Recent discussions about Zimbabwe’s new currency have revealed a mix of backing claims: some believe it is supported by gold, others by the USD, and some by various other minerals. The truth encompasses all these assertions. Following his recent appointment, the new Governor of the Zimbabwe Reserve Bank was charged with stabilizing monetary policy and rolling out this new currency. Unlike his predecessors, the Governor has been notably proactive, frequently engaging with the media to address questions about the currency. His communicative approach has gradually fostered confidence within the business community, dispelling fears that the initiative might be mere rhetoric.
As the launch date of April 30th approaches, Dr John Mushayavanhu, the Zimbabwe Reserve Bank Governor , emphasised the importance of the Reserve Bank consulting with consumers to address key questions and ensure clarity on the currency’s features before its physical release. Currently, the new currency, referred to as the ZiG, is trading at 13.53 against the South African rand. Previously, Zimbabwe’s discontinued bond notes performed poorly against the rand and were not accepted as legal tender internationally, compelling Zimbabweans to prefer USD for cross-border transactions. This reliance on the USD made commodities excessively expensive for many locals due to inflated pricing models.
The manufacturing sector, heavily burdened with USD-denominated costs for energy and fuels, and the construction sector, where pricing in USD extended to products, land, and labor, have been particularly impacted. Coupled with high unemployment and low wages across sectors including civil servants, life became increasingly difficult, triggering significant emigration to countries like South Africa and the United Kingdom.
If the ZiG withstands economic pressures, a scenario that is beginning to seem possible, it could significantly bolster the Zimbabwean economy. Early indications suggest the ZiG might succeed, potentially stemming from an innovative financial strategy. However, it could also falter, adding another chapter to Zimbabwe’s challenging financial history marked by sanctions and previous currency failures, such as the bearer cheques and bond notes.
With a hopeful yet cautious eye, many Zimbabweans are eager for the ZiG to succeed, viewing the upcoming introduction of physical currency as a critical litmus test for the country’s economic future. If managed correctly, the ZiG could even become the strongest currency in Africa, provided the government maintains sound fiscal policies.