Should The Zimbabwe Dollar Come Back?

The return of the Zimbabwean dollar is being discussed in Parliament and in the mass media.

The majority of Zimbabweans are against the return of the Zimbabwe dollar. We are naturally influenced by the severe suffering we have undergone over the past five years. We found our money devaluing to the point where virtually 96% of Zimbabweans became destitute. The elimination of thirteen zeros meant that billionaries suddenly became destitutes. The middle class who constitute the bedrock of a stable society, such as doctors, nurses, teachers and civil servants, suddenly found that they could not afford to feed themselves. They were too poor to catch buses. They could not pay their rent. They could not pay for electricity or water. They could not pay for school fees.

Commerce and industry stopped functioning, as prices escalated daily and even hourly. The price of goods escalated so that the price in the afternoon was be double that in the morning. Everyone spent their salary within minutes of receiving it, hoping that they would get at least enough food to last them the month. Supermarkets became empty. Government reacted by arresting supermarket managers. They also arrested bank managers. Amazingly the printers of worthless currency, the RBZ, were not imprisoned. They do not accept any responsibility for the inflation.

Meanwhile the RBZ continued its wild printing of hundreds of trillions of dollars. The demise of the Zimbabwe dollar took place when the money supply was increased by 200 million per cent early this year. The printing presses were working 24 hours a day, 7 days a week. Inflation was estimated also at 200 million percent. Such was inflation that by January 2009, just before the collapse of the Zimbabwe dollar, US$1 was worth 23 trillion Zimbabwe dollars. Civil servants were now being paid US$1 – 2 per month. Amazingly this was after some 13 zeros had already been lopped off. The Zimbabwe dollar had become worthless. Although it was illegal, everyone was demanding forex before they would sell you anything. Eventually, in February 2009, Government declared it legal to utilize forex. Government recognized that the Zimbabwe dollar was dead.

Return of the Zimbabwean dollar?? Zimbabweans fear a repetition of the past: once bitten twice shy. Will we again face 200 million per cent inflation?? Will the little money we have again be devalued to a minus quantity? We lost our sovereignty when we destroyed the worth of our own money. Are we surprised that Zimbabweans are afraid of the resuscitation of the Zimbabwe dollar?

Yet can we really survive without our own currency? Of course inflation stopped immediately when the printing of paper money stopped. On the negative side, it is virtually impossible to borrow money. Banks are short of money as most people utilize the bank only as a transit camp, through which they receive their money, which they withdraw as soon as possible, of course just in case the RBZ returns to its criminal habit of taking our forex without our permission. We are now a cash economy with very limited monetary services. Can we develop without these banking services? Clearly not. Without a formal monetary system our economy will not be able to go forward.

The answer is clear: we should enter into negotiations as soon as possible with South Africa to enable Zimbabwe to be supported by the Rand monetary system. Such a negotiation would enable us to print Zimbabwean currency linked to our forex deposits, in this case the South African rand. This agreement should be time defined, let us say for five years, after which we can review the situation.

Let’s have a practical solution to a practical problem.