Rejected

By Shingirai Vambe

The country’s economic fate hangs in the balance. Zimbabwe’s currency, the Zimbabwean dollar – affectionately known as the Zimbabwe Gold, (Zig) has been on an unofficial rollercoaster ride since its reintroduction in April having only few entities accepting payments in ZiG at an official rate of ZWG$14.9 and now ZWG$25.

Most business have malfunctioning swipe machines and some openly saying they are not sure of the rate to use while others are bold enough to register the parallel ZiG rate at USD$1: ZWG$40.

Government of Zimbabwe had to make a rush turn, changing from its original stance, of maintaining the rate at ZWG$14.9 after supermarkets started increasing prices in US dollars and threating to close their business if Government fails to intervene on the crisis. this also was a result of in adequate forex supply by the central bank to businesses.

Once hailed as a symbol of economic independence, the Zig’s promise has given way to despair. Hyperinflation has ravaged the economy, rendering the currency nearly worthless. Prices skyrocket, and the Zig’s value plummets, leaving Zimbabweans grasping for stability.

For Harare trader, Mrs. Chido Mukaro, the Zig’s instability has made business impossible. “We can’t price goods or plan for the future,” she laments. “It’s like trying to build on shifting sand.”

Politician, Nelson Chamisa on his social handle said, its not the currency that must be changed, but the whole governance structure because citizens don’t trust the government of the day.

Majority who accept payments in local Zimbabwe dollar, made a loss of 44% when the central bank announced the changes from USD$1:ZWG14,9 to 25.

Economists point to a perfect storm of fiscal discipline lapses, foreign exchange shortages, and a crippling lack of confidence in monetary policy. The Reserve Bank of Zimbabwe (RBZ) has tried to stem the tide with monetary policy tweaks, but the Zig remains volatile.

Dr. Gift Mugano, a renowned economist, notes, “The Zig’s struggles are a symptom of deeper economic issues. Until we address the root causes, the Zig will remain unstable.”

As the Zig’s value continues to fluctuate wildly, Zimbabweans continue to use the alternative US dollar. Black market traders thrive, exploiting the desperate need for stability.

In a bid to restore confidence, the RBZ has vowed to implement stringent monetary policies, enhance fiscal discipline, and promote export-led growth. But for now, the Zig’s turbulent ride continues, leaving Zimbabweans holding on for dear life.

The President, His Excellence, Emmerson Dambudzo Mnangagwa while delivering the State of The Nation Address speech, said Corrective measures are being instituted to protect all Zimbabweans from economic disruptions.

“It remains the duty of all of us to respect and abide by measures and instruments intended to maintain economic stability and tame inflation. In response to the increased foreign currency pressures, and in a bid to deepen the foreign exchange market, the Reserve Bank allowed for greater flexibility under the willing-buyer willing-seller arrangement. The increased flexibility on the foreign exchange market is expected to further promote effective price discovery and encourage holders of foreign exchange
to participate in the willing-buyer willing-seller market, ” the President noted.

he further added that his Government remains committed to backing the currency through setting aside 50% of royalties for building reserves. Foreign currency inflows from exports have increased from US$7 billion in 2023 to US$8 billion in 2024. The country’s banking sector is on sounding footing, with sufficient capital and liquidity buffers, while profitability, asset quality and liquidity matrix have also remained stable.

The nation holds its breath, awaiting the Zig’s next twist. Will it find stability, or will the rollercoaster ride continue? Only time will tell.

“This is a recipe for disaster,” warned economist, Dr. Gift Mugano. “The gap between the official and unofficial rates will only widen, fueling inflation and undermining trust in the currency.”