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President Mnangagwa says there is no going back to dollarisation

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Hopes have faded that President Emmerson Mnangagwa – who took over from late President Robert Mugabe after a coup two years ago – can quickly revive the economy, which has left millions struggling and facing hunger [File: Philimon Bulawayo/Reuters]

Zimbabwe’s President Emmerson Mnangagwa vowed on Friday not to revert to using the United States dollar despite the country’s new local currency plunging against the greenback since its introduction this year, fuelling inflation and economic hardship.

In 2009, Zimbabwe “dollarised” the economy by allowing the US dollar and other foreign currencies to be used as legal tender in the country after hyperinflation decimated the value of Zimbabwe’s sovereign currency.

The government ended dollarisation in June after it outlawed the use of foreign currencies in local transactions in a bid to defend a fledgling interim sovereign currency. This paved the way for the new Zimbabwean dollar, which formally entered circulation last month.

But economists say the decision to end dollarisation actually drove hyperinflation, eroding wages and savings.

Economists, businesses and the opposition have accused the government of rushing to reintroduce the Zimbabwean dollar without the backing of foreign currency reserves. They say the government should allow the use of US dollar and other currencies to tame soaring prices.

“No progressive nation can progress without its own currency. However, we have so many among our people who fight this decision. We will not revert back to a basket of currencies, never, never, never,” Mnangagwa told ZANU-PF members at an annual party conference outside the capital.

There is little foreign investment in the troubled Southern African nation, which is in the throes of its worst economic crisis in a decade. Export earnings and remittances from the diaspora have fallen. The resulting shortage of US dollars to pay for imports has led to fuel and electricity shortages, hobbling businesses including in the important mining sector.

Although it is now illegal to use foreign currency to buy local goods, many people still take the risk and some businesses charge in both US and Zimbabwe dollars.

Hopes have faded that Mnangagwa – who took over from late President Robert Mugabe after a coup two years ago – can quickly revive the economy, which has left millions struggling and facing hunger.

Mnangagwa said his government is pursuing difficult economic reforms, including measures to reduce the budget deficit to single digits.

He said violent protests in January that erupted in the wake of a fuel price hike – and calls by labour unions for strikes to boost paychecks in line with inflation – were both part of an anti-government plot to derail economic reforms and undermine his rule.

“I want to commend the people of Zimbabwe for rejecting the machinations by those with unbridled political ambitions who are even prepared to use violence, divisions and disunity and violent demonstrations to acquire power,” Mnangagwa said.

SOURCE: REUTERS NEWS AGENCY

Economy

1996 Zimbabwe: Shared National Vision to be Achieved by Year 2020

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Zimbabwe. National Economic Planning Commission (NEPC) – Zimbabwe Vision 2020 and Long-term Development Strategies: Final Working Draft : Submitted 26 March 1997 : Objective to Identify National Aspirations, Come Up with a Shared National Vision and Development Strategies for Zimbabwe to be Achieved by Year 2020
National long term perspective studies

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Economy

UN needs R2.8bn in support for hunger-stricken Zimbabwe, as bread costs rise 20-fold in 6 months

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FIN24 -The United Nations has called for increased international support for Zimbabwe as eight million people – or roughly half the population – face hunger.

The World Food Programme is planning to double the number of Zimbabweans that it assists to 4.1 million, but says it will require over $200m (R2.8bn at current exchange rates) to meet its needs in the first half of 2020 alone. 

“As things stand, we will run out of food by end of February, coinciding with the peak of the hunger season – when needs are at their highest,” said Niels Balzer, WFP’s Deputy Country Director in Zimbabwe, in a statement. 

“Firm pledges are urgently needed as it can take up to three months for funding commitments to become food on people’s tables.” 

To meet the increasing hunger needs of the population, the WFP was forced to launch an emergency ‘lean season’ assistance programme in August, months earlier than expected. The country is likely to face another below average harvest in 2020 following poor rainfall. 

Hilal Elver, the UN Special Rapporteur on the right to food, visited Zimbabwe in November where she witnessed how women and children are bearing the brunt of the crisis. 

“In a desperate effort to find alternative means of livelihood, some women and children are resorting to coping mechanisms that violate their most fundamental human rights and freedoms. As a result, school drop-outs, early marriage, domestic violence, prostitution and sexual exploitation are on the rise throughout Zimbabwe,” she said in a statement following her 11-day mission. 

The hunger crisis comes as Zimbabwe is facing its worst economic downturn in a decade. Runaway inflation has put the price of basic goods beyond the reach of the average citizen. The WFP reported that bread is now 20 times more expensive than it was six months ago. Rotational power cuts, meanwhile, have been caused by low water levels at Kariba Dam’s hydroelectric power station.

Difficulties in scaling up 

The UN agency also faces challenges in scaling-up its operations in Zimbabwe as the shortage of local currency coupled with rapid inflation requires switching from cash-based assistance to food distributions. 

And with other southern African countries also gripped by drought, food stocks must be sourced outside the continent and then shipped to neighbouring South Africa or Mozambique before being transported to landlocked Zimbabwe. 

WFP will require nearly 200 000 metric tons of food to assist the 4.1 million Zimbabweans it plans to target.  Balzer underlined why financial support from the international community is so desperately needed. 

“While WFP now has the staff, partners, trucking and logistics capacity in place for a major surge in Zimbabwe, it is essential that we receive the funding to be able to fully deliver,” he said. “The lives of so many depend on this.” 

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