MULTI-CURRENCY REGIME The use of multi-currencies in Zimbabwe has led to a relative growth in the country’s mining and agriculture sectors
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Zimbabwe’s mining and agriculture sectors have been on a growth path since the government adopted a multicurrency regime in 2009, which has enabled mining companies to sell their commodities in US dollars, like mining companies in other parts of the world, says global information company IHS senior economist Thea Fourie.
Though growth in the two sectors has been affected by uncertainties around the country’s current indigenisation policy – which stipulates that Zimbabwean indigenes must own 51% of foreign-owned companies – Fourie maintains that mining and agriculture remain the country’s largest contributors to gross domestic product growth and employment.
She states that the upward growth pattern started after the 2009 multicurrency agreement, which allowed mining companies to trade in US dollars or South African rands.
Fourie adds that the continu- ing growth spurt was main-tained, although at a slower rate, after last year’s national election, and that the multicurrency regime has led to the start-up of industries that were struggling to take off in the country when companies were still trading in Zimbabwe dollars.
She points out, however, that the country’s manufacturing sector is still struggling to successfully launch and that Zimbabwe depends entirely on imported goods.
Further, there is a tapering off of new investments, which is a result of policy uncertainty regarding indigenisation, adds Fourie, leaving the financing of the current account deficit problematic and placing Zimbabwe’s foreign reserve holdings – currently below one month of imports of goods and services – under pressure.
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