditch the multi-currency regime as no country can develop without its own currency.
During his swearing-in ceremony for the second term, President Mnangagwa said the country will continue to put in place measures to entrench the use of the domestic currency because having its own currency forms the basis for sustainable economic growth and development.
The current arrangement, which allows the use of foreign currencies such as the US dollar and South African Rand, is guaranteed until December 2025 under Statutory Instrument (SI) 118A of 2022.
The SI is titled Presidential Powers (Temporary Measures) (Amendment of Exchange Control Act) Regulations 2022.
The measures will run for the duration of the National Development Strategy 1 (2021-2025) (NDS1).
NDS1 is the Government’s five-year strategic economic blueprint covering the period 2021 to 2025.
Addressing delegates to the 9th CEO Africa Roundtable Conference in Victoria Falls yesterday, President Mnangagwa said the country has to “bite the bullet” and have a single currency in use.
President Mnangagwa was responding to participants who inquired about the way forward in view of the projected expiry of the multi-currency regime in 2025. He chronicled developments that led to Zimbabwe adopting a basket of currencies in 2009.
“In 2009, our domestic currency collapsed and our former President Mugabe appointed a committee of five people which I chaired to look into the currency issue. We agreed that for us to survive we had to create a basket of currencies and allow our currency to die,” explained President Mnangagwa.
“It could have been a wrong decision but that is what happened in 2009. We allowed the basket of currencies and that saved the economy, and we went in that situation for a long time.”
President Mnangagwa said the Second Republic realised that there is no country that can grow without its own currency.
“So, we decided to introduce our own currency but still our currency continues to be fought. However, we have to go through this cycle where as a country we must have a currency which we call our own,” he said.
President Mnangagwa said having multiple currencies in the economy is not sustainable.
“We must bite the bullet, whether it gives us some suffering for a period, we shall proceed to have our own currency, not a situation where the economy has a regime of currencies in use, we want a single currency and we are going there,” he said.
Recently, the Treasury assured the market of continued usage of the local currency and that deliberate steps are being taken to strengthen its value so as to restore consumer purchasing power and buttress the economic recovery momentum.
Government has said it will not renege on its policy to mainstream the use of the local currency as this has yielded a positive impact on the overall economy.
Zimbabwe adopted a multi-currency regime, often dominated by the US dollar, in February 2009 to tame inflation.
Presently, the country is using a dual currency monetary regime, a situation that has also been blamed for the volatility of the domestic unit due to the strong preference for US dollars, which now accounts for over 76 percent of transactions.
A multi-currency regime is basically a situation where a country adopts other currencies in addition to its own.
Presently, Zimbabwe is using the United States dollar, the South African Rand and local currency in its basket of currencies.
Notably though, wider use of and trade in local currencies can strengthen a nation’s economic autonomy and sovereignty.
Relying on a foreign currency for local and international transactions can create vulnerabilities and limit a country’s ability to pursue its economic policies independently.
By utilising local currencies, countries can assert greater control over their monetary policy, manage capital flows and protect their economic interests. This enhanced autonomy enables nations to respond effectively to economic challenges and tailor their policies to specific domestic needs, fostering sustainable development and inclusive growth.
During the recently held Zimbabwe Economic Development Conference (ZEDCON), stakeholders requested that Government provides the market and the economy with a clear currency reform roadmap as the financial sector is now hesitant to extend long-term foreign currency loans as the 2025 deadline gets closer.