Zimbabwe retailers make a case for multi-currency continuation

Retailers in Zimbabwe have urged the Reserve Bank of Zimbabwe (RBZ) to extend the multi-currency regime as official policy until 2030, warning that any abrupt move towards full dollarisation could severely impact businesses and the wider economy.

In a letter dated September 30, 2024, addressed to RBZ Governor Dr. John Mushayavanhu, the president of the Confederation of Zimbabwe Retailers (CZR), Dr. Denford Mutashu, expressed appreciation for the recent efforts by the Monetary Policy Committee (MPC) to introduce more flexibility in monetary policy. He acknowledged the central bank's role in navigating the complex economic challenges facing the country.

"While some quarters are calling for dollarisation, others are advocating for complete de-dollarisation," Dr. Mutashu noted. "It is our submission that the multi-currency regime remains as a policy until 2030."

The CZR president emphasized that full dollarisation can only be feasible if Zimbabwe's economy can generate enough foreign currency to support it. He cautioned that moving too quickly towards a fully dollarised system would likely exacerbate existing economic challenges rather than solve them.

"A hasty transition will amplify current economic challenges rather than alleviate them," he added. "As the CZR, we strongly believe that any attempts to fully dollarise at this stage could have catastrophic consequences for both businesses and the broader economy."

Dr. Mutashu highlighted the CZR's commitment to a "rational and gradual approach to de-dollarisation," and praised the MPC's efforts in promoting economic stability. He underscored the risks posed by any rapid shift away from the current multi-currency system.

"Immediate and complete de-dollarisation would pose significant risks to businesses, consumers, and the broader economy, potentially reversing the hard-fought gains made in recent years," he explained. "We are confident that with the right approach, Zimbabwe can achieve monetary sovereignty that supports long-term economic growth and stability."

The CZR reiterated its willingness to work closely with the RBZ and the government to devise strategies that would benefit both the retail sector and the wider economy. Dr. Mutashu also expressed the CZR's readiness to participate in further discussions on the matter and offer any additional insights or support as needed.

The appeal from retailers comes as Zimbabwe continues to grapple with monetary policy dilemmas, including balancing the use of foreign currencies and the local Zimbabwean dollar, while stabilizing inflation and promoting economic growth.