Why this economist thinks Zim’s foreign currency ban is a premature move

In a surprising move that has left many in Zimbabwe shocked, Finance Minister Mthuli Ncube announced the banning of foreign currencies for all local transactions, officially ending the country's multiple currency regime. This decision has sparked concerns among economists and citizens alike, with many questioning the timing and potential consequences of such a drastic measure. Economist John Robertson, in an interview with CNBC Africa, expressed his reservations about the ban, labeling it as a premature move that could further destabilize Zimbabwe's already fragile economy. Robertson emphasized the importance of building trust in the currency and highlighted the lack of foreign reserves as a major obstacle to the success of the new policy. He suggested that the government's motivations for the ban may have stemmed from a need to collect unbanked money in the economy, as many individuals refrain from depositing their funds in banks due to concerns about accessibility. However, he noted that the trust deficit in the economy, exacerbated by government interventions in private assets, remains a significant barrier to attracting foreign investment and rebuilding economic stability. Robertson underscored the need for concrete steps to restore investor confidence, such as enshrining property rights in the constitution to guarantee the safety of investments. While he acknowledged that the foreign currency ban might have some short-term impacts, he expressed skepticism about its ability to address the deep-seated economic challenges that have plagued Zimbabwe for decades. Despite the government's hopes that the ban could kickstart economic recovery and restore trust in the local currency, Robertson cautioned that more comprehensive reforms would be necessary to achieve sustainable growth and attract much-needed foreign capital. The uncertainty surrounding the ban and its potential implications have left many Zimbabweans wary of what the future holds for their economically troubled nation. As the country grapples with the fallout of this controversial decision, only time will tell whether the foreign currency ban will be a turning point in Zimbabwe's economic trajectory or a further setback in its quest for stability.