Staff Reporter

Government has issued a stern warning against the dollarisation of the economy, cautioning that such a move could lead to significant de-industrialisation and threaten the country’s long-term economic stability.

This was said by Deputy Minister of Finance, Economic Development and Investment Promotion, David Mnangagwa, during a parliamentary session last Wednesday.

In his response to a question during the Question-and-Answer segment, Deputy Minister Mnangagwa argued that while fully transitioning to the US dollar might appear to be a quick solution to the nation’s current economic challenges, it carries severe risks.

"Dollarisation may seem like a simple fix, but it is fraught with peril for our nation's economic future. It could de-industrialise Zimbabwe, turning us into a mere 'supermarket' for foreign products without fostering local industry," Deputy Minister Mnangagwa warned.

The Deputy Minister emphasised Government’s commitment to maintaining a multi-currency system, which is supported by a range of monetary and fiscal policies designed to strengthen the Zimbabwe Gold (ZiG) currency.

Deputy Minister Mnangagwa outlined Government’s strategy of gradually moving away from reliance on the US dollar, aiming to create an environment where the ZiG can stabilise and eventually thrive as a standalone currency.

"We aim to gradually move away from dollarisation, fostering an environment where the ZiG can stabilise and eventually thrive independent of the US dollar," he explained.

The debate over dollarisation comes amid an economically challenging period for Zimbabwe, characterised by currency volatility and inflationary pressures.

Despite these difficulties, Deputy Minister Mnangagwa made it clear that retaining the US dollar as the sole currency would only offer short-term relief while causing long-term damage to the country’s economic prospects.

"Our children's future job prospects and our industrial sector's growth would be at stake," he said, emphasising the importance of preserving and promoting local industries.

The Deputy Minister also dismissed calls from certain business sectors advocating for discounts on transactions made in foreign currencies, arguing that such measures would undermine ongoing efforts to stabilise the local currency.

"As we continue with these reforms, it is imperative that everyone plays their part in stabilising and growing our economy. While the journey may be fraught with challenges, our collective effort will enable us to achieve a more prosperous and stable economic environment," said Mnangagwa.

Meanwhile, Government is implementing a series of strategies aimed at stabilising the Zimbabwe Gold currency and curbing the influence of currency manipulators.

These measures include tighter regulation of money-changing activities, enhanced monitoring of financial transactions, and stricter enforcement of existing economic policies.

Stakeholder engagements are ongoing to ensure that all economic actors are aligned with the national goal of economic stabilisation.