Saturday, April 20, 2019

Eliminate Dollar arbitrage, adopt Rand: Masiyiwa

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Two weeks ago Emmerson Mnangagwa made a public pronouncement that his local currency is worthless. He said this as he praised US President Donald Trump for a donation of 2.5 million dollars to cyclone victims. Mnangagwa was speakimg at Ngangu, Chimanimani when he became the first head of state in Zim history to denounce his own currency.
Mnangagwa was attacked by journalists, analysts and the general public and this time, Econet boss, Strive Masiyiwa has said Zimbabwe must adopt the South African Rand.
“Let me put the proverbial cat among the pigeons,” said Masiyiwa.
He continued writing, “a loaf of bread in South Africa costs R9.50. It costs R30 in Zimbabwe. 3x!!! Eighty percent of imported goods in Zimbabwe come from South Africa. It’s not uncommon to find those same goods costing anything above three times the cost.
“The people who pay for a lot of goods are Zimbabweans living in South Africa, through their remittances. The cost structure – labour and goods – in Zimbabwe is distorted by the arbitrage of the United States dollar as a currency of settlement for rand imports.”
Writing on Facebook, Masiyiwa said it only makes sense for every business in Zimbabwe to quote their customers for goods and services in the SA rand. “It would go some way to eliminating the dollar arbitrage.”
“This is not the same thing as joining a rand monetary area, or customs union, which is a much more complex process. This one can be done overnight, and even voluntarily,” he said.