By Helen Kadirire
ZIMBABWE has no currency, the one we refer to is always affected by the United States dollar rate which most people are using, Institute of Chartered Accountants of Zimbabwe chief executive officer William Mandisodza said.
While speaking during a meeting on “Inflation, pricing and the exchange rate” hosted by the Friedrich Ebert Stiftung (FES) and Zimbabwe Economics Society (ZES), Mandisodza said the local currency was practically dead as it was no longer being used.
Zimbabwe’s inflation rate currently sits at 268 percent, with an unemployment rate hovering around 90 percent.
Mandisodza emphasised that whenever the exchange rate of the United States dollar moved, the RTGS price also moved.
“In Zimbabwe we can talk of having a Zimbabwe dollar but we do not have it because whenever there is a change we actually change the price in RTGS. We just have a reference currency. All decisions we make are USD decisions. And this is a disadvantage for exports. When someone is earning RTGS$600 they should do so for the next six months irrespective of what happens with the exchange rate.”
“The cost of production goes up and our exports go up too, but the moment the exchange rate moves we move. We lack that element of having confidence to attach the price of our dollar to a foreign currency. We are pricing in US dollar to preserve the value of or goods,” Mandisodza said.
ZES President Nigel Chanakira however said Zimbabweans have a paranoid desire to preserve value of their money which is why they invest in assets such as property and cars which may not be bring them any income.
He said the savings culture in the country was destroyed because of high inflation and low rates for savings in banks.
“We once had flourishing money and capital markets economy were our bond market worked because pension funds and insurance companies could invest in bonds which were used to build infrastructure. They knew they would have positive real rates of return in the lifetime of that six year to 15 year bond. Today all those companies cannot invest in a bond and expect to derive real rates of return for their pensioners-so we killed that,” Chanakira said.
“Not only have we killed savings, we have killed pensions and the biggest beneficiaries are formal sector who can borrow at sub-prime rates at the expense of everyone else. We have to fix that whole economy so that it functions like a normal economy. We have a non-competitive economy where the little businesses do not stand a chance against these oligopolies. We need new start-up companies to compete with the old ones”.
Reserve Bank of Zimbabwe Deputy Governor Innocent Matshe said Central Bank will continue implementing its tight monetary measures as a way to try and build confidence and curb economic delinquency.
Matshe emphasised that while the parallel market rate was still high it was stabilising.
“The monetary measures that are currently in place will not change because we want people to become confident in the country’s economy. We will also be introducing smaller denominations of the gold coins to cater for those in the micro, small to medium enterprises,” Matshe said.
He added that “The auction system is now stable as we are now moving between $11 and $12 million weekly which is a great improvement.”
The Deputy Governor also said the RBZ would be increasing their reserves and efforts are already in full swing- as they try to stabilise the exchange rate.