The solution is very simple, like all good ideas. In all our neighbouring countries, Zambia, SA, Mozambique, Malawi and Botswana, the currency of choice is the national currency, the Pula, Kwacha and the Rand. If you want to do business, you go to a Bureau du Change or a Bank and you change your own currency into theirs and you are set to go. If you are in business and are exporting, when your export proceeds come into the country, they are converted to the local currency and your account is credited with the proceeds. If you need hard currency to pay for things abroad, you go to the Bank or the Bureau and buy what you need. The rate of exchange for these transactions is the national, market driven exchange rate.
For historical reasons Zimbabwe does not practice this. We are allowed to hold hard currency in our personal and business accounts, we can use several currencies to settle local bills and we have no faith in our own currency, because of past experience and failures. Its not as if we do not have enough foreign currency to meet our needs – look around you. There are no shortages, you can buy what you need whenever you want to. We are not printing money to fund our Government and all the macroeconomic fundamentals are sound.
The only solution, and I want to emphasis that, the ONLY solution is to completely dedollarise our economy, make our own currency the sole means of exchange for all purposes. Use the electronic interbank market to establish, on a minute by minute basis, an exchange rate for all hard currency coming into the banking system at a level that clears demand. The only thing I would recommend that we do at the same time, is to mandate our Reserve Bank to buy hard currency off the market at a rate that will stimulate exports and inhibit imports. This has the added advantage of starting to create our own hard currency reserves at the Bank which will then allow us to meet national obligations and to borrow money internationally at the best rates available.
That is exactly how the tiger countries of the Far East have built up their economies. We need to follow their example and we can do this in 24 hours and in a week, this would be a different country.
By Eddie Cross
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