Mnangagwa Says Bond Note Bouncing Back
In a significant development, President Emmerson Mnangagwa of Zimbabwe has declared that the country will soon return to using its local currency, the condemned bond note dollar, as the sole legal tender. This announcement comes at a time when a documentary video has emerged, featuring his Kenyan business partner, Kamlesh Pattni, revealing ongoing election rigging operations in Zimbabwe, mirroring tactics he used in Kenya in the 1990s.
Pattni’s alleged election rigging method involves siphoning central bank gold and money, which weakens the currency and subjects citizens to the local currency. This revelation has raised concerns about the country’s currency stability and political integrity.
The President’s statement was reported in a state media article, in which he emphasized the need for Zimbabwe to have its own currency, citing it as essential for sustainable economic growth and development. Currently, Zimbabwe operates under a multi-currency regime, allowing the use of foreign currencies such as the US dollar and South African Rand. This arrangement is guaranteed until December 2025 under Statutory Instrument (SI) 118A of 2022.
During the swearing-in ceremony for his second term, President Mnangagwa expressed his commitment to entrenching the use of the local currency. He stated that a single currency is essential for the nation’s growth, responding to concerns raised about the expiration of the multi-currency regime in 2025.
President Mnangagwa acknowledged the 2009 decision to adopt a basket of currencies, which saved the economy from a domestic currency collapse. However, he stressed the importance of having a single, national currency for sustainable growth.
While the local currency has faced challenges, including value depreciation and public preference for foreign currencies, the government has assured the market of continued usage and efforts to strengthen its value, ultimately supporting economic recovery.
Zimbabwe’s reliance on foreign currencies in its monetary system has been blamed for the volatility of the domestic unit. A broader use of local currency can enhance the nation’s economic autonomy and sovereignty, allowing for more control over monetary policy and economic interests.
During the recent Zimbabwe Economic Development Conference (ZEDCON), stakeholders urged the government to provide a clear currency reform roadmap, especially as the 2025 deadline for the multi-currency regime’s expiration approaches. This uncertainty in the financial sector has led to hesitation in extending long-term foreign currency loans.
The move back to the local currency is expected to be a significant step for Zimbabwe, albeit with potential challenges and uncertainties, as the nation seeks to regain control over its economic policies and strengthen its economic recovery.- state media
*RBZ, Treasury to focus on future of Zim Dollar*
The Reserve Bank of Zimbabwe and Ministry of Finance and Economic Development and Investment Promotion, have been tipped to continue focusing on the future of the local currency despite increased usage of the US Dollar in the economy.
FBC Securities in their third quarter report noted; “In the outlook, focus is likely to center on the future of the country’s currency.”
The US dollar remains a dominant feature in the local economic space as the dollarisation trend continues. Currently, foreign currency denominated loans constitute circa 90 percent of total bank loans, while over 80 percent of local transactions are in US dollars.
“Authorities have, however, maintained their position on promoting use of the local currency and have, over the last few years, put measures in place to promote the Zimbabwe Dollar and anchor inflation and exchange rate pressures,” the report read.
Promoting wider use of the local currency has been challenging as economic agents continue to favour the US dollar for transacting and value preservation.
FBC Securities added that, while exchange rate stability has been achieved to an extent, and official inflation figures continue to trend downwards, confidence in the local currency remains low due to past experiences of volatility and value loss.
“Stability of the local currency remains fragile, hinged primarily on government’s ability to continue to control money supply, foster confidence and encourage use of the local currency. A mix of measures to increase the supply of foreign currency, while simultaneously reducing demand for the USD and increasing demand for local currency should also alleviate pressure on the local currency,” the securities firm said. Business Weekly
