THE Employers’ Confederation of Zimbabwe (Emcoz) has blamed the dual-currency system for the country’s worsening economic situation, while advocating for a mono-currency regime.
Zimbabwe adopted a multi-currency system in 2009, dominated by the United States dollar and South African rand, after hyperinflation officially peaked at 250 million percent in July 2008.
The local currency was reintroduced in February 2019, but the mono-currency system failed in 2020, prompting the government to revive the multi-currency regime.
In an interview with businessdigest, Emcoz president Demos Mbauya attributed the country’s economic hardships and price instability to the dual-currency system, which has weakened the local currency.
“A dual-currency regime, especially in the case of Zimbabwe where a strong currency is partnered with a weak local currency, always causes challenges as the stronger currency drives out the weaker currency,” he said.
“This creates exchange rate problems that then feed into price instability in particular and economic instability in the general sense. There is, therefore, need for the economic policies to be crafted in a way that gravitates towards the use of a mono-currency.
“That should be the ultimate goal if the economy is to achieve competitiveness. Perhaps what needs to happen is to have an agreed roadmap among social partners towards a mono-currency.”
The economic troubles also saw the new currency, the Zimbabwe Gold (ZiG), introduced in April 2024, depreciating by over 43% in September, barely a year after it was introduced.
On the other hand, many companies are paying employees in both US dollars and ZiG, a practice critics argue disrupts the economic system.
“Zimbabwe’s economy is operating under a dual-currency regime, while the collective bargaining regulations are premised on a single currency environment. It is, therefore, necessary to contextualise and adapt the collective bargaining processes to the reality applying on the ground,” he said.
“We need to work on trust issues because tripartite is a three-legged pot that stands firm when all the legs are in standing. So, if there are any issues to do with mistrust, we have to work around them by engagement. It calls for more dialogue.”
The government in 2023 extended the use of the multi-currency system to 2030.
