HARARE – Several retailers in Zimbabwe have introduced limits on the sale of essential goods like milk, with a “one item per person” policy, as panic-buying spreads due to growing distrust in the Zimbabwe Gold (ZiG) currency.
The move comes after the recent devaluation of the ZiG, sparking fears of economic instability and threatening the survival of formal businesses.
Major retailers, including Pick n Pay and OK Supermarket, have warned that they may have to shut down after the shock devaluation of the ZiG, a currency the government claims is backed by physical gold. The latest devaluation of the ZiG by 43% last week has created confusion in the market, leading to uncertainty among consumers and businesses alike.
A retail sector watchdog, Zimpricecheck, criticized the government’s handling of the currency, noting that the sudden devaluation “contradicts recent government assurances about the ZiG’s stability and its purported gold backing.”
Retailers Struggle Amid Currency Crisis
Retailers have struggled with the official exchange rate for the ZiG, which they say is artificially high, forcing them to sell goods at unsustainable prices. Many shops are finding it difficult to stay afloat, with some considering closure if forced to continue operating under the current exchange rate system.
The Reserve Bank of Zimbabwe’s Financial Intelligence Unit (FIU) has blamed the exchange rate volatility on illegal money changers, with over 300 people arrested so far and their accounts frozen. One high-profile case involves Neville Mutsvangwa, the son of senior Zanu PF officials, who faces charges of illegally trading foreign currency. His parents claim he is being targeted by political rivals within the ruling party.
Despite these arrests, black market foreign currency trading remains rampant. A forex trader, speaking anonymously, said, “The same police sent to arrest us also need our assistance. Their salaries lost value last week, making them more interested in corruption for survival.”
Lack of Confidence in ZiG
Many Zimbabweans remain sceptical of the ZiG, viewing its new value as closer to the actual rate used in unofficial markets. Tererai Chamu, a tuckshop owner, argued that the true state of the economy is best understood by those operating on the ground, not by government officials. “We are the true economists here, and the government should ask us why the ZiG is failing,” Chamu said.
The introduction of the ZiG has drawn comparisons to the Zimbabwe bond note, introduced in 2016 by then-RBZ governor John Mangudya, which was initially pegged at parity with the U.S. dollar. Chamu noted that, just like the bond note, the ZiG is failing to inspire confidence among the public, with many people sceptical of the government’s claim that it is backed by gold.
Sandra Mawire, another trader, echoed these concerns, saying, “Why should we believe the gold backing statement now?” as she sought a change in U.S. dollars from her fellow traders.
Informal Market Rejects ZiG
While formal retailers are required to accept ZiG payments, informal vendors and tuckshops often refuse the currency, further exacerbating the problem. As a result, intermediaries have emerged to facilitate transactions between formal shops and informal traders, who act as unofficial outlets for larger retailers. Some formal shops have resorted to turning off their point-of-sale machines to avoid accepting ZiG altogether.
Economic Hardship Deepens
The devaluation has worsened economic hardship for many Zimbabweans. Talent Ncube, a recent retiree, expressed his frustration, noting that when he retired, the exchange rate was 13.9 ZiG to the U.S. dollar. Now, with the devaluation, he fears his pension may be worth half as much, leaving him in financial uncertainty.
The Amalgamated Rural Teachers Union of Zimbabwe (Artuz) has also raised concerns about the impact of the devaluation on civil servants’ salaries. They are calling on President Emmerson Mnangagwa to address the issue in his upcoming State of the Nation Address, demanding that salaries be paid in hard currency to protect workers from further devaluation.
As the currency crisis deepens, Zimbabweans are left grappling with an economy that shows little sign of stabilizing, with confidence in the government’s economic policies at an all-time low.
