South African is quietly pressing Zimbabwe to adopt its currency, the rand, which is already used in other neighbouring countries like Namibia, Lesotho and Swaziland, and sources say this could open up taps for finance from Pretoria’s state-owned mega funders.
According to the African News Agency, the move makes economic sense but the only thing that is holding Zimbabwe back is national pride.
Zimbabwe has been experiencing cash shortages which it has blamed on illicit flows because the country has become a fishing pond for United States dollars, the main currency now used in the country.
Officially, Zimbabwe has adopted nine currencies including the rand, the Botswana pula, Chinese yuan, the British pound, the euro and the Indian rupee.
But the United States is now dominating the market following the decline of the South African rand which was the major competitor and was dominant in the Western part of the country.
Zimbabwe is planning to introduce US-dollar denominated bond notes in October but now argues that these would mainly be an export incentive.
ANA said that switching to the rand would boost Zimbabwe’s exports as the US dollar made its exports too expensive on international markets. This could in turn revive Zimbabwe’s flagging manufacturing sector.
If Zimbabwe switched to the rand, Pretoria would also encourage its state-owned enterprises already in the country, such as the Development Bank of Southern Africa, the Industrial Development Corporation, and the Public Investment Corporation, to inject more money into the Zimbabwean economy.
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