HARARE – Business leaders in Zimbabwe are calling for the removal of the six-month-old Zimbabwe Gold (ZiG) currency, citing its volatility and negative impact on the economy, despite the central bank’s insistence that the currency is here to stay.
Speaking at a currency review breakfast meeting hosted by the CEO Africa Roundtable (CEO ART) in Harare, Oswell Binha, the chairperson of CEO ART, criticised the ZiG for being a tool of arbitrage that has caused more harm than good to the nation’s financial stability.
Binha compared the fate of the ZiG to its predecessors—the Zimbabwe dollar, RTGS dollar, and bond notes—all of which were eventually scrapped due to instability. “Let me start by provoking this conversation by calling for an immediate removal of the ZiG from the basket of currencies and allowing for the trading of other currencies until we decide on a stable one,” he said.
Binha called for a “currency referendum” to engage all economic stakeholders in deciding which currency Zimbabwe should adopt, adding that it is crucial for economic players to have a say in such critical decisions.
The call for reform comes as the ZiG, which the Reserve Bank of Zimbabwe (RBZ) claims is backed by gold and foreign reserves, has been under severe pressure. In the past two months, the local currency has plummeted against the US dollar on the parallel market, forcing the RBZ to devalue the ZiG by 43% in September to allow greater exchange rate flexibility.
As of yesterday, the US dollar was trading at ZiG27.28 on the interbank market and between ZiG35 to ZiG40 on the parallel market. Some businesses have already shifted to reporting their financial results in US dollars to mitigate the impact of the local currency’s volatility.
Despite growing discontent from the business community, RBZ deputy governor Innocent Matshe defended the ZiG, insisting that Zimbabwe was not facing a currency crisis. “Make no mistake about the ZiG, it is here to stay,” Matshe said at the meeting. He argued that the currency’s depreciation was part of a natural market process, not a sign of collapse, and emphasised that current monetary policies were sufficient to support short- to medium-term growth.
Matshe also refuted claims that the ZiG was headed for the same fate as the previous currencies, stating that the central bank had allowed for greater flexibility in the interbank market. “This cannot be called a crisis. Let us not fool ourselves and think that just because there was a depreciation, the currency is collapsing,” he added.
However, economic analysts and businesses are pushing for more significant reforms. Economist Prosper Chitambara noted that while the multi-currency regime should continue, a combination of monetary, institutional, and fiscal reforms is needed to restore confidence in the ZiG. He cautioned against fully adopting or abandoning the US dollar, suggesting that a balanced approach would be the best path forward.
Zimbabwe, which has experimented with multiple currencies since scrapping the Zimbabwe dollar in 2009 due to hyperinflation, is now on its sixth attempt to introduce a stable currency. The fate of the ZiG, however, remains uncertain as debates about its future intensify.