Chiwenga says Zimbabwe's monetary policy is in line with SADC integration

Zimbabwe's advancements in the gold sector, including the adoption of a floating exchange rate framework, align closely with the Southern African Development Community's (SADC) goal of achieving regional monetary integration, according to Vice President Constantino Chiwenga.

Speaking at a dinner ahead of the 59th meeting of the Committee of Central Bank Governors in SADC (CCBG) held in Victoria Falls, VP Chiwenga highlighted the role of Zimbabwe's newly introduced Gold (ZWG) currency in stabilizing the country's monetary system. He suggested that these developments could position Zimbabwe for potential inclusion in the future SADC monetary union.

The CCBG, established in July 1995 by the SADC Committee of Ministers for Finance and Investment (COMFI), consists of central bank governors from each SADC member state. Its goal is to foster regional monetary cooperation in line with the Finance and Investment Protocol (FIP).

"The Zimbabwe Gold currency is a home-grown solution, fully backed by a basket of reserve assets, including gold, precious minerals, and foreign currency. It has brought about simplicity, certainty, and predictability in our monetary and financial affairs," VP Chiwenga said.

He also emphasized that Zimbabwe's floating exchange rate framework complements SADC's broader objective of regional monetary integration, which could pave the way for a SADC Monetary Union in the near future.

"Zimbabwe's adoption of the floating exchange rate system aligns with SADC's vision of fostering monetary integration, setting the stage for the formation of a SADC Monetary Union in the coming years," added VP Chiwenga.

Introduced in April 2024, the ZWG currency has been well received by key economic stakeholders in Zimbabwe.

VP Chiwenga, representing President Mnangagwa, also stressed the significance of diaspora remittances in boosting foreign currency inflows for economic growth. He urged central bank governors to prioritize the creation of efficient remittance channels.

"As part of this meeting, governors will discuss financial inclusion and remittance costs for Zimbabwe and other SADC countries. Measures to improve diaspora financial inflows are crucial, and governors must ensure seamless transmission channels," he said.

Chiwenga also addressed the long-standing effects of Western sanctions on Zimbabwe, which have limited access to international financial institutions like the World Bank and IMF. Despite this, he praised the resilience of Zimbabwe and the support from SADC countries, noting the importance of home-grown solutions for industrialization.

He highlighted the government's shift to a technology-driven education system, which he said would help bridge gaps in sectors such as banking and payment systems.

SADC central bank governors were also commended for their role in creating a stable macroeconomic environment that fosters investment and development.

SADC CCBG chairperson and South Africa Reserve Bank Governor Lesetja Kganyago also addressed the gathering, focusing on the issue of illicit funds crossing borders. He noted that high remittance costs between Johannesburg and Harare are driving people to informal money transfer methods, which in turn facilitates the movement of "dirty money."

Kganyago called for the strengthening of an interconnected and cost-effective payment system to combat these issues. He highlighted the ongoing efforts to enhance retail transactions through the SADC real-time gross settlement system to promote financial inclusion.

He also noted that the World Bank and IMF are reviewing the remittance corridor between Johannesburg and Harare, which is currently among the most expensive globally, pushing individuals towards informal money transfer methods.

The CCBG's Strategic Focus Areas support the objectives of the SADC Protocol on Finance and Investment, within the mandates of central banks in SADC member states.