Business / Economy
Zimbabwe urged to join Rand Monetary Union to ease liquidity
13 Jul 2016 at 09:52hrs | Views
THE Centre for Public Engagement deputy director, Butler Tambo, has urged the government to join the Rand Monetary Union to alleviate Zimbabwe's cash crisis.
The Union consists of South Africa, Lesotho, Swaziland and Namibia and these countries use the South African Rand as their main currency.
Tambo said joining the Rand Union will be ideal for the country, as the cash crisis is getting out of hand.
He said the multi-currency policy has been unsuccessful and its now time for the government to consider using the rand.
"It's high time the government admitted that using a multi-currency is not possible. It should consider negotiating with the South African Reserve Bank to use the rand as the main currency. Using the rand would be an advantage because South Africa is our largest trading partner," he said.
Tambo said the rand will be a better solution as compared to the use of plastic money recently suggested by the government.
He said plastic money is not a solution because people are not benefiting from it.
"Using plastic money is a challenge because most people do not have bank accounts especially in the informal sector. Some people cannot use it because they are unemployed.
"If people are to use plastic money for now, we need a simpler way of banking, a way that accommodates everyone," said Tambo.
He said requirements for opening bank accounts are too demanding and some people cannot meet them.
"Charges for opening a bank account are expensive and a person selling tomatoes cannot afford to pay an amount of $50 just to open an account.
"This simply means that plastic money can only be used by a few employed people who have bank accounts and those who can afford opening them now," he said.
Tambo said using plastic money is difficult especially in an informalised environment like Zimbabwe.
He said most people are not banking their money because they no longer trust the Reserve Bank of Zimbabwe.
"We have between $4 and $7 billion circulating in the informal sector which includes people such vendors. After what happened during the Gideon Gono era people are now afraid to bank their cash," said Tambo.
"Zimbabwe needs a permanent solution to end the cash crisis and introducing the rand might be one," he said.
Tambo said when Zimbabwe adopts the rand, South Africa and other countries might start considering Zimbabwe as a tourist destination and investors may also be attracted.
In 2014 economists once urged the country to join the Rand Union but the deputy governor Dr Kupikile Mlambo turned down the idea saying the Rand is the most volatile currency in the world.
The Union consists of South Africa, Lesotho, Swaziland and Namibia and these countries use the South African Rand as their main currency.
Tambo said joining the Rand Union will be ideal for the country, as the cash crisis is getting out of hand.
He said the multi-currency policy has been unsuccessful and its now time for the government to consider using the rand.
"It's high time the government admitted that using a multi-currency is not possible. It should consider negotiating with the South African Reserve Bank to use the rand as the main currency. Using the rand would be an advantage because South Africa is our largest trading partner," he said.
Tambo said the rand will be a better solution as compared to the use of plastic money recently suggested by the government.
He said plastic money is not a solution because people are not benefiting from it.
"Using plastic money is a challenge because most people do not have bank accounts especially in the informal sector. Some people cannot use it because they are unemployed.
"If people are to use plastic money for now, we need a simpler way of banking, a way that accommodates everyone," said Tambo.
He said requirements for opening bank accounts are too demanding and some people cannot meet them.
"Charges for opening a bank account are expensive and a person selling tomatoes cannot afford to pay an amount of $50 just to open an account.
"This simply means that plastic money can only be used by a few employed people who have bank accounts and those who can afford opening them now," he said.
Tambo said using plastic money is difficult especially in an informalised environment like Zimbabwe.
He said most people are not banking their money because they no longer trust the Reserve Bank of Zimbabwe.
"We have between $4 and $7 billion circulating in the informal sector which includes people such vendors. After what happened during the Gideon Gono era people are now afraid to bank their cash," said Tambo.
"Zimbabwe needs a permanent solution to end the cash crisis and introducing the rand might be one," he said.
Tambo said when Zimbabwe adopts the rand, South Africa and other countries might start considering Zimbabwe as a tourist destination and investors may also be attracted.
In 2014 economists once urged the country to join the Rand Union but the deputy governor Dr Kupikile Mlambo turned down the idea saying the Rand is the most volatile currency in the world.
Source - Radio Dialogue
