Black market reappears, ZiG collapses – ZimEye

By Business Reporter – The Zimbabwe dollar (ZiG) is rapidly losing value as more businesses reject the currency in favour of the US dollar available on the black market.

The black market rate has soared to 1:25 ZiG, in flagrant violation of government regulations and highlighting a growing lack of confidence in ZiG.

This blatant defiance undermines the government’s efforts to stabilize the currency, maintain its utility and control inflation, further eroding consumer purchasing power and leading to economic instability.

The official exchange rate remains at about 14 Zimbabwean dollars to the dollar, according to government data, but that is becoming increasingly irrelevant in the face of market realities.

According to national media reports, some businesses in Bulawayo have resorted to faking problems with their Point of Sale (POS) network to justify their exclusive dealings in foreign currency.

This practice clearly demonstrates the deep-seated distrust of ZiG.

In response, the Financial Intelligence Unit (FIU) of the Reserve Bank of Zimbabwe (RBZ) has set up a hotline and WhatsApp number for the public to report businesses that refuse to use local currency or use black market exchange rates.

Despite these measures, implementation remains a challenge.

In May, the government introduced Statutory Instrument No. 81A of 2024, which aims to punish those who violate exchange rate regulations. Under these regulations, individuals and businesses that charge more than the exchange rate published by the Reserve Bank of Zimbabwe face a fine of 200,000 Zimbabwe dollars.

Yet these penalties have done little to stem the general appetite for the dollar.

The Ministry of Finance, Economic Development and Investment Promotion recently blacklisted more than 50 contractors for supplying the black market after receiving payment for services or goods.

The move highlights systemic problems in the economy and the prevalence of the black market.

Presenting the mid-term currency review in parliament, Finance Minister Mthuli Ncube claimed significant progress in the phased de-dollarization plan, which aims to re-establish a single currency system backed by the national currency to improve local production and export competitiveness.

The recent fiscal policy review stipulates that taxes should be paid in the local currency, regardless of the currency used in business transactions.

Despite these measures, the collapse of the ZiG appears imminent. Widespread reliance on the black market, coupled with a widespread refusal by businesses and consumers to use the ZiG, bodes poorly for the currency’s future.

As economic realities overwhelm regulatory intentions, government efforts to enforce compliance and promote local currencies appear increasingly futile.

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