Date Of Article: 9/27/2002
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Malawi, Zim plan to dump US dollar
By: Ephraim Munthali
Malawi and Zimbabwe plan to start using respective currencies in instituting trade between their two countries, according to a top government official in Zimbabwe. Zimbabwean Minister of Industry and International Trade Samuel Mumbengegwi told Business Chronicle, a financial daily in Zimbabwe, that the system—to be introduced before the end of the year—aims at using the kwacha as a local unit in trade between the two countries. “We are looking at the possibility of using each other currencies in implementing trade between the two countries,” Mumbengegwi was quoted as saying. But Director of Commerce Geoff Mkandawire confirmed in an interview yesterday, saying the Reserve Bank of Malawi (RBM) have for the past one year been pushing for a bilateral agreement on the same. But he expressed ignorance on whether any concrete decision has been reached to implement the deal. “In fact it was the Malawi government through the Reserve Bank of Malawi that initiated the negotiations for the bilateral agreement more than a year ago because quite a number of businesses [in Malawi] have been killed because they were finding problems in getting their payments,” said Mkandawire. Mumbengegwi said it does nnot make sense for the two countries to use dollars “when we have our own currencies at our disposal”. The paper said the decision was reached at a meeting held in August to promote trade relationships between Malawi and Zimbabwe. The minister, reported Business Chronicle, said financial authorities from the two countries are working out exchange rates. Foreign currency shortages in Zimbabwe have crippled companies in the country on foreign debts since 2000, prompting Malawian exporters to seek the central bank’s intervention on the matter. As at February last year, Zimbabwean firms owed Malawian exporters about US$455,000 (K36 million). Zimbabwe and Malawi strengthened trade relations in 2000 by bridging imbalances between the two countries which were heavily tilted in favour of Zimbabwe when they revised the 1986 trade agreement. In 1999 for example, Zimbabwe exported to Malawi goods worth K3.9 billion while Malawi only exported K409.2 million worth of goods, prompting the Malawi government to call for a review of the old agreement.
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