MINISTRY of Industry and Commerce permanent secretary Thomas Wushe this week said the decision to introduce a "structured currency" was reached following widespread consultations within government.
Finance, Economic Development and Investment Promotion minister Mthuli Ncube announced on Monday plans to create a ‘structured currency’.
He said this at a press conference held ahead of the United Nations Economic Commission for Africa Conference of Ministers slated for end of February.
The currency would involve linking a commodity to the Zimbabwe dollar and creating a currency board to monitor it, something which renowned American economist Steve Hanke has in the past urged the government to do.
Creating this structured currency is in response to the rapid depreciation of the local currency that has so far lost over 40% of its value against the greenback this year, resulting in the massive erosion of consumer and business income.
“For us, we are the Ministry of Industry and Commerce, and we take a whole government approach. So, there are aspects within the ministry that work on those areas. We have what we call the division of labour between our own ministries,” Wushe said in an interview with businessdigest.
“We bring our own responsibility. Another ministry brings its own. Together we create a burgeoning environment that will make Zimbabwe produce for itself.
“The government works among thematic working groups where we structure interchangeability of ideas, and we are always working as a team. All we realise is that some things may need to be addressed at a later stage and this can be addressed now.”
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He said as government, officials were very clear about where they all wanted to go.
“We will face challenges, but definitely ‘Vision 2030’ will be achieved no matter what. We will overcome any perceived problems that you may be seeing now,” Wushe said.
“I can’t really discuss the operations of the government. All I can say to you is that it is one government.”
Vision 2030 is a strategy that was set by President Emmerson Mnangagwa, which aims to grow the economy into an upper middle-income one by 2030.
However, rapid depreciation of the currency has significantly slowed that growth.
Upon its reintroduction in June 2019, the Zimbabwe dollar traded at US$1:ZW$6,32 at official forex market and US$1:ZW$13,5 on the parallel market.
Now, however, due to a lack of market confidence, subdued economic growth and foreign currency shortages, the official and parallel market rates have deteriorated to US$1:ZW$11 906,91 and US$1:ZW$18 000, respectively. These were the prevailing rates on Tuesday.
“Zimbabwe's Finance minister Mthuli Ncube is considering the adoption of a currency board. Since we don't have any details, we don't know whether Ncube is playing games, or if he is for real,”
Hanke said on the microblogging website X on Monday. “The idea of a currency board for Zim was first established in my book Zimbabwe: Hyperinflation to Growth, published in 2008 in Harare.”
One of the reasons why the currency is not performing well is that it lacks sufficient foreign currency, which could be derived from an increase in production.
“The challenge behind this, however, is that formal businesses lack enough foreign currency liquidity to scale up production as there is poor circulation and banks refusing to lend forex,” he said.
