HARARE,– Zimbabwe’s local currency, the ZiG, has seen a remarkable surge in public confidence, with a recent survey indicating a 91% acceptance rate, a significant increase from the 61% recorded at its launch in April this year.
This was revealed by Reserve Bank of Zimbabwe (RBZ) Governor, Dr. John Mushayavanhu, in his 2024 Mid-Term Monetary Policy Statement.
Dr. Mushayavanhu attributed the growing confidence in the ZiG to the currency’s stability, which has encouraged both companies and individuals to keep their funds in banks without fearing a loss in real value. He noted that the reserves backing the ZiG, primarily gold, had increased significantly, reaching US$375 million in June, up from US$285 million at the start of the year.
This stability has also reflected in the reserve money for the ZiG, which includes Non-Negotiable Certificates of Deposits valued at US$139 million. The RBZ’s Consumer Perception Survey, conducted since mid-April 2024, has shown a steady rise in the currency’s acceptance.
“The ZiG currency has been fully embraced by businesses and the transacting public for both transactional and savings purposes,” Dr. Mushayavanhu stated. The survey also highlighted a dramatic increase in the willingness of economic agents to be paid in ZiG, rising from 8% in April to around 80% by June.
Dr. Mushayavanhu emphasized that this growing public confidence is due to the increased stability and predictability of the local currency. “The RBZ remains committed to consolidating this stability to achieve and sustain low and stable inflation in the medium to long term,” he added.
The ZiG, a currency backed by mineral commodities like gold and foreign assets, was introduced to replace the Zimbabwean dollar, which had been crippled by hyperinflation. Since its introduction, the ZiG/US$ exchange rate has remained relatively stable, averaging between ZiG13.2 and ZiG13.8 per US$.
“The stability of the exchange rate has helped to keep inflationary pressures subdued, with inflation expectations remaining anchored,” Dr. Mushayavanhu noted.
He further explained that the adoption of a refined foreign exchange market system under the Willing-Buyer and Willing-Seller (WBWS) principle had significantly contributed to this stability. The RBZ has been active in the interbank market, intervening to smooth supply-demand mismatches and facilitate trading using 50% of the 25% export surrender proceeds. Between April 8 and August 28, 2024, approximately US$190 million was traded through the interbank foreign exchange market.
In addition to ensuring currency stability, the RBZ has taken steps to promote financial inclusion. Following a comprehensive public awareness campaign, the ZiG cash was introduced into the market on April 30, with notes and coins available in denominations of ZiG 1, ZiG 2, ZiG 5, ZiG 10, and ZiG 20.
Despite initial logistical challenges, the RBZ successfully distributed adequate cash to banks to meet public demand. The central bank also introduced a swipe facility for ZiG at Homelink and set up cash kiosks at bus termini to increase access to cash, particularly for commuters.
“Going forward, the RBZ will continue to improve cash availability, especially in rural areas, to ensure that the financially excluded have access to ZiG,” Dr. Mushayavanhu said. The bank also plans to roll out “cash kiosks” to allow people to exchange mobile wallet balances for ZiG cash, enhancing the currency’s circulation.
To further boost the use of ZiG, the RBZ will increase the supply of smaller denominations to address the issue of change and prevent businesses from rounding up prices. Additionally, the bank will streamline the distribution of cash to ensure that ZiG reaches remote and rural areas, fostering greater financial inclusion.
The RBZ is also planning to expand the Homelink Swipe for ZiG kiosks and similar initiatives to other provinces, towns, and business centers, encouraging wider usage of the ZiG currency across the country.
Source: Herald