Zimbabwe’s New Gold-Backed Currency Faces Mixed Reactions on Launch Day

Zimbabwe Unveils ZiG Currency Despite Growing Demand

by Ikeoluwa Ogungbangbe

Yesterday marked the official release of the Zimbabwe Gold (ZiG) bank notes and coins, a new currency introduced by the Reserve Bank of Zimbabwe (RBZ) last month aimed at stabilizing the nation’s economy. However, the rollout was met with challenges and mixed feelings among the population, with several banks unable to meet the high demand for the new money.

During the first day of distribution, a survey by NewsDay revealed that most banks were short on cash, causing concern and skepticism among customers. Many had been waiting almost a month to get their hands on the new notes and coins but found limited quantities available. Notably, banks were primarily dispensing coins and the ZIG10 notes, the lowest denominations, with ZiG200 being the highest available.

The introduction of ZiG has been a topic of interest, especially among farmers and traders at Harare’s bustling Mbare Market. Vendors and farmers expressed a cautious optimism about the new currency. “We have not yet transacted using the ZiG as we wait for those with bank accounts to withdraw the money and use it when transacting with us,” mentioned one vendor, highlighting the indirect effects of the rollout on daily commerce.

A farmer shared his perspective on the potential benefits of ZiG, especially in making small transactions more manageable. “We have been struggling with change to an extent where we were giving people some extra produce to compensate for cents,” he explained, adding that while the full impact of the new currency remains to be seen, he is hopeful about its convenience.

Despite these hopeful remarks, not all responses were positive. Some Zimbabweans, particularly those unable to withdraw ZiG from automated teller machines, voiced concerns about the currency’s stability and trustworthiness. “I haven’t seen the new currency on the streets yet, and as for me, it will take time for me to adjust. I do not think I will accept the ZiG if I am given it as change on the commuter omnibus,” a local woman stated, reflecting a significant trust barrier that the RBZ needs to overcome.

Addressing these concerns, Lawrence Nyazema, president of the Bankers Association of Zimbabwe, confirmed that banks had only started receiving the new notes and coins on the day of release. He urged the public not to panic, emphasizing the importance of maintaining stability and avoiding speculative behaviors that have previously harmed Zimbabwe’s currency value.

The RBZ has introduced the ZiG as a replacement for the Zimdollar, which has suffered from severe devaluation since its reintroduction in 2019 under President Emmerson Mnangagwa. Officials have assured that the ZiG is backed by substantial gold and foreign currency reserves, which they hope will support its value. Currently, the ZiG trades at a rate of 14:00 against the US dollar.

Following the Monetary Policy Committee (MPC) meeting, RBZ governor John Mushayavanhu highlighted the market’s positive reception to the 2024 Monetary Policy Statement (MPS). “Preliminary indications since the announcement of the MPS show that the markets have been fairly stable,” Mushayavanhu stated. He reiterated the committee’s commitment to reinforcing this stability, managing inflation expectations, and restoring public confidence in the financial system.

Moreover, the MPC has directed the RBZ to enhance communication about the new ZiG currency across the country to promote financial inclusion. The Reserve Bank is also tasked with ensuring that any increase in reserve money is adequately backed by tangible reserves, including gold, precious minerals, and foreign currency balances in the RBZ’s nostro accounts.

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