Adopting the South African Rand is not a good idea, at least for Zimbabwe

Despite all that the government is saying, Bond notes are effectively the Zim Dollar returned, and they are going to spell trouble for ordinary Zimbabweans. Wether we like it or not, we are headed for 2008 again. Here are the real facts about the 'zombie money'

By Tapiwa Mubonderi

There has been a concerted proposal for the adoption of the South African Rand by Zimbabwe joining the Common Monetary Union (CMU).  It entails that nations have similar tax regimes and free movement of goods.  Net exporters in the CMU pay rebates to net importers.  This is a historical position South Africa achieved from unfair negotiations from the colonial era where it bullied the members to be part of this arrangement.  

For Zimbabwe to just join this state of affairs would be impractical and detrimental towhat is left of local industry. Why would Zimbabwe just hand over control over of its destiny to the groups of people who run the South African financial sector?  The motivation of the local groups who are advocating joining the CMU is that they wish to have access to the goods of South Africa and have no idea or wish to develop their country to a competitive rate.  This move would not unlock any productive capacity, but just make it easier to pretend to be Caucasians.  

What would be probably progressive and an alternative route worth exploring would be tackling the monetary situation from a SADC position.  

Background:

Over the past three years Zimbabwe, Zambia, Mozambique, Angola, DRC, Tanzania and Madagascar have had some currency related problems.  The reason is that we were formed as colonies to enable the Metropole to always prevail over us, our currencies are interpretations of value against the currency of our colonial master that is the British Pound, United States Dollar or Euro.  We would probably derive some benefit from coordinating our monetary policies and pooling our resources and there would be less competition for us to get inflows into the sub region.  

Instead of Zimbabwe or any of the other nations joining CMU individually, why not negotiate as a region.  Change the shareholding of the South African Reserve Bank for it to be in the hands of all the member nations so that monetary policy can be planned with every member’s interests protected.  The setup of the South African Reserve Bank is colonial and it has to be changed to a developmental model.  Why should we surrender our collective fate to people who will not be affected by decisions made?

In terms of the SADC Industrialisation protocol, and to stem labour migration to South Africa.  South Africa would be mandated to replicate its infrastructure throughout the region.  This would be a big source of economic activity and spread it to other jurisdictions.  Zimbabwe has made some strides in terms of provision of social services and we can use then this structure in the region after 5 – 10 years we will be on a higher developmental plane.  Angola has got huge financial resource surpluses and these could be employed in the region and reduce overall dependence on external monetary sources.  This would increase the aggregate market size and unlock economies of scale which would enhance regional competitiveness on a global scale.  When huge infrastructure projects are due in the region it would be easier to pool resources by ourselves and increase the speed in which such things are done.  

We cannot ignore or wish away South Africa’s prowess over the rest of the region in terms of its technological, market and commercial organisation.  It is imperative that we leverage on it such as what China did when it received Hong Kong and simplify the developmental curve of the region.  

Other things which could be done would be the of pooling foreign missions, our objectives are similar and it would be cost effective to develop goal congruence, as we all suffer from limited resources.  

Easier movement of goods and services across borders and this would drastically lower the cost of doing business for the region.  This is a different approach towards dealing with legacy issues and the huge resource reserves we have would be helpful in transforming our capacity in looking after ourselves.  

Is it easy to do?  No but as they say you cannot win a race running in place and its always better to use what is available.