Mnangagwa threatens to ban US dollar – ZimEye

By Business Reporter – Kenyan President Emmerson Mnangagwa has said the U.S. dollar will cease to be legal tender in 2023 and will be replaced by the Zimbabwe dollar.

This is in stark contrast to Mnangagwa’s plan announced in October 2023 to extend the multi-currency system for five years to 2030.

The move is seen as an effort to ease concerns about an imminent change in Zimbabwe’s monetary policy.

Speaking during the commissioning of a new juice and water treatment plant in Mutare, Mnangagwa said exclusive use of ZiG could be achieved sooner than the 2030 timetable. He said:

Two years from now, actually two years is too far away, but one day, when our ZiG currency fully penetrates the market, I will instruct the country to use only ZiG.

If you go to a store and buy something with USD, they will refuse it. Even the people who perform and entertain us today, they are given USD tokens, and in two months, you (they) will be given ZiGs, not USD, because that is our currency and we should promote it.

In his speech, Mnangagwa also said that Zimbabwe could not continue to rely on the US dollar given the US government’s apparent hostility towards Zimbabwe. He said:

Biden doesn’t like us but you like his country’s money, is that ok? So as ZANU PF we cannot continue to use and rely on the currency of those who don’t like us because one day they will try to hinder our efforts and then we will have no place to stand.

That is why we now have the Zimbabwe Gold (ZiG), which is our currency and that is what we are promoting. We are promoting our currency.

Mnangagwa’s comments highlight ongoing tensions between Zimbabwe and the United States, particularly over sanctions and other punitive actions imposed by Washington over human rights and related issues.

By describing the use of the dollar as a problem in this geopolitical context, the president is arguing from a nationalist perspective that Zimbabwe should assert greater monetary sovereignty through the Reserve Bank of Zimbabwe.

ZiG is the country’s sixth attempt to establish a functional local currency in the past 15 years.

In response to Mnangagwa’s comments, economist Gift Mugano said the regulatory status of extending the multi-currency system until 2030 should be clarified. He said:

So will the statutory instrument guaranteeing the use of US dollars until 2030 become invalid? What happens to the banks that provided loans until 2030 under this SI? Similarly, what message is the Zimbabwean government sending to the banks in terms of lending? Slow down the pace of US dollar lending?

ZiG was launched in early April 2024 and is backed by 2.5 tonnes of gold reserves and $100 million in foreign exchange reserves held by the Reserve Bank of Zimbabwe.

related