The Government has been urged to remove pegs between bond notes and the United States dollar for the surrogate money to establish its own value and become local currency.
The need for a local currency took centre stage at a panel discussion during the Confederation of Zimbabwe Industries (CZI) 2017 congress here as captains of industry exchanged views on possible solutions to ending the cash crisis facing the economy.
The discussion followed a presentation by economic consultant, Professor Ashok Chakravarti, on cash crisis and possible solutions. The consultant suggested that Zimbabweans could embrace the bond notes as a national currency.
The Government has said it will maintain the multiple currency system until such a time when economic fundamentals allowed use of a local currency.
Last week Vice President Emmerson Mnangagwa revealed the Government was building diamond and gold stocks to back up a local currency upon its future introduction.
Prof Chakravarti said attaching value to the bond notes will reduce externalisation of cash as the currency will circulate locally but trading freely.
“I believe we have a national currency in bond notes and as a country we have to accept this,” said Prof Chakravarti.
He said bond notes should be allowed to trade freely and what is needed is removal of the peg between them and the United States dollar so that the “surrogate” currency realises value.
He said by removing pegs between the bond notes and United States dollar, the country would naturally restore discipline in usage of money as bond notes. Prof Chakravarti said having own national currency will allow the country to keep the value as low as possible to enable exports, which the country desperately needs.
There were mixed feelings during the panel discussion about solutions needed to solve the country’s cash crisis as some advocated for adoption of the rand while others called for internal devaluation and salary rationalisation.
Adoption of the rand will, according to experts, reduce externalisation as the currency only works in the region.
The general feeling was that cutting wages will only affect those in the formal employment leaving the majority who are in the informal sector hence not solving any problem.
“We don’t need wage reduction at all. Instead let’s have salary rationalisation because we have executives who are earning way beyond what the economy can afford,” said one participant.
Some experts said lack of competitiveness was a problem and urged Government to focus on dealing with lack of competitiveness in the industry.
The congress started on Wednesday under the theme: “Growing manufacturing competitiveness: Realities and Realignment.”