2019 an eventful year for Zimbabwe as economy continues to struggle

A decision by the government in June to ban the use of foreign currency as legal tender alongside the local Bond Note left many companies in turmoil, especially after the Reserve Bank of Zimbabwe had removed the 1:1 parity between the Bond Note and the US dollar in February.

The ban was an apparent bid to arrest galloping increases of prices of basic commodities and other goods and services.

Finance and Economic Development Minister Mthuli Ncube said, however, that the government was working to end cash shortages, eliminate cash discounts and the multi-tier pricing system and punish traders who continue trading on the multi-pricing system.

Ncube noted that the economy had been battered by the severe 2018/19 drought which caused food insecurity and depressed electricity generation, with negative spillovers to the rest of the other sectors of the economy.

In November, Reserve Bank of Zimbabwe Governor John Mangudya announced the introduction of the new notes to ease current cash shortages.

He said the new notes totaling 1 billion Zimbabwe dollars would be gradually injected into the economy over the next six months to curtail fuelling inflation.

The new notes circulate alongside the surrogate bond notes that were introduced in 2016.

However, the introduction of Zimbabwe dollars did not ease the cash shortages as thousands of Zimbabweans continued to endure long hours waiting in queues for cash at the banks.

The shortage of cash has led to retailers and other service providers employing a multi-tier pricing system offering cash discounts and literally punishing those paying by electronic means.

President Emmerson Mnangagwa said in December that new $10 and $20 notes will be introduced in the next few days as the government moves to contain persistent cash shortages.

He reiterated calls for Zimbabweans to support the local currency, saying sole use of the local currency in domestic trade was imperative for the country’s economic development, especially considering that Zimbabwe, unlike its neighbors, was not receiving any financial assistance from multilateral financial institutions due to Western sanctions.

Two tragedies involving flooding also occurred at the beginning of the year, the first being the death in early February of more than 50 miners in Kadoma when a nearby dam burst its wall in heavy rains and flooded the shafts they were working in.

The second occurred in March when Cyclone Idai hit the country together with Mozambique and Malawi.

Continued next page

(200 VIEWS)