PDF | This paper examines the economic impact of the inception of the full dollarization 1 in Zimbabwe’s economy after the effects of hyperinflation and an. “Dollarisation” in Zimbabwe and the death of an industry. Rory Pilossof. Uploaded by. Rory Pilossof. This article was downloaded by: [Swets Content. The study investigated the effects of dollarisation on economic growth in Zimbabwe from Q to Q The variables included are gross domestic .

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However, months later, in March ofthe then acting Finance Minister, Patrick Chinamasa announced that the Zimbabwe dollar would be suspended indefinitely. Zimbabwe is essentially operating a multiple currency system and recently the then Acting RBZ Governor, Dr Charity Dliwayo announced the adoption of more currencies in the economy.

Despite this Zimbabwe is viewed as a dollarised economy given that the Government conducts all its business using the United States US dollar and it is the currency that has dollarisztion predominant among the other currencies used in the country. RBZ rules out return of Zimbabwe Dollar.

Solutions and the timeline. Brace for Zimdollar return: The chief advantage to dollarization is that rampant inflation has been dramatically stabilized. This has, in turn, stabilized the overall economy, sustained the buying power of the Zimbabwean people, and allowed the nation as a whole dollarosation experience significant economic growth. Long-term economic planning is easier to do under a stable currency, and the hope is that the dollar will attract foreign investors who were previously reluctant to invest in Zim due to its economic and monetary weaknesses.

On the other hand, there is also a downside to dollarization. By scrapping its own currency, the Zim government can no longer make its own monetary decisions which Dr. Ngwenya, a lecturer at Solusi University describes as seigniorage.

Moreover, Zimbabwe is at a zimbabww disadvantage to its trading partners in that, unlike neighbouring countries such as Zambia or South Africa, it cannot make its goods cheaper in the worldwide market by devaluing its currency.

Other drawbacks to dollarization became apparent during its implementation: Dollarization is a factor of stability. Commerce and services grow rapidly in Zimbabwe, encouraged by dollarization.

The monetary scheme succeeded in that the spending power of Zimbabweans is maintained and is going towards the purchase of goods and services, many of which are imported. The control of inflation was key for these activities. He refers to inflation and the stability of foreign exchange. Dr Ngwenya recognizes that now zmibabwe economy is concentrated in the services, while the contribution of national production is reduced.

Dr Ngwenya recommend increasing productivity and reducing costs of production so that industrial activity does not further decay. Warambwa, the Managing Director of Siabuwa Infrastructure Development Cooperation SIDC adds that, first, the Government must lower the public debt and maintain doplarisation economic policy of fiscal austerity and reduced taxes.

Dr Ngwenya, on the other hand, maintains that the presence of wealth from exports in the economy is generated by high prices of petroleum and the remittances of emigrants. But the predicaments are not only for entrepreneurs. Dollarization corrected problems with electricity, petroleum, telecommunications and interest rates.


We could not continue ignoring washing away inefficiency.


The dollar has been a stability factor. In order to visualize the relation that dollarization has had on political policy, a small exercise of imagination is required. What might have happened with the Zim dollar had rumors of political wars actually existed? It is not difficult to imagine terrible devaluation that would have occurred and zimbabw effect that would have had on the Government.

Dollarization has been, then, an economic phenomenon that has had enormous political meaning. In fact, the decision to adopt that model was a political measurement.

Some analysts also agree that dollarization has created an atmosphere of stability for the public, soothed by their purchase capacity, that neutralizes the calls to mobilization that indigenous and labor leadership often make.

In Zim the dollarization process also has meant a certain change in the behavior of the political class regarding the topic of the budget. Nevertheless, the old custom does not completely yield and the Government has had to emit bonds and to acquire external zimbbawe to fulfill certain political pressures.

For Developmental practioners like us, the political dimension does not stop there. The dollarized country, i maintain, can count on the implicit support of the U. From the emission of Zim Dollar to the emission of debt. Before dollarization, the burning of money had become the solution to the problems of budgetary deficits, to rescue or to improve banking positions or dollarisatjon other hardships.

Those practices had an unhappy ending with dollarization. In the last years there has been a strong increase in the internal debt approved in the budgets, although this has not happened to worry the legislative confines of the inclusive government. A system that has given transparency.


A peculiar phenomenon happened in March of The retailers and companies of Zim went ahead with dollarization. The industries and the businesses also adopted this measurement as dolkarisation.

The dollar had seduced the owners zzimbabwe those businesses. Or real estate that commercialized houses in that currency. Definitively, it was a time of instability for the productive sector. The constant complaint was that the prices of the inputs and capital assets increased daily and that the clients of the industries delayed the payment or let cancel their debts. It was the time in which it was difficult to plan. For example, the Bata company which manufactures footwear, set zimbxbwe of profit of 50 percent, because they feared to lose their investments due to constant devaluations.

How dollarisation has contributed to the Zimbabwean economy – Nehanda Radio

The manager said that before dollarization he did not know with certainty how much he gained. From the following year, when dollarization zimbabqe dictated, the sales to the external markets, have had a recovery process.

The rate of unemployment also fell. The January 31, unemployment was 90 percent of the economically active population PEA. But, as of that date a decreasing tendency is registered so that by 31 of December of the the rate was set at percentages lower. Of course, since dollarization began a sizable number of Zimbabweans have emigrated, many of them of working age; that is to say, within the PEA. I tried calling the immigration department in Harare to give me statistics but unfortunately they kept referring me from office to another.


The Register of Companies does not have data but it registers the eliminated or dissolved ones. Although some of its effects on macroeconomic variables have been successful, others have had a negative impact, for example, in the rate of unemployment. The tendency is that unemployment continues to increase, although emigration has helped to control it.

We cannot successfully circumscribe the analysis only to indicators like inflation and economic growth.

It is necessary to ask if the model of dollarization has contributed the growth, so that poverty is reduced and that less imbalances exist in the distribution of wealth. And it is necessary to ask if the foundations are being laid so that dollarization is sustainable in the medium and long term.

The results do not say that we are headed dollarisattion way. The art of the good immediate economic handling is to be pending of the immediate and most ib evils, to try to be aware of what can happen in the immediate future immediate. At the moment, we continue with zimbahwe problems: These problems should be solved immediately.

The subject is not only to leave dollarization. Dollarization is one of the elements. This restrictive policy, which is over and above what is prudent and beyond fiscal discipline — which is needed but never at such extreme levels — has meant the destruction of the productive apparatus of Zim. In a globalized world, it is important to gather the most important contributions of the economists of all history. It will probably take many years before the effects of dollarization in Zimbabwe can be fully catalogued and understood, but so far the results have been clearly mixed.

On one hand, inflation is under control, the economy is growing and it is easier to do business in the country. On the other hand, the Zimbabwean economy is becoming less goods-oriented and more service-oriented. Jobs are still scare and interest rates are still high. The government continues to heavily rely on borrowing to finance its expenditures.

Dollarization has done nothing to improve this problem but rather worsened it.

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The bottom line is this: Objects found in new MH search zone. Mugabe attacks state media over Gono blackout. How the Zimbabwe dollar was destroyed. Zimbabwe rules out rand adoption. Home March 28 Opinion How dollarisation has contributed to the Zimbabwean economy. On Mar 28, 28, 1. Nov 6, Jul 5, 16, Jun 29, 24, 3. Dec 8, 4, Prev Post Objects found in new MH search zone.

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