Published: 16 hours ago

The Confederation of Zimbabwe Industries (CZI) has urged the government to back its de-dollarisation strategy with binding legal instruments, warning that without a formal framework, business confidence and investment could collapse during the transition.

In a submission to the Ministry of Industry and Commerce dated August 25, 2025, the country's main industrial lobby said the Reserve Bank of Zimbabwe (RBZ) must move beyond verbal assurances and enshrine its commitments into law.

"There is an urgent need for the Reserve Bank to formalise and legalise its proclamations on what will not happen due to de-dollarisation to strengthen business confidence," CZI said in its submission, which formed part of its contribution to the Zimbabwe National Industrial Development Policy II (2026–2030).

The industry body said key commitments needing legal protection included safeguarding US dollar-denominated obligations, preserving foreign currency balances, and guaranteeing monetary stability. Clear legal backing, it argued, would provide certainty to both industry and investors.

Zimbabwe has struggled with currency instability for more than a decade. Hyperinflation in 2008 wiped out pensions and savings worth over US$5.1 billion, forcing the country to adopt a multicurrency system in 2009. Although the RBZ introduced the Zimbabwe Gold (ZiG) currency last year, around 60% of all transactions remain in US dollars.

The CZI cautioned that mishandling the transition could trigger a repeat of the 2008 collapse, when speculation about the local currency sparked a freeze in bank lending and stalled investment.

Exporters remain frustrated by the RBZ's foreign currency retention policy, which requires them to surrender 30% of hard-currency earnings in exchange for ZiG. CZI said the policy had become "punitive," citing a drop in manufactured exports to US$90.7 million in the first half of 2025 from US$119.9 million in the same period last year.

The lobby called for a new funding model to support exporters in the manufacturing sector, similar to that already used in horticulture. "Strategic policy interventions to unlock financing for manufacturing exporters will enhance competitiveness, deepen regional integration, and strengthen Zimbabwe's position in global value chains," the group said.

Economists say Zimbabwe's reliance on the US dollar remains deep-rooted. As of June 2025, foreign currency transferable deposits made up 72.4% of the nation's broad money supply of ZiG97.34 billion. Analysts warn that without a credible plan to restore trust in the local unit, forcing a shift to exclusive use of ZiG risks triggering another recession.

The CZI also noted that Zimbabwe remains one of the most expensive countries in the region for doing business, citing high taxes, inefficient regulations, and heavy state involvement in the economy. It suggested that Argentina's reform agenda under President Javier Milei—focused on deregulation to stimulate growth—could provide lessons for Zimbabwe.

Beyond currency policy, the lobby pressed for a comprehensive review of the country's value chains to ensure that economic activities genuinely add value. It recommended strengthening high-value segments and reserving certain subsectors for Zimbabwean entrepreneurs to boost local participation.

While latest trade figures show a sharp narrowing of the July trade deficit by 94.5% to US$8.7 million, with exports rising 21.3% to US$877.5 million, CZI warned that gains may not last unless deeper reforms are implemented to diversify the economy.

"Zimbabwe's over-reliance on a handful of commodities such as gold, nickel and tobacco leaves the economy vulnerable," the lobby said. "A stable currency and a diversified industrial base are essential to achieve sustainable growth by 2030."
- Standard

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