(Bloomberg) -- The Confederation of Zimbabwe Industries, the country's largest business lobby group, said the government should adopt the South African rand as its “reference currency” instead of the dollar.
While the country's unique “multi-currency system” should be maintained, all financial reporting should be done in rand, the confederation said in a statement handed to reporters in the capital, Harare, on Nov. 4 before national budget negotiations this week. South Africa is Zimbabwe's neighbor and biggest trading partner.
“We suggest the minister of finance starts presenting his budget in rand instead of dollars,” the group said, citing proposals it will present to the finance ministry.
Zimbabwe abandoned its own currency in 2009 to end hyperinflation and uses mainly dollars, with rands, euros, pounds and several other currencies also accepted as legal tender. A shortage of foreign exchange after a collapse in exports has caused a liquidity crisis that's forced the government to delay worker payments. Last week, President Robert Mugabe authorized the introduction of dollar-backed bond notes to ease a shortage of the U.S. currency.
“With the acute liquidity crisis of cash dollars, the rand is becoming more attractive for business,” Alex Vines, head of the Africa Program at London-based Chatham House research group, said in an interview in Johannesburg on Nov. 4. “Business has already been asking for it and with the increased externalization of dollars, this will grow.”
Finance Minister Patrick Chinamasa will present the country's 2017 budget in late November or early December, Finance Secretary Willard Manungo said last week.
In an interview with Zimbabwe's state-controlled Sunday Mail, South African Trade and Industry Minister Rob Davies said his country is unlikely to lobby for Zimbabwe to join a rand monetary union.
“It's not anything that we, particularly as the government of South Africa, are pushing for,” Davies said. “It's a sovereign decision for the government of Zimbabwe.”
--With assistance from Colin McClelland To contact the reporters on this story: Godfrey Marawanyika in Harare at gmarawanyika@bloomberg.net, Brian Latham in Harare at blatham@bloomberg.net. To contact the editors responsible for this story: Karl Maier at kmaier2@bloomberg.net, John Viljoen, Robert Brand
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