Billionaire telecoms tycoon Strive Masiyiwa says Zimbabwe could achieve price stability if all goods were priced in the South African rand, and the country could do this “overnight”.
Masiyiwa, whose Econet is one of the biggest companies in Zimbabwe, reacted after the price of bread almost doubled to real-time gross settlement systems (RTGS) ZWL$3,50 from ZWL$2 this week.
Shops have been adjusting their prices upwards in response to the continuing decline of the country’s RTGS currency to the United States dollar, and the government has threatened price controls.
But Masiyiwa says Zimbabwe would do well to abandon the United States dollar as the currency of settlement for rand imports which account for 80% of goods sold in Zimbabwe.
“The people who pay for a lot of goods are Zimbabweans living in South Africa, through their remittances. The cost structure — labour and goods — in Zimbabwe is distorted by the arbitrage of the United States dollar as a currency of settlement for rand imports.”
Masiyiwa said if every business in Zimbabwe quoted their customers for goods and services in the SA rand, “it would go some way to eliminating the dollar arbitrage”.
“This is not the same thing as joining a rand monetary area, or customs union, which is a much more complex process. This one can be done overnight, and even voluntarily.
But the tycoon also accepts that the currency switch “is not what you have to do to fix Zimbabwe’s economic woes,” adding: “That is a whole different story.”
The spiralling prices of goods, which are not matched by salary increases, have heightened resentment against Mnangagwa’s government as economists warn the country has entered hyperinflation.