I have on many occasions, in the recent past, strongly and persistently advocated the immediate reintroduction into circulation of Zimbabwean dollar coins (but not Zim dollar notes at this stage), for the primary and main purpose of change, in place of rudimental instruments such as credit notes, tokens and/or even sweets that we had been forced to contend with under the circumstances.
These coins would have been in this initial period backed, supported and secured against, but not bonded by, our gold reserves at Fidelity Printers and Refiners. I suggested also that the coins, much like the bond coins that were later introduced, should be at par with United States cents.
I have made the point that the South African rand coin for reason of exchange rate disymmetry was always going to cause inconvenience and confusion to the transacting public and institutions.
In addition, I made the point that both the capacity and material needed to mint more coins have always existed locally – in Bulawayo specifically – to meet any expected and resultant surge in demand as was certain to happen.
There was, therefore, no need to rely on foreign outsourcing of this function as was the case with Bond coins.
There have been some recent events, developments and dynamics in our economy, which have all made the recirculation of Zim dollar coins not only imperative, but also the most logical, progressive, reasonable and wise thing to do.
First, there is the now all too apparent and obvious acceptance and preference for Bond coins by the general public compared to Rand coins. This acceptance was precipitated in the main by the substantial fall in Rand value, compounded by inconvenience and confusion arising from cross exchange rates primarily.
This, therefore, calls for the gradual and simultaneous disuse of all such foreign coins.
Second, there is also a surge in gold deliveries to Fidelity Printers and Refiners since the beginning of 2015, with delivery and refinery estimates at 5,2 tonnes by April 31, 2015.
The annual target of 20 tonnes now appears feasible. What is more, there is US$100 million sourced from our all-weather friend, China, and guaranteed by our Government. This money will benefit small scale miners whose impact was largely not felt in the first half of 2015, but will be felt mostly in the second half and thereafter.
A further bonus in gold deliveries could be realised if gold leakages through smuggling via South Africa and use of the Rand Refinery in that country were plugged and tighter remedial measures introduced.
Zimbabwe, therefore, has the requisite security and back up in gold reserves in abundance. It should not be overlooked that once Zim dollar coins are brought back into circulation, a significant amount will also start flowing from homes and company premises into the financial system.
For starters, it may be prudent to first reintroduce the Z$1 and 50c coins until product and service prices plummet as they are sure and expected to, whereafter, we can then introduce smaller denominations, and this should be done simultaneously with the withdrawal of all small foreign coin denominations, with the exception of small Bond coin and US cent denominations.
In these positive circumstances, it is my humble submission once again that Zim dollar coins should be brought back into circulation immediately, drawn in the first instance from Reserve Bank of Zimbabwe vaults in Harare and Bulawayo where they have been lying idle for many years.
Going forward, the Bond coins that are yet to be minted offshore or are not already in circulation should be used to settle urgent and desperate aspects of our domestic debt.
Such aspects of the domestic debt include, but not limited to:
(a) Settlement of Zim dollar bank balances; and
(b) Compensation on Zim dollar-denominated Treasury Bills and other prescribed assets and monetary instruments, which the State defaulted on, mostly owed to pension funds and/or insurance companies.
These measures, in my view, will also have a positive and immediate impact of ameliorating the current liquidity crunch in no small measure, among other benefits.
There is also the added positive impact on national demand, which is an important macro-economic fundamental at its lowest ebb now, with its attendant and obvious disastrous effect on industry and commerce, and the economy in general.
Legislative measures that may be necessitated by the demonitisation of the Zim dollar are not a major issue, impediment or constraint, as these can easily be effected and taken care of given that the ruling Zanu-PF already enjoys more than two-thirds parliamentary majority.
In conclusion, the eventual, inevitable and desirable come-back of Zim dollar notes (or by whatever name such local currency may come back under) shall gain impetus and be hastened, but should be made on the basis and back of achievement of macro-economic fundamentals as recommended and outlined by the monetary authorities, and approved by Government.
We remain hopeful also that this will happen when the fears and apparent apprehensions often expressed in some circles about the return of the Zim dollar (though unjustified in my view) will have long disappeared.
◆ Edmore AM Ndudzo was the lead consultant in the compilation of the Public Finance Management Act of 2010.