President Emmerson Mnangagwa today shut the door on the United States dollar sending a clear signal to those who were dollarising or demanding wages and salaries in the greenback that Zimbabwe is not dollarising but will soon introduce its own currency which will be the legal tender for all local transactions.
Mnangagwa said the use of the multiple currencies which started in 2009, and was dominated by the United States dollar, was introduced to address hyperinflation.
The country could not develop using other countries’ currencies. It had to have its own currency and Zimbabwe has started on that journey and will have its own currency before the end of the year.
Mnangagwa said people will be allowed to keep their own foreign currency but they will have to change it into local currency to buy products locally like they did in all other countries.
The government has been under pressure from civil servants who have been demanding that they be paid part of their salaries in US dollars.
Businesses, pharmacies and doctors are demanding to be paid in US dollars.
Finance Minister Mthuli Ncube has been pleading with Zimbabweans to stop thinking in US dollars without success.
He also told the nation on several occasions that adopting the US dollar or the South African rand as the country’s currency was not currency reform but capitulation.
Ncube blasted former Finance Minister Tendai Biti, who has been pressing for dollarisation saying the economy was doing well under his tenure, that Biti destroyed the country’s ability to conduct its own monetary policy.
The local currency has been tumbling against the greenback over the past few weeks with prices rocketing.
It will be interesting to watch how the market will react to Mnangagwa’s statement but the country’s largest beverage maker, Delta, which had started charging in US dollars this week said money was now readily available on the interbank market and it was now selling its products in local currency.
Contrary to the popular belief, also hammered by Biti, that the country has no reserves to back its currency, insider sources say Mnangagwa has been quietly been building the country’s reserves but the programme was set back by Cyclone Idai which forced the country to divert some of its resources to bail out the affected people and to rebuild roads and bridges that were destroyed.