From the perspective of pure national pride, Zimbabwe ought to have a currency of its own. But the banned historical Zimbabwe dollar denominations had made the country's currency such a joke that even the government itself knew and understood that the notes' value only lay in their appeal as a novelty.
Perhaps the hour has come for that sub-Saharan country to enter into serious debate and weigh the numerous benefits that would accrue to it if it entered the rand monetary area.
Granted, the Zimbabwe dollar was trashed for the economy's inability to support the local currency due to, among other factors, a virtually non-existent productive capacity.
It is noteworthy that the government of national unity now running Zimbabwe immediately introduced the current multi-currency system, which in point of fact amounted to playing catch-up because Zimbabweans had long 'discarded' the local medium of exchange in preference of mainly the United States dollar. Even street vendors were no longer accepting that form of currency as money.
In the southern part of Zimbabwe, the rand dominated commerce, while near Botswana in the west the pula held sway. In northern Zimbabwe the US dollar was predominant, as was the case in the eastern parts of the country. We agree wit
h the many economists and state technocrats who have asserted that returning to the Zim dollar right away would tear the current stabilisation efforts of the new government to smithereens.
It's not rocket science to appreciate that inflation only stabilised in Zimbabwe - plunging to negative rates - only after the multi-currency system was sanctioned as the modus operandi of economics in the country.
Simply stated, Zimbabwe as well as SADC would benefit from the country achieving a dispensation like that in countries tied within the Common Monetary Area (CMA), which links South Africa, Lesotho and Swaziland into a monetary union.
Yes, Namibia has withdrawn from the monetary area due to the introduction of the Namibian dollar in 1993, but the bottom line is that it has not chosen to pursue its own flexible exchange rate policy, with its dollar at par with the rand. The same is true for the lilangeni of Swaziland and Lesotho's Loti. The rand circulates freely in these countries and bringing Zimbabwe into the picture promises benefits akin to those enjoyed by the more than 300 million people in the Eurozone, who have benefited immensely from a single currency, the euro.
Many economists agree that the 16 nation Eurozone - encompassing 330 million people and a gross domestic product of over US$5.6 million - has benefited enormously from adopting a single currency. Commenting on Slovakia's entry into the zone on January 1 this year, Associated Press noted that the decision by this country of 5.4 million people to join the Eurozone and abandon the Slovak koruna appears even wiser now amid the global financial crisis, as other European countries have seen their currencies severely buffeted.
So we urge the Zimbabwean authorities to move boldly to join the Southern African Customs Union because doing so would encourage the kind of greater harmonisation in world monetary affairs that the advanced countries now see as the solution to the currency risk that has been exacerbated in some countries by the global recession.
The case of Iceland is instructive. This tiny country of 300 000 people has been a deplorable victim of the crisis, with its currency plunging while many of its people are stuck with foreign currency debt. House prices collapsed while mortgage repayments doubled, prompting Iceland to seek to join the Eurozone.
China, with the highest number of United States Treasury Bills, is also pushing for a new international financial order, arguing that such a dispensation would lay down a much more substantial groundwork for the sustainable development of the global economy.
Why should SADC be left behind?
