112 THE ADOPTION OF MULTICURRENCY SYSTEM A PANACEA TO URBAN DWELLERS’ SOCIO-ECONOMIC CHALLENGES? PERCEPTIONS OF HIGH DENSITY SUBURBS’ RESIDENTS IN GWERU, ZIMBABWE Thomas Marambanyika, Trish-mae Muziti, Mark Matsa, and Timothy Mutekwa ABSTRACT Zimbabwe experienced a crippling hyperinflationary economic environment, which created a nation of poverty-stricken billionaires over the past decade until it adopted the multicurrency system (MCS) in January 2009. The paper explores on the impact of the change in monetary regime on socio-economic conditions of urban dwellers, given their overreliance on the market economy and vulnerability to its fluctuations. Questionnaires, semi-structured interviews, and participatory observations were used targeting household heads, school heads, and sister in charge of the local clinic. The research found that although the multicurrency system has generally improved the quality of life for the majority of people, they still remain in poverty if one considers the quality of life indicators, like the national poverty datum line. There was great change in nature and patterns of sources of income, particularly for informal traders, a sector which had become the backbone of almost all households’ income in pre-MCS era. MCS brought with it the inherent problem of inadequacy and, in some cases, unavailability of smaller denominations. The government must adopt a single currency to avoid exchange rate problems, as well as reduce shortages of smaller denominations. Keywords: Dollarization, socio-economic indicators, urban people INTRODUCTION Money, in its different forms, has existed since prehistoric times. It fulfills an essential role in the development of societies since it is a tool used to facilitate trade in all global economies. In Zimbabwe, the economy has been crumbling on a very fast rate with inflation rising from 55,8 percent in year 2000, 228 percent in year 2003, 622 percent in year 2004, 6,723 percent in year 2007, and to 231 million percent in year 2008 (Jayne, Chisvo, Rukuni and Masanganise, 2006; Central Statistical Office, 2009). This has made the Zimbabwean Dollar a valueless tool, unreliable for trade (Zimbabwe Independent, 2009). Evidence shows that the country’s Gross Domestic Product declined by approximately 40 percent between 1999 and 2007 and a subsequent slump of 14 percent in 2008 (Solidarity Peace Trust Report, 2007; The Financial Gazette, 2009). The effectiveness of money comes from a set of economic policies by the government and will depend on the dynamism and efficiency of the productive sectors, the business environment, as well as specific political realities of a country (Pascal, et al., 1998). Various explanations have been enlisted to account for the catastrophic economic meltdown in Zimbabwe. These include poor implementation of the Economic Structural Adjustment Program (ESAP), lack of funding from the International Journal of Sustainable Development in Africa (Volume 12, No.5, 2010) ISSN: 1520-5509 Clarion University of Pennsylvania, Clarion, Pennsylvania