Harare,— Zimbabwe’s largest independent brokerage has called on the government to focus on restoring public trust in its currency rather than pushing for the abandonment of the US dollar.
Imara Asset Management, through its chief executive officer John Legat and chief investment officer Shelton Sibanda, emphasized that the country’s recent history of rapid currency depreciation and hyperinflation has significantly eroded confidence in Zimbabwe’s economic and monetary authorities.
In a recent note to clients, Legat and Sibanda stressed the importance of rebuilding this lost trust. “The rapid local currency depreciation and hyperinflation years are still fresh in the minds of most Zimbabweans,” they wrote, urging the government to address these historical challenges before imposing new currency mandates.
Zimbabwe’s latest attempt to stabilize its monetary system is the ZiG, a gold-backed currency introduced in April 2024. This marks the nation’s sixth attempt in 15 years to establish a stable local currency. Previous efforts have faltered due to extreme inflation, leading to a reliance on the US dollar, which now accounts for 80% of transactions.
President Emmerson Mnangagwa has proposed that the ZiG could become the sole legal tender by 2026. This vision is supported by the country’s banking sector, which has aligned itself with the President’s plans. However, the recent experiences with currency instability, including a brief ban on foreign currencies in June 2019—reversed in March 2020 due to the COVID-19 pandemic—have left many Zimbabweans wary.
As of Friday, the ZiG was trading at 13.71 to the US dollar. The currency is backed by 2.5 tons of gold, a move aimed at providing more stability compared to its predecessors. Despite these measures, experts argue that the government must first focus on regaining public trust in the local currency to ensure long-term success.
Source: Bloomberg
