Dollarisation the worst thing to do for Zimbabwe

The Zimbabwean government has remained resolute in its decision not to revert to full dollarisation, despite growing calls from businesses and citizens who prefer the United States dollar over the rapidly depreciating Zimbabwe Gold (ZiG) currency.

The ZiG, introduced by the government earlier this year, has been steadily losing value against the US dollar, leading to price instability and a rise in inflation. Recently, the Reserve Bank of Zimbabwe devalued the gold-backed currency by 43%, further exacerbating concerns over its long-term viability.

During a parliamentary session on Wednesday, Deputy Minister of Finance David Mnangagwa dismissed calls to return to the US dollar as the dominant currency, describing it as an "easy but worst" move for Zimbabwe.

"The easiest thing for the government to do would be to dollarise, but that would be the worst thing for our country," Mnangagwa said. "It may seem like a quick solution, but in the long term, it will lead to the de-industrialisation of Zimbabwe and hinder our progress."

Mnangagwa explained that full dollarisation would erode the nation’s industrial base, making Zimbabwe reliant on imports and turning the country into a "supermarket of other nations."

"If we allow this, our children will have no jobs in the future," he warned. "While the competition between the ZiG and USD is challenging, the government is committed to reaching full de-dollarisation over time. Allowing the parallel market to dictate currency use will only hurt consumers in the end."

The ZiG was introduced as Zimbabwe's sixth currency in an effort to stabilize the economy, but retailers and businesses have continued to show a strong preference for the US dollar due to its stability. Many retailers currently price goods in both currencies, with the US dollar being favored for imports.

During the same parliamentary session, Citizens Coalition for Change (CCC) representative Agency Gumbo raised concerns about the practicality of the government's stance, noting that over 60% of goods on Zimbabwean shelves are imported and require foreign currency for procurement.

Gumbo questioned why the government was not allowing retailers to offer discounted USD prices to encourage consumers to purchase goods in foreign currency, thus easing the pressure on businesses to secure hard currency.

"Let us not pretend that we have market-determined exchange rates," said Gumbo. "If the government is the largest holder of foreign currency, it should facilitate ways for retailers to operate in US dollars, which many consumers prefer."

Despite the mounting pressure, the government has made it clear that it sees full de-dollarisation as the path forward, insisting that long-term economic growth and industrialisation would be undermined by continued reliance on the US dollar. However, many in the private sector remain skeptical, questioning how much longer the struggling ZiG can be sustained in an economy heavily dependent on imports.