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The Reserve Bank of Zimbabwe governor has shot himself in the foot after lying that Zimbabwe cannot adopt the South African Rand to fix cash challenges.
Mangudya falsely claimed that Zimbabwe needs to have its own currency first for that to be possible, contradicting himself as he in the same vein admitted that Botswana has been able to be a member of the Common (Rand) Monetary Area without possessing a currency of its own.
History will judge Mangudya harshly for taking the nation into the dark as he did not tell the truth in his refusals on adopting the South African rand as the country’s option to cash challenges saying Zimbabwe does not have its own currency which is a pre-requesite to joining the Common Monetary Area.
Mangudya’s Director of Financial Markets, Mr Azvinandaa Saburi claimed that for Zimbabwe to use the rand as people have been advocating for, there are pre-conditions of joining the Common Monetary Area (CMA) with one of them being that Zimbabwe needs to have its own currency which is then matched 1:1 with the Rand.
The CMA links South Africa, Namibia, Lesotho and Swaziland into a monetary union. Although the South African rand is legal tender in all the states, the other member states issue their own currencies: the Lesotho loti, Namibian dollar and Swazi elangeni, the state media said.
“There is no way that South Africa can print money for those countries in rands otherwise it will face inflation. That is one of the reasons why it is impossible for Zimbabwe to adopt the rand. We will not be seeing the return of the Zimbabwean dollar anytime soon as other fundamentals have to be in place to support our own local currency,” said Mr Saburi.
John Mangudya also weighed in on the deception on the issue of adopting the rand saying people should be careful of what they are asking for as they are in a way requesting the Zim dollar.
“What you are asking for is more dangerous than the bond notes because you are asking for the return of the Zim dollar which we are not ready for. The rand issue is simple, we should have joined in 2009 so you cannot seven years down the line start thinking of that route.
By adopting the rand formally, you need to request formally to join as the rand zone has its own criteria and that is why in Zimbabwe we are using a multi-currency system and not even the US dollar only,” said Mangudya.
He said South Africa cannot supply the whole region that is why the SACU members also have their own currencies.
Of the SACU members, only Botswana is currently out of the CMA, having replaced the rand with the pula in 1976.
Bankers and industry recommended the adoption of the South African rand as the major transacting currency to reduce concentration of risk associated with heavy reliance on the United States dollar currently accounting for 95 percent of all transactions.
Botswana has been member of CMA under Zimbabwe’s exact conditions.
But Botswana which Mangudya mentioned, has been a member of the CMA for a whole ten years from its independence. The Botswana central bank reveals that: At independence in 1966, Botswana maintained its membership to the Rand Monetary Area (RMA), a regional monetary union composed of South Africa, Lesotho, Swaziland and the then South West Africa (now Namibia) that used the rand as a common currency; in turn, the rand was pegged to the US dollar.
While South Africa, with a much larger economy, had a decisive influence on the exchange rate policy for the RMA, at the time the arrangement was considered appropriate for Botswana, given its limited resources.
However, following subsequent economic and political developments, including the desire for more independent management of domestic economic policies, the authorities in Botswana became increasingly of the view that the country’s continued participation in the RMA was no longer desirable.
In August, 1976, Botswana formally withdrew from the RMA and introduced its own currency, the Pula, which was pegged to the US dollar at P1 = US$ 1.15.
Mangudya thus shot himself in the foot claiming the opposite.
Meanwhile, Mr Saburi said a second phase of the introduction of the bond notes marketing would begin soon and that is the time features of the new notes would be advertised. “The first phase of the marketing by RBZ was to let people know what the bond notes are.
A second phase will be introduced before the end of the month to advertise the features of the bond notes. This will definitely be done before the notes are brought into circulation,” he said.
He said the bond notes would be introduced into the market before the end of November. The Government has since gazetted the Reserve Bank of Zimbabwe Amendment Bill 2016 to enable the central bank and Finance and Economic and Development Minister to issue bond notes exchangeable at par value with the United States dollar.
Source: Zimeye
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