CZI urges gvt to lead local currency use
Bulawayo, Sept 25, 2023 (New Ziana)- Government should lead the use of local currency so as to make the country`s exports competitive in the region, a senior official of the Confederation of Zimbabwe Industries (CZI) said on Monday.
Speaking at a business interface meeting here, CZI Matebeleland Chapter vice President Joseph Gunda said the use of local dollar should be prioritised as this will promote competitiveness and help foster economic growth.
Currently, the country is using a multi-currency regime, mainly consisting of the United States Dollar, and the South African Rand, which was adopted in 2009 to arrest runaway inflation. The USD has dominated the
basket of currencies, with businesses preferring it to any other currency.
However, Gunda said there should be a clear road map towards gradual de-dollarisation that is backed by macro- economic stability.
“We have an elephant in the house which is inflation, interest rates and currency issues. The use of local currency should be a top priority with a clear road map towards gradual de-dollarisation that is backed by macro-economic stability,” he said.
“The issue of de-dollarisation requires a functional financial market; exports are currently uncompetitive in the region as high costs associated with use of United State Dollar (USD) together with export retention are a bit discouraging,” Gunda said.
He exhorted the government to spearhead the use of the local currency by offering incentives, and accepting tax payments exclusively in the Zimbabwe dollar.
“Government should spearhead the use of the Zimbabwean dollar, they must incentivise the use of local currency through demanding taxes exclusively in local currency,” he said.
Whilst relative economic stability has been prevailing in the last few months, Gunda said CZI has noted that the widening gap between the official rate of exchange and parallel market in the last few weeks showed that the liquidity drivers are back.
“We recommend control of money supply and upholding the proper auction system free from manipulation where the Zimbabwe dollar derives its true value,” he said.
President Emmerson Mnangagwa said last month that the local currency was indispensable for the country`s economic growth and development.
He said relying on foreign currency for local and international transactions can create vulnerabilities and limit a country`s ability to develop.