Chief Executive Officer at United Refineries Limited, Busisa Moyo has outlines the merits of dollarizing Zimbabwe’s economy and the other key fundamentals that need to be in place for the economy to function. He writes:
I am hearing colleagues talking about “re-dollarization”. There are two types of dollarisation. We have been trading in RTGS since 2014. Sales on critical commodities and retail are STILL circa ~85% RTGS & ~15% USD. Surging inflation and price is an issue but we are in RTGS.
Efficient functional markets are key to bringing stability. Markets run on confidence and consistency. People’s memories are long when it comes to the loss of value and economic trauma, it’s a natural and normal human response.
Use of actual USD for transacting is one format. The other is essentially pricing and thinking in USD for all intents and purposes but using local currency. There are not enough dollars at present to serve for a transaction (medium of exchange) even those dirty $1 notes have gone.
We are in a wild country because we don’t have sufficient market references to determine a commercial rate for the RTGS. The current street rates are based on unknown persons and unknown volumes. The OMIR is for investment arbitrage and means nothing to a retailer in Sandawana.
Hard currency is good for investors/savers who want stability and options (fungibility). However, traders commodities need other additional features of money in order to engage in commercial activity; portability, divisibility, universality (acceptability), predictability.