ZIMBABWEANS were transacting exclusively in United States dollars yesterday as the country began transitioning to the new currency — Zimbabwe Gold (ZiG) — following unveiling of the new gold-backed unit by the Reserve Bank of Zimbabwe (RBZ) on Friday.
Financial institutions and mobile money platforms began converting customers’ Zimbabwe dollar balances into ZiG late Friday following presentation of the Monetary Policy Statement (MPS) by RBZ Governor Dr John Mushayavanhu.
Banks notified clients that their local currency accounts were being converted into ZiG and that Zimbabwe dollar transactions were suspended until further notice.
As a result, all point-of-sale and mobile money platforms were unavailable yesterday, while retail shops accepted only US dollars and Zimbabwe dollar notes. According to the Bankers Association of Zimbabwe, the process of reconfiguring all Zimbabwe dollar accounts is set to be complete by tomorrow at most banks.
Our Harare Bureau has gathered that commercial banks are expected to begin dispensing the new ZiG notes and coins early this week.
The central bank will begin drip-feeding smaller denomination notes and coins to commercial banks early this week for disbursement once the conversion process is complete.
Electronic transactions for some banks are expected to resume by tomorrow, as Zimswitch, the country’s electronic financial transactions settlement platform, finalises adjusting its systems to accommodate the new currency.
In an interview with our Harare Bureau yesterday, Dr Mushayavanhu said ZiG will commence circulating in the market this week.
“They (ZiG notes and coins) are going to be disbursed early this week; it might not be on Monday,” he said.
“It might be a few days after, but they are going to be disbursed this week. That is what we are expecting. As for the amounts, we are going to print enough.”
The RBZ was yet to set cash withdrawal limits because “we want to see the reaction of the public before we set the limit”.
The gold-backed ZiG will be issued in denominations ranging from 1 ZiG up to 200 ZiG, as well as half ZiG and quarter ZiG.
Presenting the MPS, Dr Mushayavanhu said the new currency will be introduced into the market gradually.
“These notes shall be issued gradually in the market to cater for small transactions and to ensure the availability of change, thus, mitigating the use of retail vouchers in the local economy. As such, the proposed denominations will bring convenience to the transacting public,” he said.
In Harare, retailers were transacting exclusively in US dollars and Zimbabwe dollar notes. Many people, who were caught off-guard by the currency changeover, were left frustrated, as they failed to transact in the local currency.
“We were not anticipating this changeover,” said Budiriro resident Mr Brenna Mandivava.
“Everyone who does not have US dollars is having trouble transacting. We hope they sort this out soon.”
Retailers were also busy converting prices of their goods into ZiG.
Confederation of Zimbabwe Retailers president Mr Denford Mutashu said: “We are complying with Government’s directive and we are in the process of converting the prices to the new currency.
“Retailers are only transacting in US dollars to ensure that consumers are not inconvenienced by the migration process. We are confident that by Monday most retailers would have migrated to ZiG.”
Bankers Association of Zimbabwe president Mr Lawrence Nyazema said banks were reconfiguring all Zimbabwe dollar accounts.
He said the process is set to be complete by tomorrow at most banks.
“We expect to start disbursements of new notes this coming week (this week),” said Mr Nyazema.
“Remember, the old Zimbabwe dollar notes will be coming back as deposits as they are taken out of circulation. Banks have been working flat out since midnight (Friday) to reconfigure Zimbabwe dollar accounts and balances to ZiG. Some will maintain the same account numbers, while others will have to open new accounts in the new currency. We expect ZiG accounts to start coming on stream at different banks this weekend and we are all targeting to be up and running by Monday morning. Zimswitch will be switched on for banks as and when they convert to ZiG accounts.”
Zimswitch marketing manager Ms Sharon Marira said the platform will be back online once banks have completed reconfiguring the balances.
“It will largely depend on the banks’ readiness and configuration,” she said.
“We have already sent notices to customers, informing them that the system is down. When the system has been restored, banks will inform the customers. This, however, will not be uniform as it will depend on banks.”
Economist and member of the RBZ Monetary Policy Committee Mr Persistence Gwanyanya said the new currency will be widely available before the end of the week.
“We expect the notes to be in circulation as soon as Monday,” he said.
“I believe the new currency will perform better compared to its predecessor because it is backed by physical (gold and cash) reserves.”
The introduction of ZiG is part of several policy measures meant to address exchange rate volatility, curtail inflation and restore macro-economic stability.
The new currency replaces the Zimbabwe dollar, whose value has been depreciating rapidly over the past few months.
The new currency will be backed by the quantity and value of precious minerals — mainly gold — as well as foreign currency reserves held by the RBZ.
As of Friday last week, the central bank had in its reserves US$100 million in foreign currency and 2,5 tonnes of gold valued at US$185 million. – Sunday News
