Industrialists advocate pegging prices in rand

INDUSTRY lobby group, the Confederation of Zimbabwe Industries (CZI), has called on businesses to peg their prices in rand and mitigate biting cash shortages as the debate around the currency rages on.

The push for adoption of the South African rand has generated debate despite the fact that its use is provided for in the basket of multiple currencies.

The scarcity of the United States dollar and bond notes on the market has exacerbated the situation.

Government adopted the multi-currency system in 2009 but it has been effectively dysfunctional with the economy trading solely on the United States dollar.

The development has also resulted in local industry being uncompetitive in the export market due to the firming of the greenback.

CZI president Mr Sifelani Jabangwe said industry should start taking the lead by quoting their prices using the South African rand and this will entice the public to use the rand.

"There have been concerns by industry to push for the use of the rand because it is a softer currency, which will make us competitive on the export market and this might go a long way in solving the liquidity challenges we are facing in the economy.

"However, I don't know why as industry we are not using the rand because it is provided for in the basket of currencies. As business, I believe we should lead and peg our prices using the rand and slowly the public will gain confidence and start transacting using the currency," said Mr Jabangwe.

Government has said it will not mainstream rand usage citing a number of hurdles and political economic considerations. It has also said the introduction of a local currency was not proper for now as economic fundamentals were not favourable.

However, economist Mr Washington Mathuthu is of the view that Government should take the lead in paying its workers using the rand as it is the single biggest employer and the rest of the market will follow.

"Government should be the first to accept the rand because at the moment most government departments are only accepting the United States dollar and bond notes. If you look at it Government only needs to pay its workers using the rand and everyone else will follow because civil servants are the majority in this economy," he said.

The country is battling to manage its foreign currency gap as imports, which were almost at par with exports between 1990 and 2009, have to date doubled while exports have trailed, leading to a deficit which has brought about the liquidity challenges.