HARARE – Zimbabwe’s government has reiterated its commitment to de-dollarisation, signalling plans to make the Zimbabwe Gold (ZiG) currency the nation’s sole legal tender in a bid to stabilize the economy and curb inflation.
This announcement comes as the Reserve Bank of Zimbabwe (RBZ) and senior officials emphasize a “monocurrency” approach designed to restore public confidence in the local currency amidst persistent economic challenges.
The ZiG, introduced in April 2023 as a gold-backed currency pegged initially to the US dollar, was aimed at curbing inflation and reducing Zimbabwe’s dependency on the US dollar, which has dominated local transactions for over a decade. The government’s strategy includes gradually eliminating the use of foreign currencies and creating demand for the ZiG to establish it as Zimbabwe’s exclusive currency.
An RBZ official speaking on condition of anonymity confirmed, “A full transition to the ZiG as Zimbabwe’s monocurrency is underway. This shift aims to bring more stability to prices, creating a system where the ZiG becomes a trusted, singular medium of exchange within the economy.”
However, the ZiG currency has faced challenges, with reports indicating depreciation on both the official and parallel markets. Currently, the currency trades at approximately ZiG25 to the US dollar on the interbank market, while the parallel market rate has surged to around ZiG43 per dollar. Despite these setbacks, authorities remain confident that the phased de-dollarisation and increased use of ZiG will ultimately yield economic stability.
Economists, however, have expressed concerns about the feasibility of a full transition to a single currency, given the entrenched dollarization in Zimbabwean society and the public’s preference for a more stable US dollar. Critics argue that until there is broader confidence in the economy’s capacity to sustain a monocurrency, reliance on the ZiG could lead to increased volatility and economic uncertainty.
In response, the government is reportedly exploring various mechanisms to support the ZiG, including imposing requirements for businesses and individuals to transact in the local currency. Measures could also include collecting taxes, duties, and fees solely in ZiG, while incentivizing businesses to adopt the currency through subsidies and other supports.