Zimbabwe’s new ZiG doomed by overall lack of transparency

Economic mismanagement has stripped citizens’ trust in the government and threatens the new currency’s viability.

The struggle to stabilise Zimbabwe’s economy continues, with no signs of relief for ordinary citizens. The recently introduced currency, Zimbabwe Gold (ZiG), seems destined to suffer the same fate as the five previous attempts to create a local currency.

Zimbabwe’s economy thrives on informal trade, with most traders operating outside the banking system. The Reserve Bank of Zimbabwe’s decision to introduce the ZiG electronically before hard currency is available has sparked panic. An informal trader in Harare told ISS Today about widespread trading disruptions and uncertainty among fellow dealers.

The gold-backed ZiG was due to be rolled out on 8 April (the date has since been pushed to 30 April). Anyone found with notes amounting to Z$100 000 (about US$2) after the ‘start’ date would have to explain why they had that amount of cash. As a result, many traders are refusing to accept Z$ notes and deal solely in forex. The few accepting Z$ doubled their prices, leaving consumers earning local currency poorer.

The trader said the public transport sector was also affected, with operators refusing to accept the outgoing local currency for local trips and transacting only in US$. Commuters ended up paying US$1 for a trip that cost US50c.

The new currency comes after the Z$ lost over 70% of its value in the first three months of 2024. Inflation now stands at 2 647% – the highest in the world.

The economic and currency collapse emanates from bad governance, irrational policies and disregard for economic fundamentals that define the Zimbabwe African National Union-Patriotic Front (ZANU-PF) regime.