Zimbabwe has outlawed all foreign currencies, including the rand and the US dollar. Picture: REUTERS
Zimbabwe has outlawed all foreign currencies, including the rand and the US dollar. Picture: REUTERS

Zimbabwean President Emmerson Mnangagwa has effectively outlawed the use of a multicurrency payment system, which is seen as an attempt to stop the country's ever-rising black-market exchange rate.

The surprise move comes a few days after Mnangagwa told journalists that the country would have a new currency by March 2020.

In a government gazette published on Monday, the president said: “The British pound, US dollar, SA rand, Botswana pula and any other foreign currency whatsoever shall no longer be legal tender alongside the Zimbabwe dollar in any transaction in Zimbabwe.”

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Sources in the government said the president’s hand was forced by “cartels” that control the means of production in the country, as well as imports and exports.

“Floating the bond note/RTGS Dollar, giving it an official bank exchange rate against major currencies, didn’t help. Big corporations still went on to trade on the black market, pushing the rate up,” a government source said 

The dollar was at RTGS$12 on Monday, having traded at RTGS$8 on Friday.

News of the surprise announcement has met mixed feelings on the streets of Harare and Bulawayo. Illegal foreign currency dealers, popularly known as osiphatheleni, said they would not go out of business because the local currency would continue losing value.

“No one wants the Zimbabwean dollar. Businesses linked to the government are the ones that come to us. There’s a lot of foreign currency outside the banking sector and more is coming because such sudden decisions will force people to withdraw their savings," one forex dealer said.

"The government will waste resources monitoring us, instead of fixing the economy. Dealers have to be clever now: only trade with people in one’s client base or someone referred by a known customer.” 

Illegally dealing in foreign currency carries a sentence of up to 10 years in prison.

Some business owners said the sudden change would result in more goods disappearing from shelves.

“Business has been relatively decent. With people paying in forex, it meant that I could restock and even make a profit and stay in business. But as soon as I don’t get that forex, I will just have to take my goods off the shelves. About 80% of my goods are imports; the local stuff only makes up 20%,” said a supermarket owner.

Some government workers said if the local currency were to be stable, it would be good for them, but they had doubts that things were being done the right way.