This past Monday, Zimbabwe’s Vice President Joice Mujuru suggested that Zimbabwe, which currently has no currency of its own, should adopt the Chinese Yuan.
Zimbabwe’s Vice President Joice Mujuru on Monday suggested that the southern African country, which currently has no currency of its own, should adopt the Chinese Yuan.
Mujuru said China is now Zimbabwe’s biggest trading partner, with the Asian giant absorbing most of the country’s mineral and agricultural produce and this would “further cement the Look East Policy”.
“Adopting the Chinese Yuan would be a logical step and could help solve some of the country’s liquidity constraints,” Mujuru said.
The southern African country discarded the Zimbabwe dollar last year after hyperinflation estimated at around a trillion percent rendered it worthless.
In its place, the government adopted a range of foreign currencies, including the British Pound Sterling, American Dollar, Euro, Botswana Pula and South African Rand, as legal tender.
All transactions, including salaries for workers, in the country are carried out in foreign currency.
But last week Finance Minister Biti said the multiple currency regime would remain in place until 2012 when ministers hope it would be replaced by a single currency for the Southern Africa Development Community (SADC).
And although senior Zanu-PF officials have welcomed the suggestion made by Mujuru to adopt the Chinese Yuan, economists are not so sure.
Mujuru says this would be a “natural progression and offshoot of the Look East Policy” which has seen China emerge as the country’s biggest trading partner, absorbing most of the agricultural and mineral produce.
“I don’t see why we should not use the Chinese Yuan when most of what we are producing in the country like our tobacco and minerals are ultimately being bought by the Chinese.
She said China was not only a vast market but also the world’s fastest growing economy that needs to be deliberately incorporated into Zimbabwe’s production, manufacturing and marketing matrix.
Critics say President Mugabe, who has led Zimbabwe since independence from Britain in 1980, has destroyed one of Africa’s most promising economies through controversial policies, including the seizure of white-owned commercial farms for redistribution to inexperienced black farmers.
Mugabe, 86, denies the charge and says the economy has been sabotaged by enemies opposed to his nationalist policies.
The only reason that this idea is being floated is the poor economic mismanagement that Zimbabwe has had during the rule of Robert Mugabe. This is nothing but a political move masked in economics, since China is really the only major country backing Mugabe’s corrupt rule.
China, which has been slow in allowing the use of its currency abroad, has to be careful for blow back, especially in the region since there is a negative growing view among Africans that China is just exploiting Africa for its economic gains. If this idea of allowing the use of the Yuan goes through, see a more negative view of China spread in Africa and the world.