Rejection of Rand
Ignorance or genuine fear
T
Terence Zimwara
he wholesale rejection of
the South African rand by
Zimbabwean consumers and
businesses has come as a
surprise to many.
Late in 2014, when the Reserve Bank
of Zimbabwe (RBZ) introduced what are
known as bond coins, there was swift
resistance with accusations that the
central bank wanted to reintroduce the
Zimdollar via the ‘backdoor’.
Now almost a year later, the same
transacting public has now rejected the
rand in favour of the once maligned bond
coins, because the latter are supposedly
indexed to the US dollar.
The South African rand has continued
to break records in as far as depreciating
against the US dollar is concerned.
The depreciation means a country like
Zimbabwe, which uses both currencies,
must constantly adjust prices to reflect
exchange rate movements.
With the US dollar as the base currency,
most businesses use this currency to set
prices and prices in other currencies are
set in relation to the rate of exchange.
Page 34
The rand has markedly depreciated
against the dollars resulting in rand prices
rising. The rand rejection is perhaps
because Zimbabweans are not eager to do
calculations each time they want to trade
using this currency.
However, that reason appears moot
when one realises that even quarter
dollars have fallen victim to this
mayhem. Recently, I was stunned when a
commuter bus operator refused to accept
the American coins simply because they
were being rejected elsewhere.
In fact, no one person appears
knowledgeable as to why Zimbabweans
are refusing to accept such coins.
Interestingly, it seems everyone is equally
perturbed that coins and indeed bank
notes, which are still legal tender in their
host countries, get completely rejected
by a country that does not have its own
currency.
However, it should be instructive
to recall the episodes just before
the
Zimbabwean
currency
finally
disappeared. Many people were not
aware of what was going to happen until
they had entire life savings held in bank
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accounts erased.
At the stroke of a pen, banks announced
they had nothing in their coffers and
that Zimdollar balances had gone with
the now defunct currency. Indeed many
people lost out and that really knocked
the confidence people still had in the
banking system and in our currency in
particular.
Since then, it has been difficult to
encourage the same victims to return
to the banking system. So fragile is the
confidence right now such that any
mis-statements about the return of the
Zimdollar often results panic and frenzied
withdrawals.
Although the South Africa rand is not
issued by the RBZ, Zimbabweans seem
to be associating its depreciation with
similar depreciation patterns of the
Zimbabwean dollar.
Zimbabweans seem to be ignorant of
the fact that the rand is still valuable just
across the South Africa border although
the lingering memories of lost savings
could be a factor as well. TP
December 2015