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HARARE – Zimbabwe’s multi-currency system could end within the next two years as the gold-backed Zimbabwean currency (ZiG) continues to gain popularity in the local market, President Emmerson Mnangagwa has announced.
The President, who was speaking at the inauguration of a new juice processing plant in Mutare, highlighted the widespread use of ZiG and the key role it plays in achieving economic stability.
“The progress we have seen with ZiG suggests that within two years, and possibly sooner, Zimbabwe will be conducting day-to-day business entirely in its own currency,” said President Mnangagwa. “This transition will be largely automatic and painless, reflecting the growing acceptance and use of ZiG.”
ZiG, which launched three months ago, has already made significant progress. Before its launch, about 80% of local transactions were conducted in foreign currencies, mainly the U.S. dollar. This was particularly evident in the informal sector, where tracking transactions can be difficult.
Retailers have reported an increase in customers using ZiG, but some manufacturers are still charging in US dollars, a practice that has come under scrutiny by the Reserve Bank of Zimbabwe (RBZ), which is collecting data on the illegal practice with the aim of enforcing compliance.
Concerted efforts to curb the black market in foreign exchange have also helped Zimbabwe’s stability. The Reserve Bank of Zimbabwe’s Financial Intelligence Unit (FIU) has targeted street traders and major players, freezing suspicious bank accounts and imposing fines. The crackdown has mitigated the impact of the black market on the exchange rate.
Economist Prosper Chitambara commented, “The reduction in black market activity will help separate ZiG and dollar transactions and maintain stability in currency markets.”
ZiG’s stability is further enhanced by the gold and foreign exchange reserves held by the Reserve Bank of Zimbabwe. At the time of ZiG’s launch, these reserves included 2.5 tonnes of gold, providing solid backing for the currency. Ongoing mining royalties continue to bolster these reserves.
In addition, the narrowing trade deficit also provides support for ZiG. The current account remains positive, and remittances and investment inflows are more than enough to offset the trade deficit. As this trend continues, the RBZ expects that oil imports will eventually be fully financed through commercial banks, further enhancing the use of ZiG.
Reserve Bank Governor John Mangudya stressed: “Our gold and foreign exchange reserves ensure that the Zimbabwe dollar is a strong and stable currency. The falling trade deficit and positive current account growth are key factors in this stability.”
The Ministry of Finance, Economic Development and Investment Promotion has been strictly controlling the money supply to ensure that it grows in line with economic growth. This disciplined approach is essential to controlling inflation and maintaining economic stability.
“We have successfully managed money supply growth to keep it in line with economic growth,” Finance Minister Mtuli Ncube said. “This disciplined approach is essential to maintaining Zimbabwe’s stability and the economy as a whole.”
The International Monetary Fund (IMF) and the World Bank have expressed cautious optimism about Zimbabwe’s economic trajectory, noting the importance of continued reforms and fiscal discipline.
Ray Ndlovu of Bloomberg said: “Zimbabwe’s adoption of the ZiG single currency system is an important step towards normalizing the economy. Currency stability will attract more investor confidence.”
Business leaders and retailers also responded positively to the president’s forecast. But they stressed the importance of ensuring manufacturers comply with local currency regulations to maintain the momentum.
Financial analyst Sylvester Mupanduki noted: “The stability that ZiG brings allows us to accurately forecast the company’s cash flows, thus attracting more investors to the market.”
President Mnangagwa’s vision of a single currency economy is consistent with global norms and puts Zimbabwe’s economic future on a stronger footing. Supported by sound monetary policy and fiscal discipline, this transition is expected to enhance economic stability and investor confidence.
As Zimbabwe’s economic integration process continues to accelerate, Zimbabweans will usher in a more stable and predictable economic environment, ultimately achieving sustainable growth and development.
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