The Reserve Bank of Zimbabwe (RBZ) Governor, John Mushayavanhu, made a commitment to the Zimbabwean public to report on the performance of the new Zimbabwe Gold (ZiG) currency if it fails to stabilize the economy. This statement was delivered during a monetary policy briefing at the Zimbabwe International Trade Fair in Bulawayo, organized by Alpha Media Holdings (AMH).
ZiG was introduced as a replacement for the beleaguered Zimdollar, which succumbed to hyperinflation, drastically elevating the cost of living. The new currency, consisting of notes and coins, is set to be released on April 30, with significant implications for various sectors, particularly the fuel industry, which will be required to settle dues in ZiG. This mandate is expected to drive demand and foster confidence in the new currency.
Mushayavanhu emphasized the government’s preparedness with more than adequate reserves to back the ZiG, with 80% of transactions still occurring in foreign currencies. The ZiG’s exchange rate will be determined by the market, a move away from the previously manipulated rates that contributed to economic instability. Additionally, the government plans to eliminate the 10% markup businesses add to the interbank rate to make goods and services priced in local currency more affordable.
The shift to ZiG is part of a broader de-dollarization strategy championed by President Emmerson Mnangagwa, who remains steadfast against re-adopting dollarization, a system that was temporarily implemented in 2009 when the local currency failed. The strategy indicates a commitment to stabilize the local economy using a currency backed by gold and other mineral reserves, ensuring greater economic independence and stability.
Critics, however, remain skeptical. They argue that the government is merely experimenting with the new currency, risking further economic instability. The introduction of ZiG follows the failure of the Bond note, another local currency initiative that did not withstand economic pressures. Skeptics worry that without substantial changes in fiscal policy and economic management, ZiG may face a similar fate.
Despite these concerns, there is a concerted effort to rally stakeholder support around the new currency. AMH CEO Kenias Mafukidze highlighted the importance of collective efforts and trust in making ZiG successful. He emphasized the media’s role in fostering a platform for nation-building, where success is shared, and failures collectively addressed.
The central bank is actively engaging with stakeholders, including the Zimbabwe Revenue Authority, to ensure that systems are adapted to accommodate transactions in ZiG. This proactive approach is aimed at preventing any speculation and misinformation that could undermine the currency’s acceptance and effectiveness.
In essence, the introduction of ZiG represents a critical juncture for Zimbabwe’s economic policy. It is an attempt to rectify past errors associated with currency management while trying to restore economic order and confidence. The RBZ’s transparency in its willingness to report back to the public if the initiative fails is a notable shift towards accountability.
Governor Mushayavanhu’s statement also reflects a broader intent to monitor and adjust policies based on real-world outcomes and feedback from various economic sectors. This adaptive approach is crucial for the successful integration of ZiG into Zimbabwe’s economy and for avoiding the pitfalls that plagued previous currency reforms.
As Zimbabwe stands at this economic crossroad, the success of ZiG could potentially mark a significant turnaround in its financial systems and economic prospects. The collective efforts of government bodies, industry leaders, and the general populace are imperative to ensuring the currency’s stability and to fostering an environment of trust and economic growth. Thus, while the introduction of ZiG is a hopeful step forward, it is surrounded by cautious optimism and a clear understanding of the challenges that lie ahead in achieving sustainable economic stability.
Source: Newsday
