KEY POINTS
- ZWG currency struggles with persistent three-tier pricing.
- Retailers prefer US dollars, limiting ZWG transactions.
- Central Bank’s measures have reduced volatility but not resolved issues.
As shopkeepers maintain a three-tier pricing structure, Zimbabwe’s gold-backed ZWG currency still faces major obstacles to stabilizing the local economy.
When the ZWG was first introduced on April 5, 2024, it appeared to have potential for solving the nation’s monetary problems. However, since parallel market prices jumped to $1: ZWG 30 compared to the official rate of ZWG 13.80, its performance drastically deteriorated before the end of its six-month existence.
In response, the Central Bank of Zimbabwe took a number of actions to fix the value of the currency. These included raising interest rates to discourage speculative borrowing and depreciating the ZWG by 43 percent. Although exchange rate volatility has been significantly decreased by these measures, market acceptance of the currency is still uneven.
Retailers cling to multiple pricing strategies
Retailers in Harare’s Central Business District still impose different price tiers according on payment methods, according to a visit by New Zimbabwe to a number of establishments in the area.
For instance, Colgate Maxfresh is only offered in US dollars at Food World store. Rabroy Tomato Sauce, on the other hand, costs $1.10 when paid with cash and $1.25 when paid with a credit or debit card. Likewise, a 330 ml can of Coke costs $0.88 when paid with a swipe and $0.64 when paid with cash.
Customers are irritated by these disparate costs, particularly those who pay in ZWG, since they get nothing from the various payment methods.
“We don’t enjoy any of these pricing advantages since we are paid at a flat rate,” said one Food World client, expressing their frustration. Because these problems undermine trust in the currency, authorities must take prompt action to resolve them.
Impact on consumer trust and economic stability
The three-tier pricing structure’s continued existence draws attention to persistent problems with Zimbabwe’s monetary policies. The difference between the official and parallel market rates is still quite large in spite of the Central Bank’s actions.
Because of this discrepancy, shops are forced to use US dollars for some products, which shows a lack of confidence in the ZWG. Furthermore, some retailers restrict the selection of goods that may be bought using the local currency, making transactions more difficult for clients who rely on ZWG.
Customers are demanding that these pricing irregularities be fixed immediately. The ZWG currency’s efficacy is compromised by the ongoing usage of various price systems, which also runs the risk of making the economy even more unstable. Even while the government works to preserve economic stability, the local unit may become obsolete in the absence of fundamental reforms.
Future prospects for the ZWG currency
The continued use of a three-tier pricing structure suggests that more work must be done to rebuild trust in the ZWG currency. Experts contend that more steps are required to guarantee uniform adoption of the ZWG in all retail sectors and to close the gap between official and parallel market rates.
Reducing reliance on foreign currencies and attaining long-term economic stability require increasing confidence in the local currency.
Addressing the fundamental problems that keep the ZWG from becoming a competitive alternative to the US dollar must be the top priority for authorities. This entails boosting credit availability, increasing monetary policy transparency, and cultivating an inclusive economy that promotes sustainable growth.
