Tendai Biti, is reflecting on what happened during his term as Minister of Finance with some disappointment. In 2010, during the inclusive government era, Biti suggested Zimbabwe join the Rand Monetary Union (RMU) as a way of adopting the South Africa Rand instead of using a basket of multiple currencies, including the US dollar.
The US dollar became the dominant currency on the Zimbabwean market but its elusiveness has nearly brought President Robert Mugabe’s government to its knees, prompting it to use unpopular means such as introducing bond notes, in a desperate attempt to arrest the cash crisis.
Biti this week told the Daily News on Sunday that it is too late to join the RMU or adopting the South African Rand.
“There are some who are now calling that we should join the Rand Monetary Union.
“In 2010, I moved that Zimbabwe should join the Rand Monetary Union and I was heavily opposed, ironically, by the Bankers Association of Zimbabwe (Baz) among other groups but now I think it’s too late,” Biti told the Daily News on Sunday, exclusively.
“Now it’s no longer a solution because of the volatility of the South African Rand and also the disequilibrium of our own economy.
“The current cash squeeze which has seen long queues forming at local banks on the back of pronouncements of introducing the bond notes, has led to suggestions that Mugabe’s administration must adopt the Rand as its major currency.
Baz, a professional and lobby group representing local bankers, has also waded into the Rand use debate.
Last week, its chairperson Charity Jinya told Parliament that government should explore the use of the Rand.
Jinya heads MBCA Bank, a subsidiary of Nedbak South Africa.
But Biti said Zimbabwe’s problems are too many to be exported into the RMU.
“The members of the RMU will not accept us because our economy has deteriorated so much” it would be like “the importation of Zimbabwe’s structural problems into the RMU.
“And so they won’t accept unless we attend to certain structural problems.
“The underlying structure of the Zimbabwe economy is wrong, so whatever currency you use and change, it will be delegitimised by the structure of this economy and that’s why you need reform.
“It’s like a crook with a scar on his face it doesn’t matter what make-up you use, the scar remains the same.
“So deal with the fundamental problem of that structure. That is a problem we have it’s no longer a currency issue but a structural issue.
“So let’s reduce the cost structure and make it more competitive. So what needs devaluation is not the US dollar; what needs devaluation is the cost structure of Zimbabwe which is fundamentally skewed.”
Biti’s successor Patrick Chinamasa has ruled out adopting the Rand while Mugabe has put the speculation on whether the bond notes are coming or not to bed by declaring there will be in circulation in October.
Most Zimbabweans, victims of Mugabe’s toxic and disastrous policies, have received with trepidation the announcement of bond notes introduction.
Although central bank governor John Mangudya has ruled out the immediate return of the Zimbabwe dollar, insisting conditions are not yet ripe for its re-introduction, there is palpable fear that Mugabe’s government will take back the country to the days of hyperinflation in 2008.
Millions of Zimbabweans sank into poverty while pensioners’ savings were wiped off as they were left to contend with the worthless local currency.- State Media