Is The Zim Dollar Already Phasing Out?
Barely six months since the return of the Zimbabwe dollar as the sole unit of transacting in the country, its fate has taken a rather quick and dramatic twist as market players are switching back to transacting in United States dollars (USD).
In June this year, government gazetted Statutory Instrument 142 of 2019 which outlawed the use of multiple currencies and compelled all forms of transactions to be done in local currency.
But with the fall in value of the local currency most businesses are now charging in USD to preserve their earnings against inflation hovering over 500 percent.
This is despite the fact that just a fortnight ago, the Reserve Bank of Zimbabwe (RBZ) released fresh coins and notes to improve liquidity of the currency in the economy.
Yet a survey by 263Chat Business across the city of Harare shows that the majority of business establishments have reverted to charging customers in the USD.
Even ordinary folks in the streets are also charging their services in the USD.
“We simply have no trust in this currency. If we try to keep pace with the exchange rate we end up adjusting prices every two days. The American dollar is the only stable currency we can trust to maintain value in our businesses,” a clothing boutique owner told this publication.
A survey at some privately owned learning institutions dotted across the city also revealed that school fees were also being charged in USD and in some cases the payments are structured at 60 percent in USD and 40 percent in bond notes using the parallel market rate.
Real estate sector has not been spared either.
Most tenants are now paying monthly rental fees of between US$ 10 and US$ 15 per room in high density suburbs while in low density areas rentals can go as up to US$ 250 for a full cottage depending on its quality.
Worryingly, employers are issuing wages in the local currency despite trading in USD.
The development has created distortions in the market and worse still, it has brought massive suffering for the majority of working class.
Authorities have conceded that the transition from the USD to the Zimbabwe dollar is proving difficult.
Speaking at a post-budget meeting last week, Finance and Economic Development Minister, Mthuli Ncube said very few countries had successfully de-dollarized and Zimbabwe needs more time.
“We are in transition but the trick to de-link from the United States dollar is exchange rate stability. If we can keep the exchange rate stable for six months to a year, it can help us de-link,” he said.
Despite the use of other currencies such as the USD, Rand and Pula increasingly growing, it however remains illegal to transact outside the Zimbabwean dollar.
But efforts by authorities to monitor adherence to use of the local currency are proving futile due to high levels of informality within the economy.
Analysts have condemned authorities for lacking the will to punish offenders as some shops clearly mark out their prices in USD currency.
However, the Central Bank and the Finance Ministry have expressed belief in their efforts to stabilize the exchange rate, until then can we be certain about the fate of the Zimbabwean dollar.