Reserve Bank Governor m Dr John Mngudya recently revealed that the 2009 dollarization created multifaceted problems for the country whose effects are being felt to this day as citizens have lost confidence in the Zim Dollar.
Addressing a public lecture at Manicaland State University of Applied Sciences last week, Mangudya said the Zim Dollar should have been allowed to co-exist together with other currencies so that locals would have confidence in it rather than be done away with completely.
“In Zimbabwe, we made one fundamental mistake of throwing away our currency in 2009. We were supposed to keep it and allow it to limp alongside other currencies.
“We should not have locked it out through a Statutory Instrument, saying don’t come back again, don’t resurrect. That is where we made a mistake,” Mangudya said.
He said Zimbabwe should have drawn lessons from other countries whose currencies became worthless but have since been resurrected.
“At one time the metical was useless in Mozambique, but they never threw it away. In Russia and Zambia, the same happened and when their economies began to pick up, their currencies regained value, but here we put it six feet under and therefore it is now very difficult for people to accept the local currency.
“The irony in Zimbabwe is that big companies were the first to call for the use of local currency because they know that will make them more competitive on the global market, but the ordinary men and women on the streets are clamouring for a re-dollarisation of the economy,” Mangudya added.
Meanwhile, Finance Minister, Professor Mthuli Ncube yesterday said Zimbabwe is taking steps to tackle an inflation rate that’s jumped to 132% after its currency slumped.
“We are instituting measures that every other country in the world is instituting,” Ncube said in an interview with Bloomberg Television’s Manus Cranny and Yousef Gamal El-Din from Davos on Thursday. “We are not in panic mode.”
Ncube attributed the surge in inflation, which is above 100% for the first time in 10 months, to rising prices of imported food, fuel and fertilizer and said the stronger dollar had affected the domestic currency. In 2008, a bout of hyperinflation led to the scrapping of the Zimbabwe dollar, which was only reintroduced in 2019. Inflation exceeded 800% in 2020.
