Zimbabwe returns to US dollar

Zimbabwe is reverting to using the US dollar as common tender less than a year after the government reintroduced the local currency to assert economic independence.

In the past month local businesses have started accepting USD and civil servants are now demanding to be paid in foreign currency as well.

The government reintroduced the Zimbabwe dollar in June last year, after a decade of multiple currency use in which the South African rand, US dollar, and Chinese yuan were all accepted. 

At the time President Emmerson Mnangagwa’s government said that the local currency would kickstart the economy.

The experiment is now deemed to have failed as some sectors, such as tourism and fuel, have been given government permission to do business in US dollars. 

Civil servants have been pushing to be paid in foreign currency for some time now, with the country’s reserve bank joining the calls in order to pay for critical imports using US dollars. 

Tony Hawkins, professor of economics at the University of Zimbabwe, said of dollarisation “unfortunately, the market decides for the government and not the other way round. So we should stick with the devil we know, which is the dollar”. 

Photo: NMG