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Zimbabwe Urged to Reform to Address Growing Cash Crisis

  • Blessing  Zulu

Zimbabwean central bank governor John Mangudya

Zimbabwean central bank governor John Mangudya

A leading Zimbabwean economist has blamed the worsening cash crisis on inconsistent government policies and urged the government to reform to attract investment.

The cash crunch has forced banks to drastically reduce withdrawal limits and thousands have been queuing outside banks for hours.

A senior advisor to the government and University of Zimbabwe economic lecturer, Dr. Gift Mugano, told VOA Studio 7 that government’s choices are limited.

“We are a dollarized economy. We do not have the option of printing money, so if you do not print money the sources of money under this environment are through exports, remittances from Zimbabweans in the diaspora, foreign direct investment and through aid from institutions such as the IMF and the World Bank.”

But with the economy headed south, Dr. Mugano said Harare is failing to attract external funds.

Dr. Mugano urged Harare to reform and earn the support of the international community.

He praised President Robert Mugabe for seeking to clarify the indigenization law which he says has rattled foreign investors.

Under Zimbabwean law, foreign and white-owned companies with assets of more than $500,000 must cede or sell a 51 percent stake to black nationals or the country’s National Economic Empowerment Board.

Head of the International Monetary Fund’s Staff Monitored Program, Domenica Fanizza, has previously urged Zimbabwe to clarify its indigenization law as a means of unlocking investments in the southern African nation.

Fanizza said the move will help allay investor concerns about the “security of investments and property rights” in Zimbabwe.

According to central bank chief John Mangudya, the long queues at the banks were an indication of the rise in demand for the United States dollar as it had substituted all other currencies such as the rand, the pound and the euro, which were in use at the introduction of the multi-currency system in 2009.

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