The Sunday Mail
Hon Patrick Chinamasa
Through my January 2009 National Budget Statement, I introduced the multi-currency regime which included the US dollar, euro, Japanese yen, British pound, South African rand and other currencies.
And these currencies became legal tender in Zimbabwe, meaning one is able to shop in our retail outlets without it being illegal.
Minister Chinamasa
The US dollar has dominated due to its global accessibility, acceptability and tradability. We never established a rule that one should solely use the US dollar; no.
For some time, the South African rand was also competitive, especially in the southern region. The Mozambican metical was accepted in Mutare, so was the Botswana pula in Plumtree.
All we did was introduce these currencies in the basket.
As to their accessibility by customers, it was really up to the people to decide what best suited them.
It also depends on trade volume.
When a country collects a particular currency, you can only leave that currency in that country where you do business. If it’s the Japanese yen, for example, you need to buy goods in Japan; if it is the euro, you need to do trade in Europe.
In 2014, we then introduced the renminbi – the Chinese yuan – to this basket of currencies.
This was official, and its usage will be a function of trade between China and Zimbabwe, and acceptability with customers in Zimbabwe.
Reserve Bank of Zimbabwe Governor Dr John Mangudya has opened negotiations with the People’s Bank of China to see whether we can enhance the RMB’s use here.
The discussions are underway as we speak.
It will all happen in the context of the RMB being part of our basket of currencies, and also that it is legal tender in Zimbabwe after our 2014 pronouncement.
The decision we are taking has also been inspired by international developments where the IMF has adopted the Chinese currency in its basket of reserve currencies.
Only four other currencies are in that basket: the US dollar, British pound, euro and Japanese yen.
This means the Yuan is now international currency; it has been accepted globally. It is now generally among the top five currencies of the world, so to speak.
So, there is no reason why we should not increase efforts to promote its use in Zimbabwe.
It is something we can leverage on, given that our trade with China is booming, with our relations growing from strength to strength.
There cannot be a better time to do this. It is now about looking at the modalities, specific sectors and how it can be done.
I give an example here: If we want to promote Chinese tourist arrivals, they are free to come as we can make that facility available and they are free to transact in Chinese currency.
What we and the People’s Bank of China need to do after collecting the RMB locally is set up a system of clearance that enables us to use the currency.
We can, in turn, use that pool of money to honour our obligations to China. Remember, we are still on an exercise.
They said they are cancelling our debts that are maturing this year, and we are in the process of finalising the debt instruments and calculating the debts.
Right now, preliminarily, we are coming up with the figure of US$40 million.
We are doing this exercise; it’s not yet complete as we need to agree on the figures.
We have signed a co-operation agreement, which is a framework, meaning it does not spell out cooperation details.
The RBZ and the People’s Bank of China will work out details of what has been agreed and subsequent implementation.
The outcome of that dialogue is what remains.
So, we can also benefit from the infrastructure projects we are undertaking by paying using the RMB.
But that will only happen if we have the RMB coming to Zimbabwe, and our economic sectors accept this currency.
In my opinion, it is achievable.
I have given the example of tourism; imagine if this were extended to other sectors. There is need for continued discussion to identify specific sectors.
These are the discussions the RBZ governor is having with his counterparts from the People’s Bank of China.
What is clear, though, is that this will be a win-win situation for both of us, Zimbabwe and China.
It will also go a long way in improving the liquidity situation, and trade between our two countries will be made easier. This move will be of great benefit to our economy. People just need to look at how easy it is to trade with South Africa because people can easily access the Rand.
In the same manner, we need to have easy access to the RMB because China is our second biggest trade partner after South Africa.
The (interest) rates at which we are going to receive Chinese capital are very low, for example, Hwange 1 is about two percent.
Most, if not all infrastructure projects in Zimbabwe, except, perhaps, the Great Dyke Platinum Project with the Russians in Darwendale, are being funded by the Chinese.
We also have many Chinese nationals here who will find a great deal of convenience in using their currency.
◆ Honourable Patrick Chinamasa is the Minister of Finance and Economic Development. He was speaking to The Sunday Mail Chief Reporter Kuda Bwititi
