Why it is not in Zimbabwe’s interest to continue using the US dollar


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Any informed observer of our economy must be astonished at the things that go on here, many of which bear no relation to the situation on the ground or even rational thinking. 

This past week has been no exception. In all I think we have had 10 versions of a domestic currency since Independence. Now we have the ‘ZIG’. 

This takes the cake and is by far the most ridiculous step taken so far in our convoluted path back to sanity.

When I started work in 1957, just 17 years old and working as a farm assistant on a Ranch before going to Gwebi College to do a diploma in Agriculture, my meagre salary was worth roughly two pounds to a British pound sterling. 

I was able to live, date the odd girl and buy a small sports car. Today at cattle sales in the south east of the country they still call out the prices at auctions in ‘Mpondo’.

Then at Independence in 1980, I participated in the hand over from the Rhodesian government to the newly elected government of Robert Gabriel Mugabe. 

The local dollar was still 2 to 1, but against the US dollar at the time. 

For 23 turbulent years the local currency had been stable, was the only local means of exchange and was convertible into foreign currencies at a rate displayed in my local bank. 

At that time, I did not appreciate the value of this aspect of life lived in the ‘Rebel Regime’. 

It had survived the break up of the Federation, 15 years of mandatory UN enforced sanctions, a British blockade of Beira Port and 16 years of civil war. Quite an achievement.

A fine economist was appointed as our first Minister of Finance in 1980 and for a while stability prevailed. The economy grew steadily but expenditure exceeded revenue consistently for the next 17 years, funded by loans and then printed money. 

The result, in 1997 the currency collapsed and our dollar slumped to 12 to 1. Over the next 11 years, our Reserve Bank printed money recklessly to prevent a total collapse of the economy and in a final act of desperation, a printed note for Z$10 000 000 000 000.00 came out and was declared valueless by the market. The local dollar collapsed and died; it was December 2008.

Continued next page

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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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  1. Write a comment * I have very little respect for your ‘Mpondo’ nostalgia which leaves the subtleties and peculiarities economic situation largely unstated. You seem to be in denial about how the systemic shadows of intergenerational geopolitics continue to shade our circumstances. You sadly still believe that a floated currency is best because the ‘market’ is apolitical, no, anti-political. You need to cure yourself of positivist delusions, sir.