Last month, the Reserve Bank of Zimbabwe introduced the Zimbabwe Gold (ZiG) currency to replace the Zimbabwe dollar. While this new currency was touted as being backed by gold reserves, which should theoretically stabilize its value and improve consumer confidence, the transition has not been smooth. Instead, the introduction of ZiG has led to significant challenges, particularly in its acceptance across various sectors outside the formal retail environment.
One of the most pressing issues following the introduction of ZiG has been the resistance from commuter transport operators. Rosemary Mpofu, Chief Executive Officer of the Consumer Council of Zimbabwe (CCZ), voiced concerns that these operators are reluctant to accept ZiG, instead charging inflated prices due to the inability to provide change. This situation has forced consumers to pay double the usual fare for their daily commutes, severely impacting their financial well-being.
Further complicating the economic landscape is the difficulty in purchasing fuel with the new currency. Despite announcements from the Zimbabwe Energy Regulatory Authority (Zera) setting fuel prices in ZiG, consumers find that no fuel stations are accepting the currency. This disconnect between policy announcements and on-ground realities highlights the challenges in implementing the new currency system effectively.
Adding to the currency’s woes, several educational institutions are rejecting fee payments in ZiG, insisting on payments in US dollars. This selective acceptance of currency is not limited to educational sectors but extends to various service providers who are manipulating exchange rates or outright rejecting ZiG. This widespread reluctance to accept the new currency underscores a lack of confidence among service providers and poses a severe challenge to its broader acceptance.
The official exchange rate set by the central bank at US$1: ZiG13.56, with a permissible margin up to ZiG14, is being flouted openly, with some service providers charging rates as high as US$1: ZiG21. Such discrepancies in exchange rates further erode trust in ZiG and complicate everyday transactions for ordinary Zimbabweans.
In response to these mounting issues, Mpofu has called on authorities to take decisive action to enforce compliance with the set exchange rates and to address the rejection of ZiG by service providers. Ensuring that all businesses adhere to these regulations is crucial for stabilizing the new currency. Additionally, combating the black market and addressing illegal financial activities are vital steps needed to restore and build confidence in ZiG.
The challenges posed by the introduction of ZiG could have far-reaching consequences on Zimbabwe’s economic objectives, including the target to reach an upper-middle-income economy by 2030. Without resolving these fundamental issues, the potential benefits of a currency backed by gold reserves might not be realized, leaving consumers in a state of continued economic uncertainty.
As Zimbabwe navigates this complex transition to the Zimbabwe Gold currency, the experiences of consumers and the response of various sectors will be crucial in determining the future stability and acceptance of ZiG. The authorities must address these issues promptly to ensure that the currency can fulfill its intended role in stabilizing Zimbabwe’s economy and improving the financial inclusion of its citizens.
Source: Newsday
