Zimbabwe wants to join a bank founded by the BRICS group of emerging nations — but a de-dollarization debate has started even before the country’s application has been approved.
Tendai Biti, a former Zimbabwe finance minister, has warned of economic “disaster” if the current administration of President Emmerson Mnangagwa decides to ditch the dollar. Zimbabwe recently applied to join the BRICS’ New Development Bank.
Any move away from the greenback is a “zany attempt to follow the global de-dollarization agenda being pursued by BRICS and other new world order advocates,” Biti said in an X post on Thursday, referring to the bloc of Brazil, Russia, India, China, and South Africa.
“This move will be an absolute disaster and will cost workers and pensioners,” he added.
—TENDAI BITI (@BitiTendai) September 14, 2023
He also said Zimbabwe doesn’t have the economic conditions to ditch the dollar.
Biti’s comments add to an intense ongoing debate over de-dollarization. The discourse has been fanned by fears that Washington is weaponizing the dollar-denominated global financial system against Russia over the Ukraine war.
The discussion has been so intense that there was even talk about the possible creation of a common BRICS currency during a recent summit in August.
The meeting ended without any announcements about a common currency and over the course of the summit, leaders from the BRICS nations even gave contradictory and differing statements about de-dollarization.
The BRICS bank is also starting its de-dollarization journey by increasing lending in local member currencies.
Biti’s views on de-dollarization also reflect local Zimbabwean concerns about its economy.
Due to economic uncertainties and hyperinflation, the US dollar is used in 75% of all transactions in Zimbabwe, even though Zimbabwe’s official currency is the Zimbabwe dollar, central bank governor John Mangudya told Bloomberg in July.
Zimbabwe’s government banned the use of foreign currencies as legal tender in 2019. President Mnangagwa said at the time that the country’s economy was “at the mercy of US dollar pricing, which has been a root cause of inflation,” per BBC.
However, the country was forced to reverse the ban in June 2022 to rein in inflation.
As talk about de-dollarization rages on in emerging economies — including Zimbabwe — locals are concerned about its spillover into their lives.
“The US dollar has given us our life back. We can’t do without it,” Lovemore Mutenha, a liquor store owner in Zimbabwe told the Associated Press in August. “How can one budget with the Zimbabwe dollar that is always changing in value? It is not stable, and we have been burnt before.”
Representatives for Zimbabwe’s central bank, Biti, and the BRICS’ New Development Bank did not immediately respond to requests for comment from Insider.