It’s a case of de ja vu. Cash queues, last seen in 2008, have resurfaced.
When Zimbabwe dollarized in 2009 many here thought that scenes like this the hallmark of the crisis during the Zim dollar era would not be seen again, but over reliance on the greenback which had brought stability to a fragile economy has seen Zimbabwean live through this again.
Despite legalizing a basket of foreign currencies the US dollar is used for 95 percent of transactions here and in cash. Its appreciation against other currencies has rendered local products uncompetitive militating against efforts to close the chasm between imports and exports.
To try and ease the demand for dollars the central bank on Wednesday introduced a raft of measures including:
Conversion of payments (50% USD, 40% Rands, 10% Euros)
Tighter control on cash outflows for imports
All retailers to put up PoS terminals
More local bond notes pegged equivalent to USD
Mandatory conversion of export receipts into rands and euros; Restrictions on outgoing funds, with priority given to productive imports; directive for all retailers to set up Point of Sale terminals and introduction of local bond notes that are pegged at par to the USD dollar.
Local businesses that had been suffering delays in making their foreign payments due to the liquidity crunch, particularly to neigbouring South Africa say this intervention is a welcome relief.
“our major trading partner is south Africa why should we pay south Africa in USD when we have got the rand so looking at the issue of trading its going to help us compared to where we are now because we were almost coming to standstill in terms of foreign payments.” said Davison Norupiri, President Zimbabwe National Chamber Of Commerce
But these measures could merely be scratching the surface of much deeper problems.
“yes I think there is going to be an ease but its not going to restore confidence within the financial system its also not going to ease the competitiveness gap that the country is facing….basically what we need to do is deal with the structural issues but these are issues that are beyond just the central bank so I think we need to go back to the issues of social dialogue, I think we need to bring together the key social partners in the economy to the table” Said Prosper Chitambara, Economic Analyst
Talk of introducing bond notes which could be in circulation in two months has stoked fears of the return of the Zimdollar, but the central bank has reiterated the local unit will not bounce back anytime soon
