Business magnate Nigel Chanakira and Oxlink Capital CEO Brains Muchemwa express skepticism about widespread adoption of ZiG amidst prevailing US dollar preference in Zimbabwe. At a recent post-2024 Monetary Policy and Outlook Conference, Nigel Chanakira, a prominent businessman and economist, expressed doubts about the acceptance of Zimbabwe Gold (ZiG) in a market dominated by the US dollar. The Reserve Bank of Zimbabwe (RBZ) recently introduced ZiG, replacing the depreciating Zimdollar. However, Chanakira highlighted a significant disparity between the authorities’ push for ZiG and the market’s preference for the US dollar.
Chanakira noted that during the conference, attendees overwhelmingly favored the US dollar over ZiG when asked about their currency preference. This lack of confidence in ZiG poses a challenge to its long-term viability, indicating a disconnect between monetary authorities and the market sentiment. The reluctance to embrace ZiG stems from various factors, including the requirement for 50% of taxes to be paid in US dollars. According to Chanakira, this reluctance reflects a fundamental problem in anchoring the new currency in the economy effectively.
Brains Muchemwa, CEO of Oxlink Capital, echoed Chanakira’s sentiments, emphasizing that the government’s failure to enforce tax payments in ZiG signals a lack of commitment to the local currency. Muchemwa stressed that for ZiG to succeed, the government must demonstrate confidence in it by mandating all tax payments in the new currency.
While acknowledging the government’s efforts to localize costs by introducing ZiG, experts like Misheck Ugaro, an economist from the Employers’ Confederation of Zimbabwe, emphasize the need for full commitment to the local currency. Ugaro argues that partial tax payments in ZiG fall short of instilling confidence in the currency among businesses.
Despite the government’s initiatives to promote ZiG, its success hinges on widespread acceptance and demand within the market. Experts caution that without full commitment and confidence from both the government and businesses, ZiG may struggle to gain traction in a US dollar-dominated economy.
