The Return of the Zimbabwe Dollar – Part 3 – Sustainability

The Return of the Zimbabwe Dollar – Part 3 – Sustainability

In the first part of this discourse we talked about the structure of the Zimbabwean economy and the 3 main pillars on which it rests. In the second part we put forward a plan to allow the Zim-dollar to be revived as a new currency using commodity pricing to guarantee its value. In this, the final part, we look at ways the government can give the new Zim-dollar an opportunity to be floated on the open market.

By free-floating we mean the removal of multi-currency from the Zimbabwean economy and the application of  fiat currency. This is legal tender whose value is backed by the government that issued it. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material that the money is made of. In other words fiat money is based solely on the faith and credit of the economy. Examples of fiat money, are the € £ $,  and many other major world currencies which are not backed by any commodity.


In bringing back the Zim-dollar we must consider the economic framework in which it will operate. As part of the recovery process of bringing back the Zim-dollar we propose that the government bring online a 4th pillar to the economy and also review some of the parastatal bodies and frameworks that are in place. These changes will strengthen the economy as a whole and reduce reliance on the traditional 3 pillars.


Taking each of the revisions in turn:

  1. Introduce a Diaspora Repatriation programme – A government that looks beyond its own borders would try to keep its diaspora engaged and this programme would be a way to encourage their return. To bring their know-how, social and professional connections in order to advance the development of Zimbabwe. Their knowledge will help accelerate the development of the 4th economic pillar. The diaspora returnees would increase the demand for the new Zim-dollar thus strengthening confidence in it.
  2. The 4th economic pillar, new millennial infrastructure and technology – Make technology a key component of the development of the nation. A fully digitised nation is a nation with universal access to global information and is capable of taking advantage of the opportunities presented by that information and by so doing make itself an economic powerhouse. Zimbabweans for the most part are very well educated, and this is the biggest resource at our disposal as a nation.
  3. Revise the Indigenisation and Foreign Investment Frameworks –  these two policies must be reworked to properly complement each other whilst at the same time making Zimbabwe an ideal investment opportunity to the foreign investor. Preferential investment privileges to our “friends” from the East must be removed and existing relationships investigated to ensure compliance with the law of the land.
  4. Revise the Land Redistribution Framework – The most contentious government policy in the last 16years. This piece of legislation cuts across property rights and was applied in a haphazard and often corrupt manner. The government has several options available to them. Firstly however, they must be seen to revisit the farms that were taken, allocated and in most cases subsequently under-utilised or abandoned. Secondly property rights must be re-established. Where the farms are under-utilised those properties must be seized back and:
    • Either offered back to the previous occupant if they are still interested or auctioned off on the open market.
    • Divided into smaller plots of 10 – 50ha and offered to agricultural college graduates. It will be governments responsibility to provide these new farmers with the right level of support for them to create solid functional businesses.
  5. Rename the RBZ to the Central Bank of Zimbabwe (or something like that) – it must be an independent entity and the board membership made up of members from both the financial and non-financial sectors. The antics of the RBZ over the last decade have left this organisation with its reputation and credibility in tatters. For the new Zim-dollar the new central bank will be responsible for the management of the bullion and new currency whilst a new banking regulatory authority would oversee the management of financial institutions in the new financial ecosystem.
  6. Efficiency improvements in dead-wood parastatals like MMCZ, ZMDC and ZTA – The introduction of new millennial technology makes the requirement for whole organisations like these unnecessary and core functionality could be run as a unit within the respective government departments. Alternatively the boards that run these organisations could be chosen from representative members within that organisational sector and thereby be funded by the sector.
  7. Invest heavily in infrastructure and utility projects – Rapid deployment of improvements to existing and new infrastructure would help to open up and decentralise the economy and further distribute the new currency.


Our relationship with the World Bank and International Monetary Fund – A contentious suggestion.

Zimbabwe as at April 2016 had foreign debts of $8.3 billion, of which $1.8 billion was arrears. For a country that somehow managed to lose $15 billion through graft, this debt is not an amount that should cause any real consternation. However, in the process of rebooting the economy, the government must request that the World Bank and IMF suspend Zimbabwe’s repayments and interest accumulation for a period, to allow the economy an opportunity to grow and the new currency to define its place in the global context.

Beyond the World Bank/ IMF repayment suspensions, Zimbabwe should also request that where possible debt forgiveness with limited concessions should also be considered and allowed.

Of more importance, the government of the day must resist the imposition of any kind of World Bank or IMF initiated structural reform programme. It is clear that these programmes are not geared in the interests of Zimbabwe and should be viewed from the perspective of history.

In conclusion, the new Zim-dollar currency in the current global economic downturn should be able to come out of the gates very strongly, given the current PPG price levels. The trick is for the government of the day to keep a cool and steady head and remember that despite the strength of the currency (and the PPG that backs it) it is only a stop-gap measure and not a magic bullet. As has happened with the Tendai Biti USD solution, if the economy is not corrected within a reasonable time, and the necessary development policies aggressively pursued and corruption dealt with with an almost religious zeal, then it will all fall apart. Below is a high level view of how at ThinkZim we envisage the new currency would work in the Zimbabwean economy

Thank you for taking the time to read our thoughts on how Zimbabwe can regain her financial sovereignty. As usual we do not profess to have all the answers but we encourage discourse and dialogue.

These papers are an open discussion and we welcome supporting or opposing views and opinions, as they help us to build better strategies. We are on Facebook and Twitter .