The Zimbabwe Chamber of SMEs has hailed the Second Republic for introducing the ZiG structured currency, saying the landmark move is a tonic for accelerated economic growth as it will arrest inflationary pressures, restore savings and stimulate investment, as the nation moves towards achieving Vision 2030.
In his presentation before the Parliamentary Portfolio Committee on Budget, Finance and Investment Promotion, Zimbabwe Chamber of SMEs secretary general Mr Venancio Kurauone, who was represented by Mr Last Matema, a director of Alinial Chartered Accountants, yesterday praised the Government for walking the talk on the quest to transform Zimbabwe into an upper middle income economy as evidenced by the introduction of the gold-backed ZiG currency.
Mr Kurauone said the SMEs sector was optimistic the ZiG would add impetus to the growth of the sector which is eyeing to have formalised operations for over five million participants by 2030.
"The potential of the ZiG to fight inflation, restores savings and increases investor trust in the Zimbabwean economy.
"It removes uncertainties on currency issues all which are anchored on the quest to make our currency the best in the region, It is the reason why the Zimbabwe Chamber of SMEs and its broader membership, who constitute more than 75 percent of the businesses in Zimbabwe while accounting for more than US$8 billion in the country's GDP, supports the ZiG," he said.
The chamber also presented a cocktail of recommendations to ensure ZiG's continued stability, urging authorities to ensure fiscal discipline, transparency and prudent interest rate management on top of keeping the nation informed regularly on the status of the new currency.
"The Government must prioritise responsible spending and avoid budget deficits that can fuel inflation. This should involve cutting unnecessary expenditure or broadening the tax base through concessionary fiscal tax policies particularly to the untapped micro, small and medium enterprises sector.
"Another key issue is interest rate management and its important because central banks use interest rates to influence inflation.
"Raising rates can curb inflation, but it can also slow economic growth and we feel the Government needs to find a balance considering that a stable and predictable interest rate environment can help build trust in the nation's currency," he said.
According to Mr Kurauone there was need for the Reserve Bank to continuously work to build confidence in the local currency through maintaining open lines of communication that kept the nation up to date on issues surrounding the new ZiG currency.
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"Our members (SMEs) need some certainty when planning investments, a consistent exchange rate makes the ZiG more predictable. Our members will also be happy if the process of exchanging the old Zimbabwean dollar notes with the new ZiG is simplified with more channels of effecting this through opening banks and kiosks especially in rural areas to make sure all our members get assistance."
Mr Kurauone underscored the importance of Government support to the small scale mining sector through creating a platform for formalisation of their operations while ensuring the sector had the requisite support to help ramp up output and make sure the new structured currency had adequate backing from the country's vast mineral wealth.
There was also need for the Reserve Bank to partner banks and other financial institutions to embark on aggressive awareness campaigns and educate the generality of the population on the new ZiG currency and efficiently manage the transition from the old Zimbabwean currency.
The Zimbabwe Chamber of SMEs expressed optimism that the country's law enforcement agencies would maintain a tight leash on black market activities by arresting illegal foreign currency traders.
Government has warned illegal foreign currency traders that their days are numbered with police crack teams swooping on those involved in currency trading countrywide.
