Stakeholders Call for Government Adoption of ZiG

State Urged to Lead in Accepting New ZiG Currency

by Ikeoluwa Ogungbangbe

Stakeholders are calling on the Zimbabwean government to boost the newly introduced Zimbabwe Gold (ZiG) currency by accepting it as a payment method. This would help instill market confidence both locally and internationally. The call was made during a meeting where the Joint Portfolio Committee on Budget, Finance and Investment Promotion, and Industry and Commerce gathered oral evidence concerning the recently announced 2024 Monetary Policy Statement.

The Reserve Bank of Zimbabwe (RBZ) Governor, John Mushayavanhu, and Finance Minister Mthuli Ncube are expected to address the committee soon to respond to feedback and concerns raised by various stakeholders. Key issues highlighted include the need for swift introduction of ZiG notes into the market to facilitate smoother transactions and prevent potential rejection due to delays.

Rosemary Mpofu, Chief Executive of the Consumer Council of Zimbabwe (CCZ), stressed that essential government departments, such as passport offices, fuel stations, the Vehicle Inspection Department, and the Zimbabwe Revenue Authority (Zimra), should prioritize ZiG for service payments. “This would not only boost confidence in ZiG but also send a strong message globally that it is a viable and accepted currency,” Mpofu stated. She also expressed concerns over the delays in rolling out ZiG, which have led to price hikes in essential goods like mealie-meal and rice, as people rush to spend their ZiGs amid fears of devaluation, similar to the fate of the former Zimbabwean dollar.

At a recent conference in Zimbabwe, several industry experts discussed the challenges facing the country’s retailers. Mpofu stressed the importance of regulatory oversight to prevent retailers from exploiting consumers during periods of panic buying, which can lead to temporary price increases.

Denford Mutashu, the President of the Confederation of Zimbabwe Retailers, called for the repeal of Statutory Instrument 118A of 2022, which he believed was causing market distortions. He also highlighted difficulties with the newly liberalized interbank foreign exchange system, including a lack of funding and willing sellers, which are hampering the industry’s ability to use ZiG for imports. Mutashu suggested that monetary authorities should ensure that the interbank market is adequately funded and incentivize sellers to engage with it, to reduce reliance on the parallel market and stabilize ZiG’s value.

Fanwell Mutogo, the Chief Executive of the Bankers Association of Zimbabwe, also spoke at the conference. He acknowledged the Reserve Bank of Zimbabwe’s initiative to convert non-interest-bearing non-negotiable certificates of deposit in ZiG to longer terms but suggested the need for more tradable and shorter-dated financial instruments to aid cash flow planning among businesses. Mutogo also addressed the RBZ’s concerns about locally-funded loans potentially expanding the money supply, suggesting that banks could mitigate this by adhering to maximum loan-to-deposit ratios to ensure they have adequate funds to meet withdrawal demands and support responsible lending.

During a recent discussion, it was noted that there is a significant demand for U.S. dollars in Zimbabwe, particularly for purchasing fuel. To address this issue, it was proposed that banks should be able to meet local foreign currency needs at a wholesale level. This would involve allowing suppliers to replenish their stocks after selling in ZiG, which would facilitate smoother transactions in the currency and help stabilize its use in the market.

Source: NewsDay Zimbabwe

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