News Column

Abandon U.S. Dollar for South Africa Rand, Says Biti

July 28, 2014

FORMER Finance Minister Tendai Biti has recommended that Zimbabwe abandon the US dollar for the South African Rand as part of a package of measures he proposed to help turnaround the country's ailing economy.

Biti's proposals come after his successor, Zanu PF's Patrick Chinamasa, sparked new speculation over a return to the Zimbabwe dollar by blaming some of the country's economic problems on the American greenback.

Government ditched the Zimbabwe dollar in favour of the current multiple currency regime dominated by the US dollar in 2009 in a move that ended hyperinflation, stemmed a decade-long recession and brought about a measure of economic stability.

But the country is beginning to feel the downside as the economy struggles to recover beyond the stability brought about by the foreign currencies.

Addressing a parliamentary portfolio committee last week, Chinamasa said: "The migration from hyperinflation to multi-currency did a lot of damage to our economy.

"It pitched our cost structure too high and unsustainable. Secondly, the wage structure is also not sustainable," said the minister.

"The wage structure that the private sector is paying is not sustainable; we are beginning to see the signs now. A lot of companies are six, seven, eight months behind, without paying wages."

The minister however, backtracked somewhat at the weekend saying, despite the challenges the time was not right to revert to the Zimbabwe dollar.

"Given the current state of the economy where real sector activities remain depressed, industry remains uncompetitive and the balance of payments situation remains acute, it is ill-advised to re-introduce the Zimbabwe dollar," Chinamasa said in an article published at the weekend.

However, in a statement on the state of the economy issued last week, Biti, who is also the secretary general of the MDC Renewal movement, said the government's ZimAsset economic programme was not working.

ZimAssett promised to generate 2 256 000 jobs, 2 500 000 low income housing units, a growth rate of 9%, 310 public schools and 300 clinics, in the next five years," Biti wrote.

"The above figures would have entailed that in year one, 451,200 jobs would have been created, 50,000 low income houses built, 60 public schools built and 50 clinics constructed.

"Quite clearly, a year later ZimAsset is in massive deficit, as the above figures will show. The economy is in comatose, arrested by stagnation and deflation.

"There is continuing and deepening poverty characterized by suffering and deprivation."

Biti proposed a sixteen point plan to help breathe life into the economy which includes abandoning the US dollar in favour of the South African Rand as well as joining the Rand Monetary Union.

The government also needs to repeal the Indigenisation and Empowerment Act and come up with an "alternative broad based empowerment and upliftment model that is transparent, fair and just."

In addition, the government must also put "a full stop to the land question by stopping any further farm invasions and, more importantly, restoring a land market in Zimbabwe through, among other things, the provision of bankable title to all beneficiaries of the land reform programme and full compliance."

Measures must also be put in place to ensure "the rule of law ... to restore trust and confidence by full and unconditional implementation of the constitution."

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Source: AllAfrica

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