Adopting the Rand would paint Zimbabwe into a corner in a bid to revive its economy

This research paper argues that Zimbabwe adopting the South African Rand or joining the Common Monetary Area (CMA) would be economically unviable and politically unacceptable, potentially undermining the credibility of the CMA due to Zimbabwe's foreign reserve crisis.

• Admitting Zimbabwe into the Common Monetary Area (CMA) would be risky because Zimbabwe's current foreign reserve crisis would likely prevent it from adhering to Article 2 of the agreement, which requires signatory states to back local currency issuance with foreign reserves and prohibits the monetisation of fiscal deficits.
• Adopting the Rand would force Zimbabwe to surrender its monetary and exchange rate policy sovereignty and severely restrict its fiscal policy space. This would result in the use of an overvalued currency, which would destroy the competitiveness of Zimbabwean exports and hinder export-led growth.
• The adoption of the Rand might fail to reduce inflationary pressures unless there is a significant removal of trade barriers at the Southern African Customs Union (SACU) level, as tariffs and transportation costs could keep prices stagnant at levels higher than those in the rest of the CMA.
• The move is politically unpalatable for Zimbabwean leadership; Robert Mugabe would likely view the loss of monetary discretion as a loss of executive power, while Morgan Tsvangirai would see it as South Africa attempting to influence the agreement through an indirect route.

APA

South African Institute of International Affairs (2009). Adopting the Rand would paint Zimbabwe into a corner in a bid to revive its economy. https://saiia.org.za/research/adopting-the-rand-would-paint-zimbabwe-into-a-corner-in-a-bid-to-revive-its-economy/

Chicago

South African Institute of International Affairs. Adopting the Rand would paint Zimbabwe into a corner in a bid to revive its economy. 2009. https://saiia.org.za/research/adopting-the-rand-would-paint-zimbabwe-into-a-corner-in-a-bid-to-revive-its-economy/.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=Adopting the Rand would paint Zimbabwe into a corner in a bid to revive its economy |date=25 February 2009 |url=https://saiia.org.za/research/adopting-the-rand-would-paint-zimbabwe-into-a-corner-in-a-bid-to-revive-its-economy/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2009adopting, author = {{South African Institute of International Affairs}}, title = {{Adopting the Rand would paint Zimbabwe into a corner in a bid to revive its economy}}, institution = {South African Institute of International Affairs}, year = {2009}, month = feb, url = {https://saiia.org.za/research/adopting-the-rand-would-paint-zimbabwe-into-a-corner-in-a-bid-to-revive-its-economy/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }