Veteran Zimbabwean industrialist calls for rand adoption

Veteran industrialist Anthony Mandiwanza says Zimbabwe must adopt the South African rand as its official currency to help ease the current cash crisis and improve the manufacturing sector's competitiveness.

This comes as the country, which adopted a multi-currency system in 2009 dominated by the United States dollar to replace the Zimbabwean dollar rendered worthless by hyperinflation, is facing an acute cash crisis.

Experts attribute the current cash shortages to illicit foreign currency leakages, widening trade deficit and lack of foreign direct investment among other issues. This has forced the government to introduce bond notes to help ease cash shortages.

Mandiwanza, however, believes that the introduction of bond notes will trigger unhappy memories of 2008 when the country lost half of its gross domestic product to hyperinflation and the majority of people lost their lifetime savings.

"We are coming from a period of crisis in trust and confidence, 2008, our memories are still fresh," he told the businessdaily in an exclusive interview.

"Now to talk about any currency that brings back bad memories, surely you are asking for too much from men and women whose pension funds, investments and savings disappeared. That is why Zimbabweans are finding it difficult to understand the rationale behind bond notes," he said.

The long-serving Dairibord Holdings chief executive said a solution to Zimbabwe's cash crisis lies in adopting a softer currency that is sensitive to the country's current economic situation.

"For instance, if we are going to use the rand, the cost of government comes down significantly and it will still achieve the same objective of reducing hard currency leakages," he said.

Mandiwanza — credited for the successful privatisation and subsequent listing of Dairibord — noted that the Zimbabwean economy cannot rise, increase productivity and employment, and reduce imports using a cost structure driven by the United States dollar.

"The United States dollar is an international reserve currency and must sit in the reserve bank as an exchange currency while day-to-day activities are driven by a trade currency which is sensitive to the current environment," he said.

This comes as calls for randification have intensified since early this year as the country battles to contain a cash crunch that has forced banks to severely limit withdrawals.

The Bankers Association of Zimbabwe recently said adopting the rand could be a masterstroke for the country as it would result in reduced illicit financial inflows which totalled $1,8 billion in 2015 alone.

The bankers noted that rand could also be beneficial to local exporting companies considering that South Africa is Zimbabwe's largest trading partner with exports to our southern neighbour representing 78 percent of Zimbabwe's total exports.

On the other hand, the Confederation of Zimbabwe Industries argues that the rand adoption could enhance competitiveness and make cheap imports irrelevant.

However, despite the calls and apparent advantages of rand adoption, Finance minister Patrick Chinamasa said Zimbabwe would stick to a basket of currencies that include the greenback, rand, Botswana pula, the Euro and Chinese yuan.

"There have been calls for the adoption of the South African rand as the transacting currency by many people. The rand remains part and parcel of the multi-currency system and economic players are free to switch to any currency as a way of managing their operations.

"We do not intend to adopt a single currency, but we will continue to bolster the strength of the multi-currency system," said Chinamasa.

Adoption of the rand would entail seeking official authorisation from the South African central bank.