President Emmerson Mnangagwa stands behind Zimbabwe’s currency switch to the bondnotes, in Victoria Falls, Zimbabwe, June 25, 2019. (Columbus Mavhunga/VOA)
President Emmerson Mnangagwa stands behind Zimbabwe’s currency switch to the bondnotes, in Victoria Falls, Zimbabwe, June 25, 2019. (Columbus Mavhunga/VOA)

VICTORIA FALLS, ZIMBABWE - On Monday, Zimbabwe's finance minister announced a ban on the use of foreign currency to conduct transactions inside the country.

Addressing journalists Tuesday at the end of a United Nations and African Union summit on wildlife, President Emmerson Mnangagwa said the move was necessary.

"Zimbabwe has gone back to normalcy, and the normalcy is a country must have its own currency, that's normalcy. We were living in abnormal situation and you should be the first to congratulate us for becoming normal again," he said.

The government has not banned the possession of foreign currency, Mnangagwa added, it only wants people to exchange it for the national currency, known as bondnotes, before conducting any transactions.

"If you want to buy your tea and you have your American dollar or euro, then you must go to bureau de change and change there and go and have your coffee. That's what we have done, that's what is normal," he said.

A trader displays former currencies that Zimbabwe had during a hyperinflationary era about 10 years ago, in Victoria Falls, Zimbabwe, June 25, 2019. (Columbus Mavhunga/VOA)

In 2009, Zimbabwe abandoned its own dollar after severe hyperinflation made it worthless.  Since then, people have used multiple currencies to conduct everyday business, with the U.S. dollar and South African rand being the most common.

On Monday, the country's finance minister said Zimbabwe would only allow the use of bondnotes, which the country introduced about two years ago as part of efforts to ease shortages of cash.

Confusion, criticism

Kojo Bentum-Williams, a travel writer from Ghana, was in Victoria Falls when the finance minister spoke. He says there has been confusion since the currency change.

"There is a lot of communication — a bit misleading — going on, suggesting that you cannot use your credit card. The systems are still running, I used my credit card here. It's working. So there is need for a lot of education to make people understand what is it that has changed," he said.

The opposition Movement for Democratic Change has condemned the ban on using foreign currency, as have a number of civic organizations.

"This was hurried, it was done without public consultation, stakeholder consultations," said Tabani Moyo, spokesman of the nongovernmental organization Crisis Coalition in Zimbabwe. "It has sent shock waves into national economy and we are likely to see a wave of price increases. In our view, this country needs a long-term plan that will leap frog the country into orbits of development."

Journalists listen to President Emmerson Mnangagwa in Victoria Falls, Zimbabwe, June 25, 2019. (Columbus Mavhunga/VOA)

Specifically, Moyo says, the country needs to produce goods to sell abroad.

"We are not earning our upkeep, hence the need to revive the production sector so that we earn forex [foreign exchange] through exports. It is not a currency crisis as they are prescribing, it is a production crisis. It's a political legitimacy crisis which must be killed," he said.

Mnangagwa stands behind the currency switch.

"In this transition, there will be a lot of confusion," he said. "But it is so clear. We shall continue to have workshops, or pronouncements on radio on what actually we are doing. The most critical thing is: Are we doing the right thing or not the right thing? We believe we are doing the right thing."

In recent weeks, the bondnotes have been losing value against other currencies. However, it's not clear if the switch will stabilize Zimbabwe's rapidly declining economy.