Zimbabwe needs bold reforms, productivity not a new currency - Arthur Mutambara

Zimbabwe has been facing a severe economic crisis that has garnered the attention of many stakeholders, both within the country and across the region. The country's Reserve Bank Governor recently introduced a new currency, known as the Real Time Gross Transfer dollars or 'RTGS dollars', in an attempt to address the currency challenges. To shed light on the dialogue issue, the newly introduced currency, and the role that South Africa and the Southern African Development Community (SADC) should play in resolving the crisis, CNBC Africa had an insightful discussion with Former Zimbabwe Deputy Prime Minister Professor Arthur Mutambara. Mutambara emphasized the need for Zimbabweans to come together in the national interest and prioritize the economy over prolonged political disagreements. One of the key points raised by Mutambara was the importance of inclusive dialogue involving the opposition, civic society, and the business community, in addition to the ruling party, to work on reforms that would address the country's economic challenges. He highlighted the necessity of focusing on enhancing productivity before introducing a new currency, as productivity is essential for the success of any monetary policy. Mutambara criticized the recent introduction of a new currency in Zimbabwe, stating that it devalued people's savings and resulted in massive destruction of value. He stressed the importance of confidence in the financial system, reserves to support the currency, fiscal consolidation, and productivity as prerequisites for any currency reforms. Regarding the suggestion of Zimbabwe joining the Rand Monetary Union, Mutambara expressed support for the idea, stating that the Rand is a real currency, which could offer a more stable alternative to the current situation. However, he noted that challenges such as the predominance of US dollar-denominated products in Zimbabwe would need to be addressed for the transition to be successful. Despite these challenges, Mutambara viewed joining the Rand Monetary Union as a potentially better solution than the current currency regime. In terms of regional cooperation, Mutambara emphasized the crucial role that South Africa should play in resolving Zimbabwe's crisis. He argued that Zimbabwe's stability and attractiveness are essential for South Africa's competitiveness and prosperity in the region. In addition to South Africa, Mutambara highlighted the significance of SADC in supporting Zimbabwe and other member states to overcome their economic challenges. He called for a shift towards regional integration and cooperation, emphasizing that the prosperity of African countries is interconnected and reliant on collaborative efforts within regional blocs. In conclusion, the discussion with Professor Mutambara highlighted the urgent need for bold reforms, inclusive dialogue, and productivity-driven strategies to address Zimbabwe's economic crisis. The call for regional cooperation, particularly from South Africa and SADC, underscores the interconnectedness of African economies and the importance of collective action in overcoming challenges. As Zimbabwe continues to navigate its economic challenges, the emphasis on dialogue and cooperation at both national and regional levels remains crucial for charting a path towards sustainable economic development and prosperity for the country and the broader African continent.