Amidst Zimbabwe’s currency market challenges and a sharp depreciation of the local currency, economist George Nhepera has put forward a unique suggestion to address the situation. Nhepera recommends that the Zimbabwean government consider paying a portion of government workers’ salaries with gold coins. This approach aims to mitigate the dominance of the black market in the country’s currency market while providing stability to workers’ purchasing power.
The approach will help the Zimbabwean economy
Zimbabwe has been grappling with severe economic challenges, including high inflation and a depreciating local currency. The recent plunge of the Zimbabwean currency on the parallel market has triggered substantial price hikes, eroding the value of salaries denominated in the local currency. Some workers have expressed their desire to be paid in U.S. dollars, but the government has cited a scarcity of greenbacks, making dollar payments unsustainable. Consequently, economists like Nhepera are exploring alternative solutions for the Zimbabwean government to consider.
Nhepera suggests utilizing recently launched financial instruments, specifically gold coins, to pay a portion of civil servants’ salaries and benefits. These gold coins were introduced by the Zimbabwean central bank as part of efforts to reduce the demand for U.S. dollars among residents. The gold coins also serve as an alternative retail investment product to preserve value.
The economist argues that promoting the use of these innovative instruments for transactions between individuals, businesses, and government entities would help instill market confidence. With the widespread acceptance of gold coins, Nhepera proposes that the government gradually incorporate them into civil servants’ compensation, allocating approximately 50% of their salaries and benefits to these instruments.
Analysts offer their opinions on the issue
While Nhepera’s suggestion has garnered attention, there are differing opinions within the economic community. Morris Mpala, an economic analyst, opposes the idea of paying government workers with gold coins, as it would undermine the government’s efforts to encourage the use of the local currency. He argues that such a move contradicts the objective of liquidity management and could hinder the broader adoption of the local currency by the populace.
The proposal to pay a portion of government workers’ salaries and benefits with gold coins presents a unique approach to tackling the challenges faced by Zimbabwe’s currency market. George Nhepera, a Zimbabwean economist, argues that this strategy could curtail the dominance of the black market while providing an alternative retail investment product for preserving value. However, the idea has faced criticism, with concerns raised about its potential impact on liquidity management and the government’s efforts to promote the local currency.
As Zimbabwe continues to navigate its economic landscape, it remains to be seen whether the government will adopt such innovative measures or explore alternative solutions. The country’s authorities will need to carefully consider the potential advantages and drawbacks of various approaches to ensure stability, mitigate inflationary pressures, and restore confidence in the local currency.
