Can the rand rescue Zimbabwe’s economy?

Tendai Biti sits in his office in a leafy Harare suburb, contemplating another collapse of the Zimbabwean economy.

Thanks to a chronic shortage of United States (US) dollars, the country is running out of cash. There are long queues outside every bank, with some customers forced to wait overnight for a chance to withdraw a maximum of US$50 from their account.

Businesses are struggling to import stock, renters can’t pay their landlords, and even government is having trouble processing salaries on time.

“The economy is in a hole. A deep hole,” says the man generally credited with rescuing Zimbabwe from its last collapse.

In the 2000s, as Robert Mugabe’s regime started printing money to finance their re-election bid, the Zimbabwean dollar was subject to Weimar Republic-esque levels of hyperinflation.

At one point, the Reserve Bank printed a 100 trillion Zimbabwean dollar note. Supermarket shelves were empty, unemployment soared, and supplies of food, petrol and medical supplies ran dry.

When the Government of National Unity came to power in 2009 – following a bitterly and violently contested election – Biti, a constitutional lawyer and veteran opposition politician, was appointed finance minister.

Under his watch, Zimbabwe abandoned the Zimbabwean dollar, replacing it with a ‘basket of currencies’, a selection of other countries’ currencies that would be considered legal tender in Zimbabwe.

These include the US dollar, the euro, the Botswana pula, the South African rand, and the Chinese yuan, among others.

But it was the US dollar that reigned supreme in Zimbabwe’s shops and on its streets, becoming Zimbabwe’s de facto principal currency, as Biti knew it would. And while there is no doubt that this stabilised the economy, and gave Zimbabwe several years of much-needed economic growth, it was never meant to be a permanent fix.

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