Dollarisation is turning Zimbabweans into criminals, financial services group Imara said on Wednesday.

Harare-based John Legat, the chief executive officer of Imara Asset Management, said in a statement that while Zimbabwe's economy was now operating under multiple currencies (largely United States dollars and rands) the country's laws had yet to be changed.

"We are all, in effect, breaking the law by using foreign exchange and not the now-extinct Zimbabwe dollar."

Instead of formalising the state of affairs by amending the necessary statutes, the authorities in Harare still occasionally raised the possibility of a comeback by the long worthless Zimbabwe dollar -- a cause for concern among foreign investors, Legat said.

"With the recent suggestion by the Governor of the Reserve Bank that the Zimbabwe dollar could be reintroduced at some point in the future, it is hardly surprising that foreign bankers and investors are very cautious about placing their money here," he said.

Yet, multiple currencies in place of the Zimbabwe unit have bestowed multiple benefits, he said.

Corporate earnings were up, goods were once again available in stores, prices were coming down, deposits were flowing back into the banks and banks had started lending again to corporate clients.

"At the moment, Zimbabwe is one of the few countries in the world where there is no currency risk should you be a US-dollar investor.

"This is a huge advantage over other frontier economies," Legat said.

He said that Zimbabwean manufacturers also did well from the situation.

"Production costs and the revenues earned by local producers are largely US dollar-based.

"In contrast, Zimbabwe's regional competitors operate in their own fluctuating local currencies -- making it difficult for them to compete consistently."

Legat said this was an advantage that Zimbabwe needed to capitalise on, but to do so the law needed to be changed to solidify the multiple-currency regime and the removal of exchange controls. - Sapa

By IOL